Amazon the everything/media/grocery/potentially collaboration store made waves today when it announced a $13.7 billion acquisition of Whole Foods Market Inc., which roiled the stocks of retailers who sell groceries, such as Wal-Mart and grocery chains such as Kroger.
If Amazon the former bookseller was struggling to gain a foothold in the grocery business, given that most people tend to buy their food in person instead of online, this changes everything.
So far afield is Amazon from its roots as a book-seller these days. But clearly the $13.7-billion price tag for Whole Foods ranks as the biggest ever for the e-tailer and gives it a huge footprint in the bricks-and-mortar world, as the WSJ reported:
The acquisition, Amazon’s largest by far, gives it a network of more than 460 stores that could serve as beachheads for in-store pickup and its distribution network. It would make Amazon an overnight heavyweight in the all-important grocery business, a major spending segment in which it has struggled to gain a foothold because consumers still largely prefer to shop for food in stores.
We’re guessing you’ll soon be able to purchase lots of Amazon products at Whole Foods too. Who knows, maybe we’ll soon be conversing at the store using Alexa commands with Echo devices — or likely adding our list at home with Echo and opting on whether to have it delivered (via drones) or pick it up.
Although the deal surprised a lot of people, the e-commerce giant has long wanted to figure out the online groceries game. It started testing delivery concepts in August 2007, when it unveiled Amazon Fresh—delivering produce and pantry staples through its fulfillment centers. Yet even after a decade—eons in Silicon Valley time—it’s still trying. Turns out, the instant gratification business doesn’t quite work with fresh food.
Still, the market is just too lucrative—and too primed for disruption—for Amazon to simply give up.
But that’s not all for Amazon this week. News also broke that the company, whose founder Jeff Bezos also owns the Washington Post, is sniffing around collaboration provider Slack in a potential valuation worth $9 billion, according to a report in Bloomberg news.
The Whole Foods merger deal would need the approval of regulators, likely the Federal Trade Commission. Could it one day be facing anti-trust issues?