Amazon to Acquire Whole Foods

Amazon has announced plans to acquire premium U.S. grocer Whole Foods Market, which has 466 stores, including 13 stores in Canada and 9 in the UK. Whole Foods emphasises natural and organic products, employs 87,000, and has grown its annual revenue to US$16 billion.

What does it mean?

There’s much conjecture about why America’s leading e-commerce company would jump in to bricks-and-mortar retailing, which is considered to be a high-overhead, low-margin business.

Is it for the retail presence which could promote Amazon’s existing catalogue? Is it for the fresh food distribution capability? Is Amazon opening a new front in its battle against Wal-Mart for retail primacy?

Amazon has long been committed to the Grocery category. The main Amazon.com website introduced a Grocery category several years ago, and Amazon websites world-wide include a Grocery department. The innovative Amazon Prime Pantry programme attempts to overcome the delivery cost barrier to online grocery sales. AmazonFresh has been operating in some areas of the U.S. since as early as 2007.

For New Zealand food and beverage products?

It’s clear that in acquiring Whole Foods, Amazon is about to become a major player in the U.S. grocery sector. For the growing number of food and beverage manufacturers that work with ExportX to have their products well-represented on Amazon.com, the possibility of reaching more customers through Whole Foods Market stores can only be a good thing.

 

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