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Amazon & Whole Foods
Acquiring Whole Foods will immediately allow Amazon to quickly expand the AmazonFresh Pickup concept. Customers will order groceries online probably from an expanded cross marketing branded website and will be given the options to pick-up their order at the nearest Whole Foods or Amazon run-store versus having it delivered by various expedited choices. Whole Foods employees will be trained to prepare the on-line orders in less than 15 minutes and to bring them to the patron's car.
The acquisition definitely has a short- and a long-term timeline. For the short-term the above mentioned remarks are all to be expected and valid. Like with every acquisition business are looking into synergies and combining assets and services.
The warehouse of Whole Foods will be an asset for Amazon and vice versa. Logistical optimizations will take place and stores will indeed be used as pick-up points for Amazon services.
It really becomes interesting to think of longer term opportunties. A very likely opportunity is to combine customer loyalty cards and to integrate benefits for Amazon and Whole Foods customers through the line. Wouldn't it be great to get benefits as a loyal grocery customer in other categories, like the media and broad-casting business of Amazon?
The Food Services of Amazon might be extended to Whole Foods by creating a layered approach. We are always thinking that consumers at Whole Foods are going there to fulfill their full shopper basket. More likely is that it's one of the supermarkets that consumers have in their repertoire. By offering more options (price lines) it could well be that Amazon can drastically expand its share in Retail both in the online and offline space. This cross-fertilization across price-lines would be a smart move as long as it is communicated transparently to consumers, without affecting the essence of the Whole Foods brand.
Ultimately, consumers are efficiency-driven. The combination of more complete stores with home delivery with loyalty programs in the food-retail but also other Amazon spaces will make this acquisition more powerful and could change the way people look towards shopping and brands.
Has anybody been to any of the physical Amazon stores yet? Their bookstores? While they have books on the shelves, it seems like they are going to create a new experience. While I am certain they are going to use Whole Foods to launch their grocery delivery services and same day delivery, I am really excited to see how they can use technology and the Internet to continue to improve the experience inside of the actual store.
I agree with the innovation, but the lack of innovation within the industry as a whole, will be disruptive. How do you expect the others to keep up as Amazon innovates? The ability to increase deliveries and ready meals will improve significantly. Will they also begin implemeting the Amazon Go option and then the related payments. All very interesting to watch unfold.
We shouldn't over think this acquistion. Amazon has always forced its competitive advantages when leveraging busineeses it wants to dominate: targeting the widest market; lower prices; aggressive sourcing; headcount reduction; constantly lowering expenses;speed-to-market; pushing down risk to its manufacturers; convenience; customer centric; direct to consumer; wide and shallow assortments; all things to all people; efficiencies through cutting edge technologies; verticality,... How they specifically employ these strategies to integrate Whole Foods into the Amazon concept is the debate which with time we will see. The panel should examine how each component of the Amazon concept in combination with Whole Foods will best disrupt the retail grocery sector and especially WalMart, Target, Kroger, Sprouts, Trader Joes... as indicated by the drop in share prices of these retailers on Friday.
I think amazon will spend time to better learn the intracacies of brick and mortar retail. They are great students which enables them to innovate more successfully.
I also expect that they will integrate their predictive software and expertise into whole foods marketing. while many retailers are increasing capabilities in this space they lag what d2c does.
They will change little and learn, add their retail outlets as drop ship/pick-up points and then implement a local delivery business. Overall, this will serve as a blueprint for them to implement "retail as a service" as an extension of AWS offerings. Lots of logistics, tracking and analytics to be developed. In parallel they will work on tracking customers via IoT devices...this will be the largest "innovation" (IBM has been in this space for 20+ years), how to blend a brick customer with their digital identitiy.
All makes sense for sure. What about the checkout and payments? I would imagine their new concepts will go far. Then, any thoughts of the footprint? If they are fulfilling orders, do they need to make the stores smaller or keep the same size and then just fulfill the same day deliveries?
Regardless they can do a lot with this concept to advance what they have been already doing.
Supply Chain Optimization, including the Fulfillment side. They have put $13B to work now and they will focus first on improving the cost model of Whole Foods. They will be able to apply their reach and technology (like Amazon Go) to lower the cost of goods to the stores. Some of this savings will go to margin expansion and some to lowering prices and moving the brand away from the "Whole Paycheck" perception. On the fulfillment side, they will bring Amazon Prime Now / Same Day Delivery to Whole Foods along with pickup, etc.
