Is Whole Foods’ e-grocery business headed down a dark path?
Amazon.com could be entering a new phase of its e-grocery business as it opens its first dark store dedicated to Whole Foods’ e-grocery fulfillment.
Amazon will be opening the location in Brooklyn, NY, according to USA Today, but will not give the general public access to the facility’s long shelves of products or large grocery coolers, nor will customers be able to pick up from the store directly. Product will be exclusively picked for delivery drivers and some bike delivery people.
While Amazon had been planning the dark store before the novel coronavirus pandemic hit, the crisis has dropped the retailer into the deep end of e-grocery fulfillment.
Being the nation’s biggest destination for online orders — grocery and otherwise — went from being Amazon’s biggest advantage to a major challenge early on in the pandemic. An unprecedented influx of orders for food and other essentials due to panic buying, uncertainty and fears about the safety of physical grocery shopping led to roadblocks for the one-time leader of order fulfillment. At one point in April, Amazon even had to waitlist new online grocery customers.
The logistics challenges extended to Whole Foods as well. Near the peak of the first coronavirus wave in New York, Amazon closed a Whole Foods store in Manhattan to foot traffic and ran it exclusively as a dark store for online fulfillment.
The chain also made other Whole Foods locations in major markets dark or semi-dark, including the Inner Harbor location in Baltimore, which went fully online-only, and the San Francisco SoMa location, which closed to the public after 1 p.m. every day, according to another USA Today report. Grocers like Kroger and Walmart made similar moves, converting some locations to pickup-only.
Amazon has returned four of those six converted Whole Foods locations to normal grocery operations, according to USA Today.
Proponents of dark stores for e-grocery fulfillment tout the model’s advantages over the high distribution costs and long wait times of e-commerce fulfillment through traditional warehouses. They also see advantages in having floor space planned out and exclusively used for online order picking.
In grocery, and especially in perishables, long delivery times can lead to additional problems, such as food spoilage.
- Why Whole Foods is trying out a ‘dark store’ as part of its vision for the future of grocery shopping online – USA Today
- Whole Foods is converting some stores to online-only to help meet coronavirus demand. Is your store affected? – USA Today
- Amazon puts new online grocery customers on hold, reconfigures Whole Foods – RetailWire
- Is the future of retailing going dark? – RetailWire
DISCUSSION QUESTIONS: What should it signal to retailers that Amazon considers a dedicated dark store to be a good strategic move for Whole Foods? What factors determine if dark stores are the right move for grocers to fulfill e-commerce orders? Will dark stores outlast the pandemic-driven e-grocery boom, and what will their place be?