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OFF-TOPIC Amazon purchased Whole Foods for $13.7 Billion

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Scot

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Story is here Amazon is buying Whole Foods for $13.7 billion

Amazon has been trying to get into the grocery sector for a while with Amazon Fresh. Now they've definitely taken a huge leap ahead by acquiring Whole Foods.

Supposedly, Whole Foods will continue to operate business as usual under the and brand and same stores.

I think this is an interesting move for two reasons.

Amazon who has been dominating ecommerce and putting many B&M out of business, is now making a huge investment into B&M.

Amazon has wanted to get into grocery for a while. I think they'll start to use Whole Foods as part of their logistics chain to make that a reality. Was the purchase made for the brand or for its infrastructure?
 

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MidwestLandlord

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Since Whole Foods is known for having an exceptionally well run distribution system in place, I would guess it's for the infrastructure.

Why start from scratch when you can buy it already made and running well?

$13.7 billion to buy a process.

I wonder how Whole Foods' customers (vegans, vegetarians, higher income health conscious consumers) will react to Amazon owning it?
 

Thoelk

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Story is here Amazon is buying Whole Foods for $13.7 billion

Amazon has been trying to get into the grocery sector for a while with Amazon Fresh. Now they've definitely taken a huge leap ahead by acquiring Whole Foods.

Supposedly, Whole Foods will continue to operate business as usual under the and brand and same stores.

I think this is an interesting move for two reasons.

Amazon who has been dominating ecommerce and putting many B&M out of business, is now making a huge investment into B&M.

Amazon has wanted to get into grocery for a while. I think they'll start to use Whole Foods as part of their logistics chain to make that a reality. Was the purchase made for the brand or for its infrastructure?
What a brilliant move.. My guess is it's for the infrastructure. And it makes perfect sense.. People are used to the brand. This is huge.. Even the Europeanen retailers took a big hit with this one... As if the sector wasn't competitive enough, this mammoth has entered the arena..

All the horror-stories aside, Bezos walks his talks.. thanks for the article! It's funny, here in Belgian the focus is on the AHold's shares taking a hit, instead of focussing on Amazon itself.
 

MidwestLandlord

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Whole foods customer- "OH NO WHAT WILL HAPPEN TO OUR ASPARAGUS INFUSED WATER!"
Not to be political here, but yeah, some of Whole Foods' customers are on the "socially liberal, anti-big business" side of the spectrum, and I expect there will be some backlash.
 
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Scot

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This news is pummelling Grocery stocks in both US and Canada. Amazon is clearly viewed as a disrupter in the grocery space just as they were in the GM space.
It's really interesting seeing how the sector is freaking out now.

Being a food entrepreneur, it'll be interesting to see how this effects the consumer packaged goods space. Whole foods is typically the first major retailer new startups try to get into, as they're typically very easy to work with.

It would also be interesting to see how food brands will interact with the Whole Foods/Amazon partnership.
 

becks22

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I heard rumbles of this happening in April..

Having Amazon own Whole Foods is probably another way to try to get ahead with Wal-Mart who has had one of the best supply chains and logistics in the industry
 

MidwestLandlord

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Plus,

Whole Foods is directed at the future of grocery, which is more health conscious.

The big boys (Walmart, Kroger, Cerberus) have a hard time competing in this space.

It works well with the "Amazon Fresh" brand.

Gives him a presence in both the US and Europe.

Bezos is a genius.
 

cmor16

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I have a feeling I'm going to have a shit load of work coming my way once upper management at my Co. figures out what to make of this. :shit::thumbsdown:
 

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JAJT

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Not to be political here, but yeah, some of Whole Foods' customers are on the "socially liberal, anti-big business" side of the spectrum, and I expect there will be some backlash.
Speaking theoretically - does Amazon care?

If Amazon's goal is to turn Whole Foods into the mass market giant it likes to be in everything, wouldn't pissing off Whole Food's core customer base in favor of accessing the rest of the market be a pretty solid trade-off?

Most companies couldn't pull of that kind of brazen dismissive attitude but assuming Amazon has a mass market strategy for this brand, I don't see why they'd care what the small % of anti-business folks think. Especially since the majority of them will CONTINUE to buy there regardless of ownership, even if they don't "like it".
 

cmor16

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If Amazon's goal is to turn Whole Foods into the mass market giant it likes to be in everything, wouldn't pissing off Whole Food's core customer base in favor of accessing the rest of the market be a pretty solid trade-off?
Yes! I work for a major Canadian grocer and though we pretend to care about our loyal customers, most of our strategies are directed at the masses.
 

Thoelk

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Plus,

Whole Foods is directed at the future of grocery, which is more health conscious.

The big boys (Walmart, Kroger, Cerberus) have a hard time competing in this space.

It works well with the "Amazon Fresh" brand.

Gives him a presence in both the US and Europe.

Bezos is a genius.
Exactly... This is huge! Im wondering how this will impact our local retailers here in West-Europe. We have a Benelux Amazon alternative.. They are actually part of the Ahold group as well..
 

Vigilante

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Not to be political here, but yeah, some of Whole Foods' customers are on the "socially liberal, anti-big business" side of the spectrum, and I expect there will be some backlash.
Bezos is an anti-Trump lib. The libs will like this.
 

G-Man

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This has been in the works for a while. Personally, I think it's for the brand and B&M outlets. Amazon is already head and shoulders ahead of everyone else supply chain wise. I don't think Whole Foods customers will be super sensitive to this. Whole Foods straight up price gouges (literally in court in state of NY for it), and their stores are still full.