Perhaps disrupting the grocery store is the the No. 1 reason for the acquisition. With hundreds of retail stores already in place, it speeds up Amazon's plan to have physical stores in order to showcase its new electric/IoT gadgets for consumers to test out before purchase. Amazon will continue its efforts to deploy IoT in stores to integrate online and offline tracking of purchase journeys
Amazon will create massive leverage with the aquisition of Whole Foods. With the innate ability to map conusmer prfile, usage and requirements online, Amazon will bring this to Brick and Mortar Retail. It will also leverage the logistics, JIT, Drop Shipment abilities developed in online retail and bring them to Offline Retail therby improving efficeincies, Delivery and margins.
I see more Offline aquisitions by Amazon in the near future. One of them is likely to be Supermarket chains that will now leverage the Online abilities into Offline Retail
The whole food supermarket business has been disruptive since Walmart started and killed the mom and pop food chainsThe Sams Club Costco all were part if the disruption
There is nothing new about the continued disruption but rather continuance of new innovations due to environmental consumer lifestyles
The comments on how Amazon is disrupting is not historic but another stage in the industry
Amazin has cash and believe to buy a food company to align with their strategies so are others changing too
We all know if a company sleeps for a minute they can slide quickly
Amazon like others have seem opportunities like others and taken action
Thats it-lets not over analyse this
It will be interesting to see, over time, how the products carried by Whole Foods change due to the demands of Amazon buyers. Will prices for current products be reduced? Will the perception of "Whole Paycheck" be diminished? Will Amazon add traditonal grocery products that don't fit the current Whole Foods buying criteria be added to meet consumers' needs and wants? I predict "yes" to all these. Great for the consumer who wants locally sourced food stuffs delivered to their homes and businesses. Bad for the Whole Foods brand. Awesome for the Amazon brand. ~Mo
I think that in near future the best, most profitable businesses will be related to the organic, healthy food - farms, shops, catering, restaurants, cooking schools, etc.
Junk food will be a past. People are more educated and try to live in a healthier way.
This is the background of Amazon decision. They have a huge analytics system, they know what people search and which products online are most required in each part of globe. They also know their competitors like Walmart, Costco ( which sells products via Amazon too) or Walgreens.
They know that food ecommerce will grow but it won't replace offline shops with a food you can see, touch and choose what you like. This is the reason they bought it I believe. They want to understand this business, this experience and maybe as a next step they will buy farms like B.Js did to simply beat the competition. They have money to invest.
If I had such money, I will only invest in eco-farms and healthy food/suplements.
I don't think that they will decrease prices or change Whole foods chain into something else, maybe they allow pickup service only.
This news is almost passe now that we hear today that WALMART and GOOGLE are joining up to combat AMAZON
Now that is interesting and audio shopping
is now the hot news
it will be interesting to see where TARGET has acquired GRAND JUNCTION for the responsive deliveries
The fight is on!!!
Majority of shoppers: This won't impact the largest segment of shoppers because they do not have the cash flow to order more than a day or two in advance and they focus on price discount.
High-end shoppers: It will impact how high-end consumers, where the profitability lies, engage with grocery.
Social impacts: It may sharpen the technology divide between top 20% and lower 50% and urban vs. rural shoppers. The upper 20% will learn more and more about they can use technology to their own advantage.
Privacy: Also, I would expect that privacy will be a growing issue, especially for the top 20%, whose data will be very useful for marketing and extracting more money. The tension between convenience and consumer privacy will continue to grow. When it starts to impact your credit rating (and hence your also access to jobs), consumers will start to scream but it might be too late.
One question is: Will Amazon (though Whole Foods) insert themselves into the Wholesale Food distribution channels for not only packaged goods such as ketchup and Salt but also inclusion of fresh foods to restaurants and other end use points. Many wholesale food distribution companies have attempted with varying success to include fresh foods on delivery vehicles already slated to deliver cooking oil and other packaged foods. It does not matter if you are Burger King or the mom and pop restaurant up the street. Everyone is looking to carry JIT foods and lower inventory that is being carried. If fresh foods could also be included in the is concept the reduction of spoilage would go down and profits up.