With the purchase of Whole Foods, what will Amazon do with the more than 400 local retail grocery stores?

One possibility  for the Seattle-based company is the increase in same-day deliveries, which would help expand AmazonFresh, or create “Amazon Stores” within larger markets.  The possibilities are quite interesting to think about.

The e-commerce giant announced it was buying Austin, Texas-based Whole Foods for roughly $13.7 billion in cash on June 16, and is the Amazon’s biggest acquisition to date by far.  The deal will reach its peak later this year.

Even after the purchase, the Whole Foods brand will remain the way it is, its headquarters will stay in Austin.  The company was founded in 1980, and since then, became a leader in the premium grocery segment.  But recently, Whole Foods has had problems growing.

It was reported that Amazon had thought about buying Whole Foods last year, bud decided not to.  Whole Foods was pushed to sell itself by institutional investors due to its stagnant growth.  While logical, the Amazon-Whole Foods combination was a bit unexpected.Because Amazon now owns a lot of real estate in Whole Foods, this could be a bit of a hiccup for the likes of Instacart and Google Express, as they both delivered from Whole Foods.  But with the purchase of Whole Foods, they will probably have to find somewhere else to make their food deliveries.

In 2016, Whole Foods revenue was about $15.7 billion, but the company saw a mere 2 percent revenue growth.  It’s Amazon’s aim to improve the later figure.  But here’s some questions of interest:

  1. What tools/technologies will make their way into the Whole Foods broader customer experience (e.g., Dash Wand, Alexa)?
  2. What will Amazon use the retail locations for beyond groceries?

Since Amazon has tried developing real-world stores, it would be likely that they would try utilizing at least some of the Whole Foods locations for Amazon-related services. Whole Foods was ready to close a selected umber of their 440 stores.  But with Amazon picking up the food store, They could very well experiment with these locations for Amazon Go.  Perhaps even some hybrid retail concept that sells Amazon products?  It’s possible that they could develop an entirely new warehouse concept.

There has been a great deal of discussion about how this acquisition sets up Amazon to more directly compete with Walmart.

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