
Is there a non-obvious answer to why Amazon acquired whole foods now? - noloblo
Are there any non obvious reasons why Amazon acquired whole foods other than declaring war on the grocery industry or the Pe being at a low ?
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11thEarlOfMar
I'm late to the discussion, but my thoughts...

From Amazon's perspective, Whole Foods is a fairly low risk acquisition. WF is
a going concern, not growing like crazy, but operating on a profitable basis.
They don't need cash or a bail out and prima facia don't need management
attention. Given the delta in revenue and profit between the two companies,
they won't materially contribute to Amazon's top or bottom lines. Hence, this
is not a deal for its own sake. It's strategic to Amazon. Until Amazon makes a
formal and compelling statement (not a smoke screen), we'll have to infer what
we can and speculate.

Amazon has shown a clear intention to pursue the grocery business. Local fresh
delivery and operating retail stores that don't have cashiers or cash
registers of any sort implies that they want to change the way people acquire
groceries, in terms of both delivery and in-store. From a delivery and
distribution standpoint, I really don't think Amazon has much to learn from
WF. Amazon is likely the technology leader in that space.

What all of this means to me is that Amazon wants to roll out their cash
register-free shopping experience beyond the proof of concept and into a
larger scale. And they want to do that in a way that the results can be
considered experimentally valid.

By buying a going concern, at the right size and scale, and then only changing
one variable, they have a pretty good, experimentally valid method of seeing
whether and to what extent the cash register-free shopping approach can work.
Some example questions that may be answered:

\- How is foot traffic affected? Do they get more people into the stores
because there is guaranteed to be no line at the cash register?

\- How is customer service affected? Can they redeploy cashiers to the aisles
to answer customer questions? Perhaps up-sell customers to a higher average
sale?

\- How is profitability affected?

\- What is the cost of maintaining the check out system itself?

There are many more things they can learn from this. It's a small investment
that should hold it's value and provide a petri dish that yields
experimentally valid results. Once they have those results, they'll be
confident in their decision whether to invest in a global roll out.

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bsvalley
Real Estate - Whole Foods store locations are usually very targeted and nicely
picked throughout the US, unlike Safeway's or Walmart's (in ghetto areas). The
obvious reason is the expansion of amazon fresh. The least obvious reason is a
long term investment in real estate. They want to become the McDonald's of the
internet by investing $13 billion in Real Estate. Very good move from Amazon.

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paulcole
Whole Foods rents their real estate.

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bsvalley
The $13 billon deal includes Whole Foods + Real estate (400 stores)

