Internet is bombarded with news and views on Amazon acquisition of Whole Food in past few days. This encouraged me to try my point of view about the deal. Since I am no retail expert, I will try not to speculate much on technicalities of the deal. A deal is a deal and in economic spirit, I would believe that an ambitious company with solid investment strategy did what is best for Amazon’s vision!
If you read once again the Wikipedia version of the history of Amazon, it will never surprise you that why Jeff Bezos stuck this deal. And it says, “Bezos selected the name Amazon by looking through the dictionary and settled on “Amazon” because it was a place that was “exotic and different” just as he envisioned for his Internet enterprise; the Amazon river, he noted was by far the “biggest” river in the world and he planned to make his store the biggest in the world.”
So simply put Jeff wants more distribution center for exotic products (also). Also, let’s not forget Amazon Go, Amazon fresh, and around 80 million Prime members (captive customers). Amazon wants to be a go-to-company for customer WHAT they want WHEN they want.
To cut short my analysis, here are random pointers (not in particular order) below that makes Amazon a good contender to buy Whole Foods Market:
- Amazon is an internet and technology lead retail company
- AMAZON has the best and big IT infrastructure
- Amazon owns cloud infrastructure and perhaps leader in that space
- Amazon has machine learning + IoT strategy in place which would know future consumer retail behavior. Based on the existing data and future data positioning and targeting would be done.
- Also, Amazon launched Amazon go few months ago. Makes sense as Amazon plans to open stores (Amazon Go). So, Whole Food cater to the strategy of physical stores (460 stores worldwide) which Amazon now could rebrand them as Amazon Go ready stores. The idea is not brand but the operation of the retail brand. With this deal Amazon pockets distribution network including cold storages and warehouses. Operational cost is the key to run successful retail business. With all technology infrastructure and now huge distribution center under your command Amazon well in position to unleash its Amazon Go and Amazon Fresh strategy
- Very important – Amazon always follows company’s Mission statement. Amazon being a customer-obsessed culture company, it is not surprising why Amazon not come close to value chain when operating in retail industry (yet outsourcing resources or acquiring it at right time at right market)
- Also remember the 2016 Letter to stakeholders by Jeff. He maintains the importance of staying in Day 1. It’s all about right investment and long term …
Please Note- my analysis might be wrong, but who cares. It is same as when major IT consultancy companies predicted desktop would vanish and tablet would eat the laptop market share by 2012. And we know now that Apple just released the most advanced Apple workstation the iMac Pro this month. Thus, I am safe 😊
Finally, a picture below