The company takeover was the subject of rumours for months. They thought that Amazon is now going to dominate the grocery industry like it does the retail industry.
Last week, the investing world was rocked when it was announced that Amazon was buying Whole Foods.
"What this points to is the potential of the e-Commerce grocery channel in the US", said Stewart Samuel, Program Director at food and consumer goods research organization IGD in an interview with Retail TouchPoints. There has been endless speculation by analysts on what the intentions of Jeff Bezos, the founder of Amazon, are if the bid for Whole Foods is successful. While Blue Apron isn't a typical delivery service - it delivers ready-to-cook meal kits instead of groceries from supermarkets -many of the foods it offers are comparable to the natural, organic items from Whole Foods.
Amazon is known for its low, affordable prices and quick, efficient execution. "It suggests that consumer behavior has gone mainstream in terms of buying those types of products online". Since capacity and reliability are always challenges in organic procurement, Amazon is starting from a strong position. In 2014 the company even made a splash in the game streaming market, acquiring video streaming service Twitch for $970 million after out-bidding rival Google.
Alibaba, which has a burgeoning cloud business that competes directly with Amazon, plans to use its trove of consumer data to provide a suite of connected services back to brands whose goods they sell. A growing number of consumers aren't willing to wait in line to give a retailer money. It's available in most Southwest Florida communities.
Essentially, Amazon, Walmart and Costco are doing to the grocery sector what Apple did to the music business nearly 20 years ago. That's when Apple introduced the revolutionary iPods and the iTunes music store for convenient, legal access to music. Few believed people would be willing to pay a dollar per song, but it happened. Therefore, the analyst continues to see more new opportunities for Amazon than its FANG peers and expects continued significant investments to fuel future stock appreciation.
Target. Often thought of in the same big-box category as Walmart, this chain actually is quite different. Are they exaggerating? What are the possible consequences for traditional food retailers?
Beyond a brief statement, Jeffrey P. Bezos, Amazon's c.e.o., has not commented much on his company's plans for Whole Foods. Only time will tell.
As a result of the proposed acquisition, a lot of these assets will likely undergo a major transformation. However, that day is far off as Amazon has to implement those changes. For all intents and purposes, Amazon still considers Canada as a pilot project, but that may change quickly. The Amazon method for books would never have an impact in the food industry, and the limited scope of Prime pantry is an example of that. Canadian food companies are still trying to build their omnichannel, harmonizing the bricks and mortar approach with their virtual, online space. Sysco (SYY) has tumbled more than 5%. The fact that food sales are not the core of Amazon's business is likely keeping Loblaw, Sobeys and Metro up at night.
Amazon's size and reach allow it to beat most competitors on price.
And since millennials have a long-standing relationship with online shopping, such a competitive advantage is key. In 2016 it rolled out its Happy Belly coffee, Mama Bear baby food, and Wickedly Prime snacks.
Whole Foods is now owned by a company that didn't exist 25 years ago. This is a whole new world.
Amazon.com, Inc. (NASDAQ:AMZN) is headed toward the biggest buyout of its existence, but that story may be driving traders to ignore some of the truly important moves at the Seattle firm.
Sylvain Charlebois is senior fellow with the Atlantic Institute for Market Studies, dean of the faculty of management and a professor in the faculty of agriculture at Dalhousie University, and author of Food Safety, Risk Intelligence and Benchmarking, published by Wiley-Blackwell (2017).