Amazon Gobbles Whole Foods As Online/Offline Boundaries Dissolve


The NewCo Daily: Today’s Top Stories

If you fear Amazon is about to swallow up the entire retail industry in its hungry online maw, this morning’s news that the company is buying Whole Foods will not reassure you. Amazon intends to pay $13+ billion to buy the high-end organic and luxury supermarket chain that customers love/hatingly refer to as “Whole Paycheck” thanks to its high prices (Bloomberg).

John Mackey, the Whole Foods CEO, would remain in charge of the business. In Texas Monthly profile published this week, Mackey vowed to stick to Whole Foods’ “conscious capitalism” mission despite pressure from equity investors to boost profits or sell the company.

The acquisition would be by far the largest in Amazon’s history, and represents a new effort by the company to crack one of the few remaining sectors of retail that hasn’t yet succumbed to the allure and convenience of its online-purchase-and-delivery model. The online giant has long-running experiments in physical-space retailing in some cities, but a Whole Foods combination would moves its grocery business to a much more ambitious level — and turbocharge the company’s transformation from an online-only behemoth to the Everything Everywhere Store.

The deal is not yet done. Other suitors could enter the picture. President Trump has taken swings at Amazon in the past, and antitrust challenges could arise. (Trump’s Justice Department might be otherwise preoccupied, however.)

Assuming the acquisition proceeds, Amazon will find itself with a small slice of the giant U.S. grocery industry, a new physical footprint in hundreds of locations, and a chance to widely deploy what it has learned about adding its tech-and-delivery smarts to a hands-on, high-touch business.

As Sarah Perez lays out in TechCrunch, the deal is also the latest and most aggressive move in Amazon’s long chess-game versus Walmart for control of whatever the online/offline future of retail is going to be. The TechCrunch headline is pithy: “Amazon wants to become Walmart before Walmart can become Amazon.”

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