Amazon announced to buy the high-end organic grocery Whole Foods Market for $13.7 billion. Whole Foods counts 430 locations and it’s strategic as both companies have a hard time competing head-on with mainstream grocery Walmart on their own. The acquisition is expected to be closed in the second half of 2017.
While the majority of physical retailers have started to sell online as well, the ecommerce leader Amazon has -reversely- made another significant move, apart from its physical book stores, to establish itself as a leader in physical retail as well.
Ironic in this context is that Amazon has recently filed a patent to block consumers comparing prices on mobile while shopping through WiFi in its physical stores. As it is not put to use, it’s unclear if its just a defensive patent.
Will Amazon be able to apply its business strategy to Whole Foods Market’s concept, mainly known for expensive organic products and premium service? It’s speculated that Amazon might offer discounts for its Prime members to harmonize its price point across its channels. Further, its speculated that Amazon might introduce its unmanned cash register tech to lower Whole Food Market’s operational cost to pay for such membership discounts.
For sure, this acquisition represents another bold move of Amazon in the global (r)etail space. In April acquired Souq (e-commerce leader in the Middle-East), mainly to deny Alibaba too much expansion space in Asia. From its acquisitions it is clear that Amazon fights a two fronts “war” for dominance in the new retail space with Alibaba in the East, and Walmart at home.
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