At first glance Amazon and Whole Foods have nothing in common. Fizzy kombuchas, crisp organic produce from local Mom and Pop distributors seem in opposition to cold warehouses, one-day shipping and a retail monopoly. But, could these two entities be a match made in heaven? The acquirement of Whole Foods by Amazon has garnered both positive and negative feedback. But, no one is without an opinion on what this could mean for the future of the grocery business.
The Great Disrupter
Traditional grocers are scared the Amazon takeover of Whole Foods will drive prices down and lower profits. Conventional grocers already suffer from paper thin profit margins. Legions are in opposition to this merger, although the U.S. system of economics leaves little power to interfere. USA Today states,
“Blocking the deal would essentially be punishing Amazon for its success. Amazon became the largest online retailer in much of the world largely by innovating and inventing whole new ways of serving customers. The company has cut costs and made shopping much more convenient.”
On the other hand, there is a group who are celebrating this move by Amazon- the consumers. “Whole Paycheck” on more? They are hoping so! Amazon has a unique business model. Each quarter their net income is basically zero. As a consequence, Amazon has no need to uphold Whole Foods high price point. In turn, all other grocers will be forced to drive prices down to keep their heads above water.
Could This Help Small Businesses?
Amazon has been steadily putting small businesses out of the running for years now. Borders, JC Penny and more just couldn’t keep their doors open when it had to compete with free 2-day shipping and prices too good to be true from the online marketplace. Once Amazon starts a new product category its almost as if Jeff Bezo’s personally hands the business a “store closing” sign himself. Ironically, many of the small brands of Whole Foods are optimistic. They believe that Amazon will open up distribution channels that they never would’ve had access to before. A big name paired with their small name could increase interest and trust in their product.
Amazon has reached its magnitude of success by innovation and technological advances that consumers wanted, or didn’t yet know they wanted. It will be interesting to see in what ways they advance the grocery industry. Since wherever Amazon goes, the competition follows. Or at least the customer does, right?