Published: Tue, June 20, 2017
Science | By Hubert Green

How Amazon's Whole Foods takeover may lower your grocery bill

It marks a significant shift from the usual tech giant acquisitions. Amazon hit a high of $1,017 and was last up 1.4 per cent at $1,001.13. One problem facing the chain: Conventional supermarkets are stocking more natural and organic products at lower prices than Whole Foods, draining away some of its customers.

Rival supermarket chains also would see Whole Foods as a strategic play where they can expand their customer base while trimming duplicate distribution, purchasing and overhead costs, Short said, adding that the savings could total up to $600 million a year.

Kroger and Target stocks dropped nine and ten percent respectively (though Target rebounded to close at only five percent down), SuperValu dropped seventeen percent, and Costco-a company oftentimes thought of as "Amazon-proof"-sank seven percent".

At the end of the day when evaluating anti-trust issues, lawmakers focus on "economic concentration", impact on wages, and impact on small businesses, Khanna emphasized. So, out-and-out online shopping may not see success in case of grocery stores. Amazon accounts for less than one percent of the grocery spending market. For Amazon, Whole Foods is a "sustainably sourced guinea pig", as Manjoo calls it.

Whole Foods' 465 stores in North America and the United Kingdom will give Amazon the brick-and-mortar presence it needs to succeed in grocery retail. How that experiment has panned out so far we don't know for sure. A Whole Foods under Amazon's stewardship will nearly certainly accept lower profit margins than it does as an independent chain - and that spells trouble for everyone else in the grocery business.

Benchmark Research analyst Daniel Kurnos also expects a bidding war, but he said: "Amazon will ultimately be able to outbid any other party by a meaningful amount, given the valuation gap between them and WFM".

Photo by David Ryder / Stringer / Getty Images. "We admire the quality standards of Whole Foods".

Analysts are seeing this as a power move on the largest grocer in the US, Walmart.

"This will only help Amazon, whole foods consumers, this is a win-win for everyone", says Lempert. "The entire fulfillment process is more complex and time consuming from the moment a "grocery" shipment arrives" at a fulfillment center until it is shipped, which includes refrigeration and attention to factors such as "expiration dates, smell, and color, among others", points out a Cowen & Co. report. And- when we huddled together, it was like we just had- we just had these big grins on our faces, like, "These guys are unbelievable". According to insiders, about 10% of Instacart's business now comes from Whole Foods orders, but that seems likely to change. That might not be the case if Whole Foods was bought by another grocery chain. The stores would create a useful additional channel for selling Kindles, Echoes, Fire TV boxes and other Amazon hardware.

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