Amazon buys its way to the top of the food chain

Amazon buys its way to the top of the food chain

Amazon buys its way to the top of the food chain

This deal would allow Amazon to leverage Whole Foods' 444 USA stores in ways that would dramatically amplify Amazon's online market power", said Stacy Mitchell, a co-director of ILSR, "and it would give Amazon, which already sells more clothing, books, toys, and consumer electronics than any other retailer, a substantial share of an even bigger consumer goods category, groceries. It has $7 billion in cash and cash equivalents on its balance sheet and could easily borrow billions more.

The main concern of antitrust enforcement is whether concentrated market share will raise prices for consumers.

Grocery shoppers will likely also be able to pre-order groceries online for pickup, or perhaps there will be an Uber-like delivery system. 'Whole Foods Market has been satisfying, delighting and nourishing customers for almost four decades - they're doing an awesome job and we want that to continue.

"Why does Amazon buy Wholefoods?" Stores are ideally located for that. That's because they're probably a member of Amazon Prime, which includes unlimited two-day shipping on over 50 million items. Private label is growing in the United States and other developed markets. "This gets Amazon straight up the curve with a credible, albeit upmarket, range".

Although non-edible items have traditionally been Amazon's specialty, it is not a complete stranger to groceries. Within our coverage, Ahold Delhaize (AD) is the most affected. Over time the impact might increase if Amazon accelerates the rollout of WFM stores. German discounters Aldi and Lidl are battling Wal-Mart, which controls 22 percent of the USA grocery market, with each vowing to undercut whatever price the others offer.

Amazon.com has proven its dominance in the online retail space, where the company is viewed as a disrupter.

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"One of the major challenges Amazon faced when it chose to pursue the lucrative grocery market was its lack of credibility in food".

Another of Amazon's forays into the alimentary domain is Amazon Fresh. "But if the goal is to fully compete against Walmart (and the low-end), then could Dollar General be next on Amazon's buying list, in order to go after an arguably larger part of the USA population?" "Amazon would be wise to pursue a distinct and differentiated food strategy that can deliver a rich gross margin - strong enough to cover the costs of delivery in a highly competitive market".

Amazon already does some grocery deliveries through Prime and some other programs, but has the chance to boost home deliveries of Whole Foods' "365 Everyday Value" products and potentially "transform the physical retail experience" through checkout-free shopping, according to JP Morgan Chase. The deal also raises an interesting question about Amazon's plans for innovation and expansion. He believes that the e-Commerce giant will focus on B2B platforms and even auto companies to help boost its service and fulfillment offerings, even suggesting that a company like Mercedes-Benz could be a potential acquisition target. However, more and more consumers are becoming less vary of buying fresh food online, with millennials leading the change.

The Whole Foods offer is nowhere near relatively recent highs for the stock.

Amazon.com, Inc. (NASDAQ:AMZN) did something that caught many market analysts by surprise. The transaction is still subject to approval and is expected to be completed in the second half of the year.

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