In a move that probably only surprised people who weren’t paying attention, Amazon has entered into an agreement with Whole Foods Market to purchase the entire company for an amazing $13.7 billion, a not-so-meager 30% above the grocer’s current market value of $10.5 billion.
Why should this not be a surprise? Amazon has made no secret of its interest in entering the brick-and-mortar world, and has, in fact, opened its own physical bookstores around the country and created two AmazonFresh pickup sites. The Amazon Go store is its latest entry into the convenience and food store, which has as its main selling point no checkout lines. (Instead, a hand-held device records, with the assistance of RFID tags, items removed from shelving. Payment at the point of leaving the store is then automatic.)
It will be interesting to see what changes come to Whole Foods after the acquisition is complete. My thought is that at least at first, nothing will change, as Amazon orients itself within the new market. This is certainly in line with Amazon’s previous acquisitions such as Zappos and Audible. Eventually, though, I think Jeff Bezos’ irresistible urge to update, change, and make no bones about it – control – as much of the market as possible, will cause the high-end grocery store (often coloquially known as “Whole Paycheck”) to bend to the will of the new owner.
A final thought: when he thinks people are looking, Bezos really wants to be known as the “low cost” go-to. But when he thinks they aren’t paying attention, he quietly finds ways to increase revenue. Given the high-end reputation of Whole Foods, which way will he go? Up? Down? Both at one time (obviously down being the more visible to purchasers)?
Whatever the final decision, it’s a reasonable conclusion to make that Mr. Bezos’ and Amazon’s treasury will eventually expand exponentially as a result of this “surprise” move.