Bizarre Story of How Amazon and Whole Foods Deal Came to Be
- Author: Zachary Reyes Jun 20, 2017,
Jun 20, 2017, 19:49
Amazon shares opened at $1,017, a record according to Google Finance, although they later came down to around $1,000, up 1.28 percent from the close Friday, the day the $13.7 billion Whole Foods deal was announced. The deal is not official yet.
While we believed Whole Foods fundamental outlook remained challenging on a stand-alone basis, the outlook could clearly be vastly different under the Amazon umbrella as Amazon will likely be able to not only make Whole Foods prices more competitive but also clearly bring industry-leading technology (eg., Amazon Go) to Whole Foods and allow WFM to re-focus on its core strength of innovation.
"We're seeing a lot of hand-to-hand combat in the grocery industry". And in a nod to the popularity of delivery companies like Blue Apron, Kroger and Whole Foods have been testing meal kits as well. It's unlikely that Amazon will make a big move and start replacing all cashiers with Amazon Go tech, but looking beyond the next few years, it's certainly possible.
You, though, will already fear that he exclaimed that this was a dream come true. On the contrary, to the best of anyone's knowledge many of Amazon's specific lines of business - including, notably, Amazon Web Services - are perfectly profitable.
Major grocery retailers were already stepping up their efforts in delivery and in-store pickup of online orders. "I think we could have talked for 10 hours", Mr. Mackey said at the town hall.
That said, we can conclude that grocery stores may not be doomed as fast as apparel and electronic product retailers. Although a tie-up of Amazon and Whole Foods Market wouldn't have a direct impact on Woolworths, it does highlight the threat posed by Amazon when it expands into Australia.
Amazon will offer Prime memberships that are suited to customer lifestyles, one expert said.
"We just fell in love", said Mackey. One of the biggest obstacles that stopped Whole Foods from exploding in growth is the exorbitant prices of its products.
This is said to give grocery customers the ability to do more just-in-time grocery ordering, which could increase usage.
"The older you get, the easier it gets when it comes to your door", said Merrill. After all, investors made it clear on Friday given the strong sell-off in grocery stocks across the board that even the biggest and strongest grocers, like Kroger, could be at the mercy of Amazon's price wars.
"This transaction is going to change the landscape of how you buy food", Mickey Chadha, Moody's vice president and senior credit officer who covers Whole Foods, told CNBC's "Squawk Box" on Monday morning. "So if you blend those two, it will be interesting to see what happens", said Meyer.