Here's the lay of the land:
  • There are essentialy 4 major grocery chains that dominate the market, and eventually they will be the only four left. (Safeway/Albertsons banners, Ahold Delhaize banners, Publix, and Kroger banners)
  • These retailers use 3rd party distributors for all but the biggest vendors (think Pepsi), primarily 2: KeHe and C&S.
  • These distributors gouge vendors, and simply doing sort/seg and consolidation sometimes takes them a couple weeks to get product on the shelves.
  • Amazon, on the other hand, has the ability to put a single item in the hands of a single consumer, the same day the order is placed.
2 things are going to happen, amazon will consolidate the supply chain with it's existing supply chain and literally cut out all the middle men. They'll be able to sell an item and the same price point Kroger does and make an extra 20% margin. They might undercut, but I suspect they'll simply start buying out smaller chains and re-branding. They'll probably come up with a semi-upscale banner that's not Whole Foods, but nicer than Kroger. Safeway has had a lot of success with this. My guess is they'll start sticking it in Safeway Albertson's and move their way West to East. By the time they get to New Jersey and Florida in 5-10 years Ahold and Publix will still be there, but the market share game will be totally over.
 

Invictus

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Not to be political here, but yeah, some of Whole Foods' customers are on the "socially liberal, anti-big business" side of the spectrum, and I expect there will be some backlash.
It'll likely be negligible. Most of them (generalizing here, of course) are more selective about big businesses and prefer smaller ones, but their outrage tends to be more focused at entrenched monoliths like Walmart.

Amazon also has a good reputation amongst them. Sure, there might be grumblings and stuff, but they still use Amazon and its many services. You just can't beat two day shipping.
 

Raoul Duke

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Not to be political here, but yeah, some of Whole Foods' customers are on the "socially liberal, anti-big business" side of the spectrum, and I expect there will be some backlash.

The spectacle of inclusion is good for business.
 

G-Man

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It'll likely be negligible. Most of them (generalizing here, of course) are more selective about big businesses and prefer smaller ones, but their outrage tends to be more focused at entrenched monoliths like Walmart.
It's really more about style than substance. Being a billionaire is fine as long as you're a turtleneck wearing Buddhist vegetarian. muh marketing.
 

JAJT

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Realistically there's no pleasing those folks anyway.

They have the "rebel without a cause" personality going on so they just latch on to whatever the outrage du jour is.

And given that the only thing they "do" about anything is complain online before moving onto the next thing, I don't expect much of a problem.
 

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MJ DeMarco

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And I'm short COST and AMZN options. COST is taking a big beating.

As for the deal, at what point does Amazon get an anti-trust looksie? They're getting too big, and too dominant.

Not to mention, Bezos owns the Washington Compost.
 
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at what point does Amazon get an anti-trust looksie?
Can't imagine it happening. It'd be hard to prove intent to hurt consumers when they can argue pro-consumer justification for every acquisition. A quick nod to their past stock performance, razor-thin margins and aggressive pricing would back it up.

Bezos is smart - he'd argue that subversive "network effects" are industry innovation, that antitrust would set a dangerous precedent, and that the properties are too fragmented to be a monopoly. Consumers won't ask for it because of the reputation. Rivals would - but co.s like Walmart wouldn't touch it because it would end in a slap on the wrist settlement that might actually give Amz real antitrust immunity.

And so the story goes, to echo @G-Man, marketing is perception and perception is reality for most people.
 

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Is this really going to change anything? Amazon owns Whole Foods, but Whole Foods will still stand. The revenues of Whole Foods goes to the Amazon financial statements and it will help to enhance their Fresh strategy. It will be interesting to see how Whole Foods changes in the coming years. More than likely you'll start seeing the transformation from the Whole Foods name to the Amazon brand once they start figuring out how to integrate their new technologies into the stores.
 

MJ DeMarco

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Did Amazon change the Zappos culture after acquisition? How about their other acquisitions?
 

The-J

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If Amazon's goal is to turn Whole Foods into the mass market giant
It's not already?

Whole Foods is F*cking everywhere. Every city and suburb with an average gross income of over $50k/yr has at least one Whole Foods.

I, for one, would be very interested to see what happens if/when Amazon decides to integrate the Whole Foods network into their existing systems.
 

SquatchMan

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Crazy to think this company was started in a garage in 1994... only 23 years ago.

As for the deal, at what point does Amazon get an anti-trust looksie? They're getting too big, and too dominant.
Amazon has really ramped up their (on the books) lobbying the past two years, so probably never. Bezos must be plotting to take over the world.

Lobbying Spending Database - Amazon.com, 2017 | OpenSecrets

Not to mention, Bezos owns the Washington Compost.
This is the biggest lobbying effort.
 

Owner2Millions

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I definitely think this for infrastructure. Amazon released a video earlier this year about a store with no cashiers and allowing you to pay with your phone. So this instantly gives Amazon huge leverage across the U.S. for grocery retail. I don't shop at whole foods because of the prices. Although I'm extremely health conscious, I wonder how the quality of food will be after Amazon integrates everything into Whole Foods.
 

rrclark

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I definitely think this for infrastructure. Amazon released a video earlier this year about a store with no cashiers and allowing you to pay with your phone. So this instantly gives Amazon huge leverage across the U.S. for grocery retail. I don't shop at whole foods because of the prices. Although I'm extremely health conscious, I wonder how the quality of food will be after Amazon integrates everything into Whole Foods.
We just got one here where I live and it's a wonderland for a health loving islander but yea those prices keep me away most of the time. I do wonder what this will do to their model but this is pretty wild news.
 

MJ DeMarco

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