Local Food Makers May Struggle with Amazon and Whole Foods Merger
Traditional sales channels for small food makers face disruption.
The merger of Amazon and Whole Foods gave indications of being a disruptive force in the $700B grocery industry. While the merger may provide some competitive advantages to Whole Foods, it’s first real impact may be to weaken local food makers who have relied on Whole Foods as a platform for launching their products.
The first indication of this change is the centralization of Whole Foods purchasing to Austin. While the previous system allowed for more regional purchasing which gave attention to local food makers, the centralization may be aimed to move more high volume mainstream products and reduce the product count (or number of SKUs). This may create barriers for local makers who could count on the shelf space for their unique and specialty food innovations.
The second threat to local food makers is the Whole Foods push to lower prices. The merger has been touted as Amazon’s strategy to take market share from Walmart which already has the lowest prices. In fact, 56% of Walmart’s sales come from grocery to very price sensitive consumers. For Whole Foods to compete on this level, they’ll need to get concessions from existing food suppliers or move to new ones. The only suppliers that can handle significant wholesale price reductions are the mass producers, not the local makers. When the squeeze comes, it may be too hard for local food makers to stay.
The impact of the new Whole Foods strategy is driving local food makers to quickly seek new sales channels and launch platforms for their products. Many of the local makers are now going digital and selling on Treatmo. Treatmo is a mobile commerce platform that was created for local food makers with today’s challenges in the grocery business in mind. Treatmo’s app lets local makers set up a store front in the app in minutes, sell directly to shoppers in the app, and bypass the physical retail channels that are becoming more complicated.
It creates convenience for food makers who are not accustomed to digital commerce with easy set-up and low costs. Shaping a mobile shopping community is simple in Treatmo and new features such as chat, loyalty, and information at a tap creates transparency and an effective way to share a brand story that’s unavailable on the store shelf. Food makers can even take pre-orders for new products and do official launches from their store.
Treatmo is defining the new shopping environment. With demand from consumers for local food on the rise and options on the shelf diminishing due to mergers like Amazon and Whole Foods, Treatmo’s platform is a great choice for small and mediums size food business that don’t want barriers to growth.
Learn more about selling on Treatmo.