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Amazon buying Whole Foods for $13.7 billion
19 Junio 2017, 11:13 | Crisanna Felipe
What happens to Instacart in the Amazon-Whole Foods deal?
The growth of online grocery shopping has faced barriers.
Some shoppers worry about the quality of their produce and say they're rather pick their pears themselves.
America's grocery stores are undergoing tremendous change. "Amazon is the master at keeping as much margin as possible".
According to the release, Whole Foods will continue to operate under its own name and Mackey will stay on as CEO of the brand.
Then there's Amazon, the online juggernaut that has turned its gaze to food retailing. When they walk out of the store, the payment is instantaneous; no more waiting to checkout, which is the biggest complaint that consumers have of grocery stores. "That's something that doesn't seem to right to me, actually".
Ryne Misso of the research firm Market Track said a customer who buys fresh fruit regularly at Whole Foods might be offered a deal on blenders and serving bowls.
"With the nationalization of its Prime-only delivery benefit, Amazon will be able to further incentivize its premium loyalty program, Amazon Prime, and bring more people into its ecosystem", Caporaso said.
"Make no mistake, Walmart under no circumstances can lose the grocery wars to Amazon", said Brittain Ladd, a strategy and supply chain consultant who formerly worked with Amazon on its grocery business. Standard and Poor's (S&P) immediately put Amazon.com's credit rating on alert noting that the company would likely have to turn to debt markets to fund the deal. So there's lots of room to grow.
Instacart is the on-demand delivery startup that promises grocery deliveries in as little as one hour. As of the end of 2016, $8.6 billion of Amazon's cash was held by foreign subsidiaries (out of the total $26 billion in cash it had at that time, putting domestic cash at $17.4 billion). But it has been struggling to find a profitable model. However, Whole Foods has only 431 stores against an estimated national total of over 38,441 grocery store locations.
Amazon has been eyeing stores that could allow traditional in-store purchases, online ordering with on-site pickup and home delivery, using the stores' warehouses as distribution points.
Lastly, Whole Foods offer Amazon reliable and robust consumer off-line data for well-off Americans.
"There's no value in Amazon keeping the status quo at Whole Foods".
Shoppers have plenty of options.
Amazon will gain a footprint of 456 supermarket stores in North America and Britain with the acquisition of Whole Foods, boosting its delivery capacity and allowing it to compete directly with United States chains such as Kroger Co and Albertsons LLC. Further, according to Progressive Grocery, total annual sales for food retail are over $668 billion per year.
The Whole Foods purchase "doesn't necessarily mean Amazon will shift it into an online grocer", she said. Wedbush Securities analyst Michael Pachter said Amazon might get customers over those fears if they know the delivered items are the same as those they would find at the local store. The stores will evolve to become more experiential.
"It would absolutely have to come down until it's included in a Prime membership", Anderson said. However, Whole Foods does not have access to Instacart's financial numbers and analytics.
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