Amazon Works Deal To Buy Whole Foods
The Business Giant Works to Get Bigger
Amazon is working a deal to buy Whole Foods for 13.7 billion dollars. Amazon is a 23 year-old company working to be a giant in every field of business.
Its latest venture is to grab an even bigger share of the food industry. Amazon is working to claw its way into a larger portion of the grocery industry space.
The Walmart and Sam’s Club combination dominates the grocery space. The combination has and estimated 2017 sales of $228 billion and 18% of the market.
Kroger $83 billion – 7%, Costco $51 billion – 4%, Albertsons/Safeway $50 billion – 4%, and now Amazon and Whole Foods $45 billion – 4% follow Walmart/Sam’s Club. (Data from Cowen and Company)
Amazon started as an online store that offered customers the convenience of shopping from home. Amazon is expanding its physical locations across the U.S. to quicken the delivery time of its of products.
Acquiring Whole Foods adds 460 physical locations across the U.S. to Amazon’s impressive online presence.
The deal strengthens Whole Foods whose share prices have declined due to the stranglehold of Walmart, Costco, and Safeway. Amazon’s competition have been increasing their supply of organic foods.
This threatens Whole Foods major lure and selling point, which is its fresh organic foods.
Even with the acquisition of Whole Foods, Amazon will still have much less influence than Walmart-Sam’s Club duo.
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Merger Concerns
On paper this looks like a good merger for both companies. Amazon’s acquisition of Whole Foods takes pressure of Whole Foods in competing with Walmart. The acquisition also helps to cut out a larger part of the grocery industry for Amazon.
Some are concerned what this will mean for people’s jobs at Whole Foods because of Amazon’s business model. Amazon is at the forefront of developing automated services with its Amazon Go Technology.
The Amazon Go technology is a concern because it could possibly eliminate cashiers jobs of their non-unionized workers.
