Online retail giant Amazon has announced its acquisition of Whole Foods. What are the possible implications?
Amazon.com sent shock waves throughout the grocery industry when it announced plans to buy Whole Foods Market on Friday. With that, bringing major uncertainty to a sector already struggling to keep up with recent growing competition.
The $13.7 billion deal heightens an ongoing tug-o-war between Amazon, the Internet giant, and powerhouse merchants like Walmart, which recently beefed up its online operations with a $3.3 billion purchase of Amazon competitor, Jet.com.
Amazon has long been tossing around the opportunity to get in on the grocery industry an now will lay claim to a fleet of more than 460 stores in the United States, Canada and Britain.
“Every grocer will remember this day as the beginning of a new era, and many are scared.” says veteran supermarket analyst Phil Lempert.
But, what does that mean, exactly?
First off, the obvious. Amazon broadens its scope and potentially becomes the king of an entirely new sector. With an established online presence, Amazon now has its feet firmly planted on physical ground.
This leads to the affect on current brick-and-mortar staples such as Kroger and Wal-Mart. Well known grocery chains should be highly concerned. Just consider how drastically the publishing and retail-book industries were changed by Amazon’s influence. Many ignored the possibilities of Amazon initially, but grew to regret it. Amazon is likely to convert many shoppers from buying groceries in the aisle to purchasing with a few mouse clicks.
With Amazon already offering free 2-day shipping to its Prime subscribers, the possibility of free or flat-rate, same-day delivery is not out of the question at all. It’s definitely something to consider as things sort themselves out.
Going to the grocery store is pretty much the only shopping I still do in person. If there is a trusted, viable way to conduct this transaction without dealing with lines, crying babies and impulse purchases…I’m down.