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Amazon (AMZN) Extends Prime Benefits to Whole Foods Stores

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Amazon (AMZN - Free Report) has recently announced the availability of Prime Whole Foods discount at 121 Whole Foods Market stores located across 12 U.S. states. This move is in sync with its focus to strengthen presence in the retail sector.

The move enables Prime members to avail an additional 10 percent discount on their purchases along with special weekly off on selected purchases made at these stores. Notably, the initiative was first rolled out in Florida.

The offer will be accessible at the stores across 12 U.S. states. At present, Prime members can benefit from the offer at Whole Foods Market 365 stores nationwide and the stores located in Florida, Idaho, Kansas, Kansas City, Missouri, Arkansas, Colorado, Texas, Utah, Northern Nevada and Northern California.

We note that the expansion of the ongoing 10 percent discount across additional Whole Foods store is likely to drive the subscriber base of Prime, consequently aiding the revenue generation of the company.

Coming to the price performance, shares of Amazon have returned 39% on a year-to-date basis, outperforming the industry’s rally of 21.1%.



Strengthening Retail Business

The successful acquisition of Whole Foods Market last year helped Amazon bolster its presence in the grocery retail market. Moreover, Amazon Prime has played a significant role in shaping the company’s growth trajectory in this market with its loyalty programs and customer friendly offers.

With the latest move, the company is aiming at offering Prime benefits to the customers at all Whole Foods stores across the United States which is around 463 in number. Amazon is expecting to achieve the target by this summer.

Additionally, the Prime members can avail the offer while using Whole Foods app for transaction and getting it delivered via Amazon Prime.

We believe Amazon’s strong endeavors toward rewarding the customers will continue to benefit its market position.

Further, the company introduced two-hour delivery services from Whole Foods stores to Prime members via Prime Now this year. The services were first offered in four cities — Austin, Dallas, Cincinnati and Virginia Beach. Recently, the company has expanded the service to Denver, Sacramento, San Diego, Los Angeles, Atlanta and San Francisco.

This will help the company in gaining competitive edge against the likes of — Walmart (WMT - Free Report) , Target (TGT - Free Report) and Kroger (KR - Free Report) , which are the major players in the U.S. grocery market.

Walmart acquired Parcel and extended partnership with Deliv last year to support its same day delivery initiative. Further, it is leaving no stone unturned to seize portion of the online grocery space.

Target also acquired Shipt to expand its same day delivery services. Further, its buyout of Grand Junction has improved its delivery capabilities. Further, Kroger’s recently acquired Ocado, which is likely to intensify the war in the U.S. grocery market.

We note that Amazon with Whole Foods, Prime Benefits and impressive delivery services is likely to keep gaining momentum in the market.

Prime — Key Catalyst

Amazon is continuously making efforts to expand its Prime business globally. Last year, Prime was launched in the Netherlands and Luxembourg along with an added facility for customers in Belgium to join Prime and shop in Dutch. The company also introduced Prime in Singapore.

Last month, Jeff Bezoz revealed the number of paid subscribers for Amazon Prime. The figure has crossed over 100 million worldwide since its inception, which is a positive.

Additionally, Prime members in the United States have started receiving unlimited free two-day shipping on over 100 million different items.

The company also offers 5% cash back benefit to prime members who use Amazon Prime Rewards Visa card while shopping at any Whole Foods store.

We believe Amazon’s strong focus toward enhancing Prime service with the help of exciting discounts, free deliveries within a short period of time, FBA strategy, expanding movies and video portfolio and many more will continue to help it to improve customer base and encourage Prime membership.

Currently, Amazon sports a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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