Amritha
May 27, 2018, 11:19 pm IST
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Amazon acquires Whole Foods

Amazon acquires Whole Foods

 Jun 19, 2017

Amazon's acquisition announcement of Whole Foods for USD13.7bn at USD42 per share has many layers. One, its Amazon’s tacit admission that eventually a presence in brick and mortar is required to capture market in perishables. Two, Amazon has probably taken serious note of WalMart’s recent acquisitions of Bonobos, Jet.com, shoebuy.com, Modcloth and Moosejaw and wants to take its fight to the retail behemoth. Third, is the uncertainty ahead for the retail industry. The flurry of acquisition activity taking place tells us that the big boys in technology and retailing aren’t going to sit around and let the other shape the retailing industry of the future.

Amazon’s intentions aren’t really a secret. Its cashier less concept retail store in Seattle is probably the model that the firms plans to pursue in the future. Amazon released a concept video in December 2016 and opened the store earlier this year. (Watch video: https://www.youtube.com/watch?v=NrmMk1Myrxc). But, that said this isn’t a perfect marriage. Amazon is a pure tech company which focuses on low costs and efficiency. Whole Foods is a company which is diligently focused on sourcing and retailing high end organic produce and is known to charge a premium for its products. From a culture and synergy perspective this could easily turn into a nightmare.

What is less clear however, is how much money WalMart is willing to pour in its ecommerce ventures. The firm has historically been unsuccessful at e-commerce. With Marc Lore, founder of Jet.com, leading its e-commerce initiatives now, WalMart hopes to make a dent in the online retail space.

It will be interesting to see who blinks first. For now the markets have given Amazon a resounding thumbs up.



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