Amazon purchased Whole Foods for a total of 13.7 billion dollars on June 16. This acquisition represents a huge step in Amazon’s new approach at creating a grocery empire. Amazon has been trying to kick start their online grocery business for almost a decade but so far have not had much success.
This acquisition of Whole Foods signifies Amazon’s first major step in expanding its grocery sales into the physical world. Amazon has run a few physical stores and has projects such as Amazon Fresh and Amazon Go, but with this purchase of Whole Foods, Amazon gained 460 physical stores, thus taking their physical presence to a whole new level.
This deal with Amazon could be a lifeline for Whole Foods. Recently, they have been struggling with the competition of stores like Costco and Walmart, who have lower prices than Whole Foods, which has been coined “Whole Paycheck” due to their high prices for groceries.
Whole Foods’ stock price has been falling, and as a result, activist investors have been pressuring Whole Foods. This deal can be a way to fend off these investors and provide new ideas and resources to help grow the grocery business even further. Furthermore, Amazon is an extremely successful entity unto itself, and that can introduce innovative and new ideas to the mix.
In the aftermath of this transaction, many regular customers and employees of Whole Foods have been wondering what this means for them. Amazon and Whole Foods have not released information on the changes and plans that are no doubt being made, but there are many people that infer, based on the nature of Amazon, the changes that may take place.Amazon has recently tested two stores called Amazon Fresh and Amazon Go in Seattle. These two stores made shopping totally automated, eliminating the role of cashier from the process of grocery shopping altogether. Instead, every item a customer placed in their cart was automatically added to the cost of their purchase, and when the customer left, the total amount was added up and paid.
Employees of Whole Foods have been worried for their jobs as a result of these projects in Seattle, not to mention that Amazon has almost completely eliminated human jobs from their online business. Although Amazon has said that they have no plans of introducing that kind of system into Whole Foods, there is still the lingering worry that employees could be replaced by a machine. Wesleyan senior Alex Bone supported this general mood directed towards Amazon when he commented, “I’m kind of wary of these conglomerates in general.”
Regular customers of Whole Foods have been wondering how this deal affects the grocery store they have grown to love over the years, and what changes Amazon might make. AP Economics teacher Franklin Pridgen says, “I think [this acquisition] will give more people exposure to the Whole Foods product.” Amazon’s motto has always been speed and efficiency, and there’s no doubt that Amazon will try and carry this motto over to Whole Foods. When asked about what he thought Amazon would change about Whole Foods, Pridgen said, “I would guess the speed at which [Whole Foods] does business.”
This acquisition signifies a huge step forward for Amazon, and if all goes right, Whole Foods as well. Without a doubt, the transaction between Whole Foods and Amazon will be cause for some interesting times down the road.
