Published: Mon, June 19, 2017
Electronics | By Jesus Weaver

Amazon acquires Whole Foods

Amazon acquires Whole Foods

Last week saw two days that could alter the shape of the United States retail sector for many years to come.

Amazon did not elaborate on the strategic rationale for buying a grocery chain, but analysts said the acquisition has the potential to strengthen its ties to consumers through its Prime program. In the health-conscious Los Angeles area, for example, Whole Foods only claims a 3 percent market share, while stores owned by Albertsons and Kroger together have a hold on 40 percent of that market.

Marc Lore, the Jet.com founder who now runs Wal-Mart's e-commerce business after selling a startup to Amazon, told Reuters in an interview that Amazon's move does not change Wal-Mart's game plan.

Now Amazon has the reach to expand its other business divisions, which may include the ability to order various products online, with pickups available at the grocery store locations. "It also gives Amazon a well-known and well-regarded brand that can, ultimately, be sold across Amazon platforms". Amazon (AMZN) announced it would be buying Whole Foods (WFM) for $13.7 billion.

"They are on offence and that is a good position to be in", Binder said, referring to Wal-Mart.

But one quarter of good results shouldn't scare Amazon investors.

Bloomberg's source reportedly said that Amazon is looking at introducing the same technology in its Amazon Go stores to Whole Foods stores.

This is where Whole Foods Market comes in.

But from P and 14th in Washington, DC, to Houston's Galleria district to Fig Garden Village in Fresno, Whole Foods' reputation for having knowledgeable and personable employees has comprised one of its key strengths.

Amazon has been linked to a possible purchase of BJ's Wholesale Club, so it's probable that many of its customers are Prime members and have shopped for groceries online in ranges similar to Costco and Sam's Club. For a generation, the USA government has also allowed far larger deals to close. It has $7 billion in cash and cash equivalents on its balance sheet and could easily borrow billions more. They'll say that they're going to figure out ways to cut costs as much as they can, and they'd still do a whole lot better than what the other two are doing, and they're not that great of experiences no matter what.

Grocery shoppers will likely also be able to pre-order groceries online for pickup, or perhaps there will be an Uber-like delivery system.

"Why does Amazon buy Wholefoods?"

"However, access to product and distribution points will determine its success, particularly in grocery". Stores are ideally located for that. "They don't go acquiring businesses just for the sake of acquiring them". Developing PL is time consuming. Only the latter argument can be levelled credibly at Amazon. "Amazon gains expertise in grocery and organics in particular".

This demographic could prove to be a secure control group for Amazon to experiment with, and the grocery market a safe sector to dabble in.

Amazon.com has proven its dominance in the online retail space, where the company is viewed as a disrupter.

A third Amazon grocery shopping option is Amazon Pantry. From launch, Amazon Fresh started to address this challenge by borrowing equity from local markets and food businesses through partnerships. Revenue at Instacart, which Whole Foods will have to distance itself from, is up 900% in the past two years.

"Another interesting consideration is the upmarket positioning of Whole Foods".

"Acquiring Whole Foods made a ton of sense", said Bryan Eisenberg, New York Times best-selling author and Partner of Buyer Legends, in an interview with Retail TouchPoints.

Both companies said there will be no layoffs, but they did not respond to other questions about Amazon's plans for Whole Foods. He believes that the e-Commerce giant will focus on B2B platforms and even vehicle companies to help boost its service and fulfillment offerings, even suggesting that a company like Mercedes-Benz could be a potential acquisition target.

The industry has become a hotbed of activity over the past few months, which already has led to food prices falling and discounts being offered in efforts to attract shoppers. "It looks like Amazon sees a presence on the high street via Whole Foods as the way to change that".

Does Amazon Have More Retail Targets On The Horizon? The transaction is scheduled to close during the second half of 2017.

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