Why Amazon is buying Whole Foods for $13.4 Billion
Amazon announced yesterday it has agreed to buy the Whole Foods grocery chain for $13.4 billion, as the internet retailer eyes a broader expansion of services.
Whole Foods will continue to operate under the Whole Foods Market brand.
Reuters:
John Mackey will continue as chief executive of Whole Foods, and the company's headquarters will remain in Austin, Texas.
Amazon and Whole Foods expect to close the deal during the second half of 2017.
The proposed deal would have Amazon paying $42 a share for Whole Foods, a 27 percent premium to the stock's closing price on Thursday, one day before the deal was announced. Friday, Amazon rose (3.3% by post time) as Target, Walmart and Costco Wholesale dropped.
From the New York Times:
For Amazon, the deal marks an ambitious push into the mammoth grocery business, an industry that in the United States accounts for around $700 to $800 billion in annual sales. Amazon is also amplifying the competition with Walmart, which has been struggling to play catch-up to the online juggernaut.
For Whole Foods, the deal represents a chance to fend off pressure from activists investors frustrated by a sluggish stock price. Whole Foods last month unveiled a sweeping overhaul of its board, replacing five directors, naming a new chairwoman and bringing in a new chief financial officer. It also laid out plans to improve operations and cut costs.
With Amazon, Whole Foods gets a deep-pocketed owner with significant technological expertise and a willingness to invest aggressively in a quest for dominance.
And Amazon wants to expand into physical stores.
They also want to expand their food service.
Personally I think Amazon is getting too big. I'm a big fan of capitalism and free markets but I see what Amazon has done to small book stores and now the same thing is going to happen to grocery stores.
Amazon drives all the book stores out of business, then starts opening up their own shitty bookstores that aren't even like bookstores they have like a visual shelf of ebook covers that look like a mess.
Personally I love physical bookstores, being able to grab a coffee and browse actual paper books.
I'll be curious to see if some Whole Foods customers stop buying and find other options. I doubt it as many people really love whole foods but I notice something similar happen with like craft breweries for example. They sell out to a large beer manufacturer and alot of their long time loyal customers don't like them anymore.
WIll be curious to see what happens.
Man, I never, ever, ever thought you will comment to anything I posted. I just saw your post on your first 5 days of posting on this platform.
I'm subscribed to your Youtube Channel and I think your input is the most relevant, non-promotional stuff on the topics you cover.
Amazon, simply put, is a giant enterprise whose sole goal is to make money and drive the competition out. Let's wait and watch.
What's your thoughts on Amazon? Do you think they're getting too big or do you think it's just the markets doing what they do?
I sometimes complain about them but at the same time I'm selling through their Merch Program, selling on FBA, I'm a Prime Subscriber, I buy a lot of stuff off Amazon.
I see a lot of similarities to a few years back when everyone was complaining about Walmart ruining their communities yet liked the low prices and shopped there which I would say I'm kind of guilty of myself.
I personally love bookstores and was kind of sad to see AMazon drive them out of business.
I notice kind of a wierd similarity between Amazon and Uber as well. Great for the end user/buyer, not so great for people trying to earn with them.
With Uber as a passenger I love it, its cheap, its convenient, its cheap lol. For drivers however I hear that unless it's peak times or you happen to live in a city with high rates it's either a losing proposition or best case scenario you're maybe making min wage but many people from waht I hear don't even make that.
I notice the same thing with Amazon FBA. While many sellers do very well and make a nice living and love it, I would say many more people wind up losing out or making very little after FBA storage fees, fulfillment fees, final value fees. Most products start off good and get driven to the lowest price possible nobody is making money, etc.
I'm not really knocking them nobody is forcing anyone to drive uber or sell on FBA but just kinda something interesting I noticed.
Your observations are indeed correct. It is a love hate relationship. Like when they change the affiliate program rules. Same with AliExpress. I'm not sure how good AliExpress is for the vendors who sell there.
Ever since they went from a 24 hour cookie to a session based cookie my earnings went down like 90%.
I rarely put much effort into it anymore although I have as an experiment and just kind of a fun thing was thinking about doing something similar to what AliAddict does and making reviews of items but then again on a $0.50 cent item is an 8% commission even worth my time? Probably not unless I can sell a ton of said item.