Amazon is Buying Whole Foods

E-commerce giant Amazon is buying alternative grocer Whole Foods Market for $13.7 billion. The all-cash transaction is expected to close later this year and is subject to approval by Whole Foods Market's shareholders, regulatory approvals and other customary closing conditions. “This partnership presents an opportunity to maximize value for Whole Foods Market’s shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers,” said John Mackey, Whole Foods Market co-founder and chief executive officer, in a media release.According to Amazon, Whole Foods Market will continue to operate under the same banner, Mackey will remain ceo and the grocer will retain its Austin, TX, headquarters. The deal is a good indication of Amazon's growing interest in grocery and brick-and-mortar stores. It could also give Whole Foods a much-needed shot in the arm amid recent declining same-store sales.Whole Foods operates 440 stores in 42 states and Washington, D.C., and generated about $16 billion in fiscal 2016. Amazon collected $136 billion in sales in 2016.“The marriage of Amazon data and Whole Foods bricks-and-mortar is just the beginning; this marriage can envelop the entire food and CPG business," Joe Robinson, president of Catapult, told the Institute. Danny Silverman, Clavis Insight's chief marketing officer, predicts this deal will be different than Amazon's Zappos acquisition, which it acquired for $1.2 billion in 2009. "In some ways, we see this acquisition working the other way around," he said. "Amazon will use its vast online and recently developed omnichannel experience to expand the appeal of the Whole Foods offering."The deal could also expand Amazon's click-and-collect capabilities, according to Steve Frenda, Institute managing director - community development."Click and collect is being accepted quite widely and in some cases preferable among customers," he said. "I think this will be the beginning of a huge network of pick-up points and it will take costs out of Amazon’s system because it’s not running delivery trucks to individual households. Additionally, the opportunity to have that endless aisle is enhanced." At some college bookstores, for example, Amazon promises same day delivery on 3 million items.

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