Perks from Amazon Purchase of Whole Foods
- Author: Darren Santiago Aug 29, 2017,
Aug 29, 2017, 0:30
They will more aggressively highlight special services, like personal shoppers, meal-planning help and offer in-store cooking demonstrations and wine tastings to lure shoppers into stores and away from ordering groceries online. The $13.7 billion deal - by far Amazon's biggest acquisition - marks the company's most significant move into both the $800 billion USA grocery market and brick-and-mortar stores. Amazon will pay $42 per Whole Foods share, an 18 percent premium from its price the day before the tie-up was announced June 16.
Everyone knows that Amazon is the biggest online retailer.
"We're growing something good", said a large sign at the entrance with Amazon and Whole Foods logos.
"The (profit) margins at Whole Foods probably were too high", said Jeff Roster, vice president of retail strategy at the IHL Group, a research and advisory firm based in Franklin, Tenn. We expect more of the same with Whole Foods.
Amazon's website also reflects the discounts on the devices, along with a discount for the Amazon Tap.
Given the prime store location of Whole Foods has established, Amazon now has an entry into the $800 billion grocery business in the United States.
There is room for expansion, as well.
The e-commerce giant celebrated the close of its Whole Foods acquisition with an Amazon Echo display inside the high-end grocery stores and price cuts on produce of as much as 43 percent. John Mackey will remain as CEO and Whole Foods Market's headquarters will stay in Austin, Texas.
"We will lower prices without compromising Whole Foods Market's long-held commitment to the highest standards", he said in a statement. "It could open the doors for any medium-size city in the country".
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Whole Foods Markets healthy and high-quality private label productsincluding 365 Everyday Value, Whole Foods Market, Whole Paws and Whole Catchwill be available through Amazon.com, AmazonFresh, Prime Pantry and Prime Now.
Amazon has chosen Whole Foods to be their partner, and quality seems to be the main thing Whole Foods is known for. "Amazon has never operated a brick-and-mortar presence at this scale".
"All the signs in the store are saying, 'Look what Amazon's doing for you, '" said Stephen Beck, who owns a management consulting firm in NY.
On top of that, Amazon has already an worldwide name for itself.
Amazon also benefits from this expansion. Is it for the convenience of being able to use Whole Foods as a distribution point for Amazon orders?
Rival grocers, instead, may skip price and make moves that pointedly separate themselves from Amazon's Whole Foods.
For now, WalMart, Kroger and a handful of other supermarket companies still dominate the market. Even the Amazon Echo, a voice-activated electronic assistant, was being sold for $99.99.
"I do all my grocery shopping here", she said.
"What's you're going to see now is grocery chains start to commit more locally", said Beitelspacher.