Amazon Is Buying Whole Foods!

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Amazon just announced that they will buy Whole Foods for $13.7B.

Clearly Amazon isn’t losing focus on high-end customers by going after EBT and Walmart customers.

Having stores in most major cities will allow Amazon to ramp up fresh grocery deliveries. Offering free 1-2 hour grocery delivery for Prime members will bring the grocery industry into the 21st century.

Maybe we’ll even be able see Amazon fulfillment and return kiosks in Whole Foods stores?

What do you think is Amazon’s rationale behind the Whole Foods purchase?

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36 Comments on "Amazon Is Buying Whole Foods!"

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Davidmal

Amazon is not about profit they are about market coverage. Somehow they see this as a way to expand their market. (Amazon Fresh?)

Malki

Great. Now you’ll need prime to buy coconut ice cream.

Iris

While the companies are great individually, when combined, it’s a very frightening consolidation of market share and power. Unfortunately the current administration will likely allow this to happen.

The Tech Rabbi

It’s expensive to build a fresh produce chain to function on par with the rest of Amazons success. Amazon fresh and pantry didn’t seem to pick up to speed in the same way as the rest of their system. So buy a high quality and well reputed produce chain instead.

Next?

Will Walmart buy Trader Joes?

Mike

Very simple Amazon needs more businesses that actually make a profit. Whole Foods caters to people who are willing to overpay. The only difference between organic and regular products is the profit margin.

Zev

This deal coincides with the opening of Aldi stores throughout the U.S. Aldi is a super discount supermarket chain from Germany that can put the Amazon grocery department out of business. Bezos bought Whole Foods to prevent that from happening. The consumer wins here.

rangersin4

Rationale for paying 27% premium on stock price is to avoid paying taxes while also buying a platform for their cashier-less store concept.

A. Friend

Amazon has been beta testing grocery stores in Seattle with impressive technology called Amazon Go. https://www.amazon.com/b?node=16008589011

Essentially the store tracks what you put in your physical cart and charges you for it when you leave the store, removing the need for any checkout process. Could be looking to roll this out in Whole Foods as a competitive advantage, but might have just been easier to license the technology.

Pd

I think it’s because they want to use whole foods to launch their automated stores that you can pay for items using your phone and no cash registers needed.

AJ

IMO, Amazon was looking to buy a chain that has locations all over just to have a footprint over the entire US. In the long run they’re planning on using all these locations for double duty. 1. They’ll use it for Amazon Fresh, and 2. They’ll use it as a warehouse and pickup location to compete with Walmart’s pickup discount.

David

My first reaction: it doesn’t make any sense. I’m sceptical, because we were thought that the whole genius of Amazon is that they don’t have retail overhead. And now, they go right back in there. But maybe there is a bigger picture we don’t know yet

YG

Any tech company that is only powerful because of its non-physical properties (software, etc.) has a greater probability of being ousted by a leaner faster startup. Amazon is solidifying its lead on top of its distribution network with physical locations that they may make into micro distribution centers. A genius move by bezos IMHO.

Hey Walmart

It’s game on for grocery

Nun

I read the comments here about Amzn avoiding brick and mortar in the past.

Amazon will think of these stores as distribution centers which just happen to also sell retail food.

Is this Bezos' form of Charity??

From analyst yesterday:
“Amazon thinks their only way to becoming a trillion dollar company is by going into groceries”
The statement was as a negative comment that groceries is gonna be Amazon’s Achilles heel.
But this is what bezos wants a true head to head and destroy wall Mart

Sam

Walmart just bought high end mens clothing company bonobos for 310 million

spender

The section of Whole Foods that sells the really good cuts of meat will now be known as Amazon Prime.

Jet vs Whole Foods

Walmart paid $3 billion for Jet, a failing company with zero history. $12 billion for Whole Foods may not be the right price, but it’s definitely a better value

Dude

To become a monsterous monopoly, destroy all competition, so Jeff bezis can fund his space ship to Mars and laugh about income inequality.

