Published January 29, 2019
My friend Brittain Ladd wrote an article for Forbes that posted on December 20, 2018, Was Acquiring Whole Foods Amazon’s ‘Bridge Too Far’? Well done Brittain, I have received several questions as a result of your article. The best questions were, “do you think Amazon is happy with their acquisition of Whole Foods and do you think Amazon will invest in growing the Whole Foods ecosystem?” These are great question, but one that goes deeper than the acquisition of Whole Foods.
My thoughts regarding Amazon:
- Jeff Bezos is a genius and a great business man. He wants to grow his ecosystem so that his customers are very loyal and ecstatic over their Prime membership and their shopping with Amazon.
- Although the Amazon ecosystem is very complex Amazon’s view is customers have two pockets of money:
- Money they spend within the Amazon ecosystem.
- Money they spend outside the Amazon ecosystem.
- Amazon has strong expertise and huge a portfolio of private label.
- Twenty percent of all U.S. consumer spending is on food and beverage, this category is Amazon’s weakest.
- Whole Foods is great at private label and has an improving food and beverage reputation.
- Amazon has spent big dollars on Whole Foods’ technology, free two-hour delivery to Prime members, and curbside grocery pickup.
My answer to the questions:
- Is Amazon happy with acquisition of Whole Foods? Yes, it was a brilliant move and Amazon continues the integration.
- Will Amazon invest in growing the Whole Foods ecosystem?
- Yes, in technology.
- Yes, by reducing prices.
- Yes, continuing to grow and expand private label.
- Yes, by increasing the number of stores.
Most importantly, Whole Foods is not dominant yet, but major progress is being made and the future is bright. All retailers and brands need to substantially move fast as the disruption cycle continues to turn and the evolution of the Amazon ecosystem continues to churn. Without substantial innovation many firms will not be in business in the years ahead.