Amazon.com, Inc. (NASDAQ: AMZN) announces that they will cut prices on a range of popular goods sending shares of Kroger Co down 8% and Walmart shares down 2%. The company also hopes to start selling Whole Foods brand products on their website that sent down shares of packaged food sellers such as Kellogg Co. More than $10 billion was wiped off the market value of big food sellers making the S&P 500 Food Retail Index close down almost 5%.
Starting Monday, Amazon will cut organic grocery prices on staples such as brown eggs, bananas, avocados, lettuce, butter, and other products. Low prices could bring in price sensitive Whole Foods shoppers and can get rid of the reputation of high prices that are about 15-25% above competitors. This could also bring in new shoppers who would be urged to shop for food and other goods online.
The company is more focused on driving volume and improving service at the expense of profit margins. Amazon members of the $99 per year Prime shopping club would eventually be rolled into Whole Foods’ customer rewards program and be eligible for special offers and discounts.