Coverage: Amazon to lower Whole Foods prices beginning Monday

Despite its massive success, Amazon Prime hasn’t been able to solve one nagging problem: its heavy concentration in high-income households.

But Amazon’s decision to lower prices at Whole Foods could help draw more lower and middle income people to its Prime program, as they will feel more compelled to check out the grocery store — and ultimately find out about the many benefits of the Prime program.

“Amazon’s trying to cast as wide a net as possible,” R.W Baird’s analyst Colin Sebastian told CNBC. “They’re going to try to make more store shoppers Prime members, and then bring more Prime members into stores.”

Amazon Prime is estimated to have signed up more than 50 million US households so far. But a big chunk of it comes from people in the higher income bracket, a segment that is slowly getting saturated.

A recent survey by Piper Jaffray showed that 82 percent of the households making $112,000 or more a year are already Prime members, while just 67 percent of the households with income in the range of $68,000 to $112,000 a year have signed up. Those making less than $68,000 a year hovered around 50 percent penetration.

Maura Judkis of The Washington Post reported that Amazon Lockers may start appearing in Whole Foods locations:

And eventually, mirroring another prediction of Amazon-watchers, Whole Foods will offer Amazon Lockers in stores for customers to stop by and pick up Amazon purchases — and probably buy some groceries while they’re at it. As online grocery shopping grows, it’s an immediate answer to Amazon’s “last mile” delivery problem — shorthand for the idea that, the closer you get to a product’s final destination, the more challenges you have in delivering it. Whole Foods stores give Amazon refrigerated distribution centers close to where people live, which “adds to Amazon’s cachet and eases concerns of customers that their perishable food comes from two to three miles from their homes where a Whole Foods is located, instead of an Amazon distribution center that could be farther afield,” wrote Michelle Lodge for the Street. “Freshness counts.”

The Amazon news release teased at other changes to come, once the companies “integrate logistics and point-of-sale and merchandising systems.” Future changes could include eliminating checkout lines, which Amazon has already done at its cashless Amazon Go store in Seattle (going cashless, while convenient for middle class customers, would also inhibit access to fresh groceries for unbanked households, which would affect more than 15 million American adults). At that store, a combination of technology including sensors, machine learning and computer vision can detect what customers are purchasing. As long as they have the Amazon Go app, they can just walk out of the store, and their Amazon account will automatically be charged. Other Amazon innovations, such as the Amazon Dash Wand, a home bar code scanner, are likely to make their way into Whole Foods stores somehow, too.