It’s hard to distribute food. “It’s not like you can just walk in and grab a building” and turn it into a food-ready warehouse, Marc Wulfraat, the president of MWPVL International explained to the Observer in a phone call. Warehouses used for food and food distribution can take a year or so to build or rehab to the specifications safe for storing stuff people will one day eat.
“Amazon’s been trying to get into groceries and it’s been a long slow process,” Wulfraat explained. His company did an independent analysis of Amazon’s existing distribution facilities. Whole Foods has 11 food distribution centers already working around the country, which helps explain the rationale for Amazon to buy the company. Rather than starting from scratch near major metro areas, Amazon has just purchased a nationwide network of warehouses equipped to handle food.
They aren’t large warehouses, though. Whole Foods runs lean distribution operation, with considerably smaller warehouses than its competitors use. It accomplishes this in part by relying on United Natural Foods for its fresh produce. Wulfraat said Whole Foods keeps its warehouses just “big enough to have a limited number of high velocity items.” Still, by adding nearly a dozen more food distribution centers to its network, Amazon can more quickly expand its Amazon Fresh services.
Amazon Prime in many cases builds facilities inside cities in order to quickly get products out to customers more quickly. “These Prime warehouses, they’re sourcing from the green grocer down the street,” Wulfraat said. “This way they can become a viable food retailer because they can purchase from the nearest Whole Foods distribution center.” This shaves a layer of markup off many sales.