Amazon’s grocery delivery service has seen a major boost following the retail giant’s acquisition of Whole Foods — but the grocer’s IRL stores seem to be having some issues.
Whole Foods stores are suffering inventory shortages, leading to empty shelves, according to several employees that spoke with Business Insider. The shortages are being attributed to a new ordering system the grocer introduced company-wide in early 2017. (Amazon acquired Whole Foods in August 2017.)
Referred to as “order-to-shelf,” or OTS, Business Insider describes it as “a tightly controlled system designed to streamline and track product purchases, displays, storage, and sales.” Instead of keeping additional product in store stock rooms that can be used to replenish shelves, with OTS products are taken straight from delivery trucks to store shelves, bypassing the backroom altogether.
The system is intended to help the company cut costs and reduce food waste, and employees who spoke to BI says it’s been successful in that regard — but it also means stores are sometimes running out of staple products such as bananas, onions, or potatoes, leading to angry customers.
“On paper, things look good — our spoilage is in check, and I don’t have a lot of back stock. But I have never seen so many empty shelves in my store,” one store manager told BI.
Whole Foods isn’t the only big corporation adopting this approach to inventory: Fellow retail giant Target also recently implemented an OTS system, and some are speculating that order-to-shelf technology will be “the future of retail distribution.” Whole Foods executives praised its new ordering system on an earnings call last year, noting that it was reducing waste and dramatically “improving and helping our out-of-stocks” — though, anecdotally at least, it seems the grocer may now be struggling with the latter.
But if anyone can figure out the logistics of keeping stores stocked without wasting a ton of food it would seemingly be Amazon, which maintains gigantic warehouses full of inventory and ships hundreds of millions of packages each year.
Neither Whole Foods nor Amazon immediately responded to requests for comment.