Ready to have your granola and freshly-ground coffee gently placed at your doorstep by a drone? That dream may have become one step closer today. The recent announcement of Whole Foods’ acquisition by Amazon has come at a surprise to many, but that doesn’t mean it’s not a perfect match. Here are 5 things you probably didn’t know about the massive $13.7 billion deal that may affect those selling on Amazon.
This may (finally) be the moment for grocery delivery
Though drone delivery continues to be unlikely in the short-term due to FAA regulations in the U.S., that doesn’t mean we won’t see it’s development alongside traditional home delivery in the next few years. Grocery delivery has always been a problematic industry, from its inception with WebVan at the dawn of the internet to more recent entrants like Instacart. So far, the convenience, limited selection, and affordability haven’t been enough to break the industry into the mass-market, but this could change. Specifically, Whole Foods adds a massive network of locations around the U.S. to Amazon’s already extensive network of distribution centers, allowing the company to make grocery delivery available to more than a few niche cities. With Whole Foods under its ownership, Amazon will also have a guaranteed customer for building out its distribution network to optimize for perishable goods, something that was lacking with Amazon Fresh when it launched.
It’s not a done deal
While this deal has been monumental for Amazon, it may only signal the beginning of a larger trend. Rumors are growing of potential new acquisitions of grocery store chains from other tech-focused companies. In fact, this may only be the beginning of a large bidding war for and between larger grocery chains like Kroger and Publix in order to adapt to the age of Ecommerce.
Amazon Go could be coming sooner than expected
Amazon Go, the company’s magical new initiative to build grocery stores that will allow people to walk in, grab their food, and leave without ever having to wait in line or pay via a terminal, may be getting it’s legs sooner than expected. While the 2017 opening of first Amazon Go’s location in Seattle will likely continue as planned, this acquisition could mean a much faster ramp-up for the service. Amazon will now be able to leverage its technology in existing Whole Foods locations rather than build its own physical network of stores.
The addition of Whole Foods takes Amazon’s physical presence to a new level. The grocery chain includes more than 460 stores in the United States, Canada and Britain with sales of $16 billion in the last fiscal year. Mikey Vu, a partner at the consultancy Bain & Company who is focused on retail, said, “They’re going to be within an hour or 30 minutes of as many people as possible.” – The New York Times
Imagine the implications for businesses in the e-commerce market, which could be about to experience a huge explosion! For more thoughts on this subject, stay tuned.
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