Amazon’s planned Acquisition of Whole Foods Set to Upend Retailing

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Amazon’s move to acquire Whole Foods is set to revolutionize retailing

Amazon has agreed to acquire retailer Whole Foods for $13.7B. The acquisition would allow the current CEO of Whole Foods, John Mackey to continue to operate the business. The acquisition is expected to be completed by the end of this year with Amazon’s key services being integrated into the Whole Foods ecosystem.

Amazon is aiming at increasing its grocery reach to 400+ stores nationwide by the end 2017 as Whole Foods stores would soon become distribution centers for Prime Now and Amazon Fresh.

The acquisition will also increase Amazon’s selection of healthy and organic food for their online marketplace. This will also encourage their 80+ million members to buy from Whole Foods, strengthening both businesses in the long term.

“For starters, this acquisition promises to shake up pricing, the ecommerce space, the trajectory of retail automation in the United States, and the already considerable competitive pressures faced by existing food retailers. When it comes to making bold moves aimed at disruption, Amazon never disappoints,” said Todd Maute, a Partner at CBX,  the New York-based brand agency and retail environments consultancy.

Amazon, Maute noted, has already dipped its toe into brick-and-mortar retailing with the likes of its Amazon Books bookstores and ongoing experiments with small-format grocery stores. Snapping up Whole Foods, however, marks its most serious commitment to date.

In addition, the holy grail of voice-assisted ordering through the likes of Amazon Echo or Google Home is to be in the customer’s kitchen, Maute noted. “Now Amazon can give its Prime Customers a lot of new options. They could get discounts on popular Whole Foods products just by saying ‘Alexa, order me some more Whole Foods 365 peanut butter, organic, creamy.’ It’s a potentially big step forward in this fast-growing space,” he said.

Whole Foods’ brick-and-mortar real estate, moreover, could potentially be of use to Amazon as it seeks to grow its distribution capabilities, Maute added. “This is real estate that could be used for pickups, returns, warehousing, you name it. And think about this: the Amazon Go test store uses sensors, cameras and machine intelligence to eliminate cashiers and checkout lines. Now Amazon has a national brick-and-mortar footprint with which to rollout this game-changing technology. It’s still speculation, of course, but this acquisition could be a big first step toward the automation of U.S. retailing.”

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