Amazon to Buy Whole Foods for $13.4 Billion

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Amazon is defined as the largest American Internet-base retailer in the world. The company rarely has brick and mortar retail stores except grocery drive-through stores, where customers can go to the stores to pick up the products they order. The majority of Amazon’s customer’s shopping behavior is online shopping. However, for foods including fruits, vegetables, and meats, main customers prefer purchasing those items by going to the stores because of shopping experiences. Moreover, according to the data, individuals spend almost 800 billion dollars in annual spending in the United States for the grocery business. Thus, in order to increase the sales and have ability to compete with main competitors, Amazon currently decided to buy Whole Foods for 13.5 billion dollars.

Whole Foods is an organic foods grocery with branding healthy eating and fresh. The grocery chain for the company is more than 460 stores in the United States, Canada, and British, and the sales of last year is 16 billion dollars. After Amazon buys Whole Foods, the company could open physical outputs in hundreds of neighbourhoods across the country. Amazon has established several warehouses, which are closed to customers, so that customers could get orders as little as two hours, and Whole Foods stores can maximally shrink Amazon’s distances to customers. The grocery stores can be used to become the locations for returning orders and delivering orders. Moreover, $99-a-year Prime membership service could be used to give Whole Foods customers a better price for groceries by two-day shipping and other benefits. Amazon can also attract increasing of Whole Foods customers to sign Prime; based on the data from financial firm Cowen & Company in September, the data indicated that Prime had 49 million subscribers in the United States, which occupied about 44% of households across the country.

Walmart, the largest grocery in the United States, is the biggest competitor for Whole Foods. However, Walmart has struggled with increasing sales by online shopping, which Amazon can fix the problem. Brittain Ladd, a strategy and supply chain consultant on Amazon grocery business, said that “Make no mistake, Walmart under no circumstances can lose the grocery wars to Amazon, and if Walmart loses the grocery battle to Amazon, they have no chance of ever dethroning Amazon as the largest e-commerce player in the world.” In other words, the combination between Amazon and Whole Foods is relentless and deadly for Walmart.

Nevertheless, there is a problem appears for Whole Foods, which is cashier-less checkout technology could result job losses at Whole Food stores. Marc Perrone, president of the United Food and Commercial Workers International Union said that “Amazon’s brutal vision for retail is one where automation replaces good jobs, that is the reality today at Amazon, and it will no doubt become the reality at Whole Foods.”

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