In 2017, the online shopping giant, amazon, made a move to acquire Whole Foods, a high end supermarket chain with more than 400 stores in Canada, United Kingdom, and the United States. Amazon acquired Whole Foods at $13.7 Billion in 2017, an acquisition that gave them hundreds of physical stores which made it possible for amazon to sell more groceries.
The purchase was as a result of amazon realizing that e-commerce alone was not enough and there was a need for a brick and mortal ecosystem. This is because online sales alone were not working especially for groceries because customers like to choose their own groceries and deliver them. The customers were also worried about the freshness of groceries purchased online and thus amazon did not have many sales in terms of groceries which registered a need for physical stores leading to the purchase. The deal however took some time for its realization due to the fact that amazon did not know if actually the acquisition of Whole Foods would work because it had not been tested. Also, there were a number of suitors which led to tough negotiations and amazon almost dropping out of the deal.
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The acquisition of the Whole foods had its advantages both to amazon and whole foods as it saw that the sales of Whole foods increased. Also, there was a significant decrease in the cost of returns due to the reduced delivery and marketing costs.
One year after the acquisition, a significant number of changes are visible for Whole Foods. There has been a huge price cuts which has led to Whole Foods having more customers. The companies have also introduced a new ad campaign which alerted customers about the reduced prices and thus getting more customers. The company has also introduced exclusive deals for prime members such as free delivery. Also, many of Whole Foods in-house brands such as “365 Everyday Value” are on sale at amazon’s website.
References
Petro, G. (2017, Aug 2, ). Amazon's Acquisition of Whole Foods Is About Two Things: Data And Product. Forbes now. Retrieved from https://www.forbes.com/sites/gregpetro/2017/08/02/amazons-acquisition-of-whole-foods-is-about-two-things-data-and-product/#d1bfa48a8084
