Quick Analysis: Amazon could have bought any food retailer. Why Whole Foods? And how should retailers react?
Much of the buzz about Amazon’s agreement to buy Whole Foods has focused around the new physical distribution channel, especially for fresh food, that Amazon will now be able to leverage. And bricks-and-mortar retailers — especially grocers — are woefully behind in the use of technology in commerce. Of course.
But if that was the case, Amazon could have bought any retailer. Why Whole Foods specifically? Why a company that was likely more focused on the Amazon rain forest than Amazon.com until today?
Whole Foods Market is a high-touch, decadent customer experience company. Amazon is a low-touch, high-efficiency company. This is not a natural fit. It would have been more of a natural fit for Amazon to start experimenting with a regional, low-price-oriented supermarket like Southeastern Grocers (sure, they wouldn’t get the instant national presence, but they would acquire a large testing lab to optimize the business model).
Source: Wikimedia Commons
While Amazon acquired Zappos, Soap.com, Diapers.com, etc. — it is not a particularly acquisitive company. And while much news has been made about a hedge fund’s involvement, this acquisition doesn’t reek of financial engineering like so many other M&A deals have.
So what data are we missing that Amazon has?
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