Whole Foods folding rewards program into Amazon Prime

Whole Foods Market is folding its loyalty rewards program into Amazon Prime as the organic grocery chain continues to integrate services with owner Amazon.

According to MarketWatch, Whole Foods' loyalty members received an email notifying them that rewards and digital coupons would cease as of May 1. In a note on its website, Whole Foods told shoppers to stay tuned for "additional announcements for Amazon Prime members."

“Any account benefits, including membership and/or unused rewards, will not roll into any future programs,” it continued.

Reports surfaced last month that Whole Foods might be planning 10% discounts for Amazon Prime members. It already offers Prime members 5% cash back when they use their Prime Rewards Visa credit card at Whole Foods. Non Prime members using the Amazon no-fee credit care earn 3% back on Whole Foods purchases.

An IRI Market Shift Study released Tuesday found that Amazon Prime’s benefits are likely to motivate 60% of Whole Foods customers with Amazon Prime accounts to purchase more groceries at Whole Foods stores. Howard Schneider, VP of loyalty strategy with Kobie Marketing, said this reinforced that Prime, not the Whole Foods brand, is the real focus here.

“The grocery chain becomes just another range of products delivered through Prime,” he stated. “Some loyalists who value the uniqueness of Whole Foods may rebel against this transformation. But I predict most consumers will value the convenience and benefits of Prime.”

Amazon has been weaving its $99-a-year Prime membership program into Whole Foods' operations since its purchase of the grocery chain last August. It recently rolled out free two-hour delivery from Whole Foods stores to Prime members via its Prime Now delivery program, which it said would eventually merge with its Amazon Fresh grocery delivery service to “streamline a delivery experience for Whole Foods.”

In his annual note to shareholders released Wednesday, Amazon CEO Jeff Bezos said more than 100 million Amazon shoppers subscribe to Prime. Though it's not known how many of those members shop at Whole Foods, research from Morgan Stanley shared by CNBC last September estimated that 38% of Whole Foods shoppers were not Prime members. Morgan Stanley expected Amazon to convert half of those shoppers by the end of 2019.

The program can drive Prime members to the in-store channel, said Schneider. But this won’t necessarily create loyalty of affinity for the Whole Foods brand. Unless Amazon maintains the emotional connection to Whole Foods, nothing will “curb customer churn” when consumers have more convenient or cost-effective options elsewhere on Amazon.

A version of this article appeared at ProgressiveGrocer.com.