4yourinfo

@Zev: actually Aldi has been around for a while I think you’re mixing it up with a chain store called Lidl…But this is getting scary Amazon to control the entire retail industry…As good of a move as it was for Amazon probably even better for whole foods as they were struggling for the past while I think high end grocery stores is a fad that catches up to your wallet

Yossi

Fun Fact-The managing partner of Jana, the company that seemingly used their stake in Whole Foods to bring about this sale, has a Jewish managing partner.

David

I wonder if this means now that all states with a Whole Foods will have to pay sales tax when buying from Amazon?

Anonymous

@David:
Amazon already pays sales tax in most states as they have distribution centers there

walmart war

this actually makes tons of sense for anyone following the walmart-amazon war b/c the major advantage that walmart had was in regard to shipping fresh produce as mark lore said in his interview on bloomberg.com and his newest idea to have walmart employees deliver the last 10 most expensive miles

ddfan

Amazon taking over the world!. Wonder what Amazon stock is gonna look like a couple years from now, its currently $993/share. I don’t shop at Whole foods because theyre outrageously and unnecessarily expensive, hopefully Amazon taking over relieves the price gouging. Brick and mortar will never go away, especially in this instant gratification era. But i do foresee Walmart closing down stores within a decade.

Dan's the Man

I think this is end up being a very decision for Amazon. Amazon won’t be able to compete with the likes of Aldi and Lidl in the grocery business. Whole Foods was a great business idea when they first started but now you can get much cheaper similar products for 90% of what Whole Foods sells at Walmart, Trader Joe’s, and Aldi.

I know Jeff is a smart guy so if can somehow make this into a good business decision that would be great but I don’t think it will happen.

Dan's the Man

@Jet vs Whole Foods: You don’t understand business that well. Walmart buying Jet.com aslo got there CEO and he may be what makes Walmart finally take on Amazon on online sales. For now the consumer is winning through great competition. I think Walmart.com is serious online threat for Amazon as amazon has transformed into being about convenience and good customer experience instead of being about a good value. Their non-sale prices are not good anymore. The question will be how many Prime customers will continue just clicking and buying without realizing prices are high. I recently did not renew my Prime. Amazon offers free shipping for $25 in spend now. Walmart offers free shipping for $35 in spend or free in-store pickup. I really don’t need Prime anymore. My kids get enough kids tv shows through free channels on Roku and I don’t watch TV so I don’t need Prime.

yankel

@Jet vs Whole Foods: WFM has been performing poorly for quite some time. stock has been sliding downwards for years… was $100 bucks and yesterday closed under $30. margins shrinking.

Civility

@Dan’s the Man: Really man, that’s kind of a nasty comment. The point made was actually a good one (to the degree it’s true) and your point is a rather weak rebuttal on its own. Paying $3 billon for a CEO is a bit much if the investment didn’t otherwise make sense. I’m sure he would have been happy to move over for a wee bit less than that paid to him directly 😉

Blitz trop

guys, is a matter of time before our whole life is gonna come through Amazon! we shop, read, listen, and watch already and with time were gonna get our coffee, phone service, internet and EVERYTHING else on Amazon. Not before long when a baby is born he’s gonna get registered on Amazon!!

Chaim

My opinion, first it’s a great thing for amazon because till now a lot of companies wouldn’t sell to amazon (grocery companies for sure) because they kill the market , so now the can get whichever food company the want, and sell it on amazon too, not through 3rd party sellers.
And second the distribution whole foods has takes a lot of years to do yourself.

So my opinion both gained a lot of this deal.
And consumers gained too.
But amazon sellers especially in the food market are going to loose.

sammy

Aldi is in the united states since 1976.
(on a side note, before you buy there,know that there are clear ties from the original founder’s with the nazi party.)

Jensays

What it means to our family is that we shouldn’t have ditched our stagnant Whole Foods stock when we did. This will give Amazon a good stake in a high end (i.e. Overpriced) brick and mortar store while Walmart ‘s target market is the other end of the spectrum.

Joe

@sammy:

I assumed that everyone that shops at Aldi must be a Nazi sympathizer…..Give me a break Sammy.

Patty

I do a ton of online shopping – and almost never on Amazon (except for Kindle books). They are just generally not very price competitive. I also rarely shop Whole Foods for the same reason. Maybe I’m a dying breed.

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