Likewise, Amazon had aspirations to open up grocery stores and convenience stores using innovative technology, focusing on automation and virtual/augmented reality. On June 16, 2017 aspirations became reality when Amazon.com announced its intention to acquire Whole Foods Market for $13.7 billion. This announcement was not dipping a toe in the water, it was a giant cannonball into the brick and mortar retail pool which created a thunderous splash that just might tip the entire industry on its head.
So Why Did Amazon Buy Whole Foods?
According to a recent Forbes Magazine article a few of the primary drivers for the acquisition were:
- 450 available retail stores
- The Whole Foods 365 brand, which is a widely recognized private label
- The overall strength of the Whole Foods Markets Brands
The 450 retail stores provide valuable real estate which can be transformed into local pickup centers for online Amazon orders, and addresses the logistics problem of the last mile of delivery, requiring food deliveries to be quick and fresh, that has always plagued online grocery businesses. The Whole Foods 365 private label brand could be every bit as valuable. Amazon has experienced significant degrees of success (and market share) with Amazon private label batteries, baby wipes, and several food offerings available to Amazon Prime members. It is not a far stretch to imagine a time when Amazon offers the 365 brand to prime members which has the potential to control a significant percentage of market share in food, based upon Amazon’s past success in private label. The enhancement of Amazon’s omni-channel retailing capabilities with new local customer pickup centers, flexible last mile of delivery, and highly-coveted private label brands will be a force to be reckoned with in just about every type and format of retailing.