Did Amazon buy Whole Food? A saving grace for Whole Foods? The following article is a written adaptation of an episode of Thrilling Tales of Modern Capitalism, Slate’s podcast about companies in the news and how they got there.
In 2017, Amazon entered the grocery business by tossing Whole Foods in its shopping cart. Amazon spent more than $13 billion to buy this 40-year-old supermarket chain known for its organic merchandise and, at times, its sky-high prices. In the grocery world, the purchase was a cataclysmic event. “The acquisition of Whole Foods was the alarm bell that started all these multibillion-dollar investments in digital grocery capabilities,” says Jon Springer, executive editor of the trade publication Winsight Grocery Business. “It was like, Oh, my God, we’ve got to do something about this.”
Did Amazon buy Whole Food?
Amazon acquired Whole Foods Market in 2017 for $13.7 billion after the grocery store chain ran into some financial trouble and sought a buyer.
Whole Foods Market’s founder and CEO John Mackey wrote in his 2020 book “Conscious Leadership” that the grocery chain had seen declining sales for several quarters before the purchase, and activist investors had planned a takeover.
Mackey felt such a takeover would ruin the Whole Foods brand, so he looked for a buyer. After billionaire Warren Buffet and grocery chain Albertsons declined, he approached Amazon founder Jeff Bezos, who ended up purchasing the company.
The hope was that Amazon would help Whole Foods upgrade its e-commerce business, Mackey wrote.
Amazon and Whole Foods announced a shared goal to “make healthy and organic food affordable for everyone,” Jeff Wilke, CEO of Amazon Worldwide Consumer, said in a 2017 news release about the acquisition.
Amazon promised to lower prices at Whole Foods while maintaining the brand’s commitment to high-quality, natural, and organic food, Wilke said.
In 2022, chief operating officer Jason Buechel took over as CEO of Whole Foods. He’s said he plans to add more Amazon innovations to Whole Foods, including cashier-free Just Walk Out technology and in-store smart shopping carts.
A bigger physical retail footprint for Amazon
Amazon revolutionized online shopping with the launch of its website in 1995, but in recent years it’s showed increasing interest in having a similar impact on the physical retail experience. Last year, the shopping behemoth unveiled Amazon Go, an experimental grocery store with no checkout counter that’s currently open to Amazon employees in Seattle.
Amazon also opened its first brick-and-mortar book store in Seattle in 2015, and has since expanded to New York City, Chicago, and Los Angeles. The company is said to be weighing numerous physical retail experiments that range from futuristic Home- Depot-like stores that incorporate augmented reality to Apple-esque electronics boutiques, according to The New York Times. Amazon’s acquisition gives the company 431 physical Whole Foods locations to potentially flesh out new concepts.
More fulfillment centers means quicker delivery
Amazon’s Prime Now service promises to deliver certain products — ranging from paper towels to electronics — in an hour or less, which Amazon sources from 70 fulfillment centers in the U.S. With its purchase of Whole Foods and the hundreds of grocery stores it operates — which sell everything from fresh food to beer, bakery items, flowers, and pet supplies — Amazon has an opportunity to expand the products it can deliver under Prime Now.
This is particularly useful for Amazon considering that the food options in Prime Now have been limited to gourmet markets like D’Agostino and Billy’s Bakery in Manhattan.
A saving grace for Whole Foods
The grocery chain has been in dire straits in recent months. After posting seven consecutive quarters of declining sales, the company announced an overhaul to its board of directors in May. Activist investors unhappy with Whole Foods’ sluggish stock have long called for it to consider selling itself. Jana Partners in particular, which acquired a stake of more than 8% in Whole Foods earlier this year, has been putting pressure on the chain, as Bloomberg reported.
A competitive edge for Amazon
Amazon is far from the only digital company to show interest in the grocery space with its AmazonFresh service, which is available for Prime members for $14.99 per month. Adding Whole Foods’ selection of items to its service could give the online retail giant a competitive edge against Google, whose Express deliver service now reaches 90 percent of the U.S. and other alternatives like Instacart, Peapod, and FreshDirect.
A stronger presence in the home for Amazon
Amazon now sells smart speakers that function as digital butlers, buttons that you can press to magically reorder household items, and wands you can wave over a product’s barcode to add it to your shopping list.
All of these gadgets act as clever and convenient ways to point consumers to Amazon’s online megastore for all of their needs. From that perspective, it’s no surprise that Amazon is seemingly bolstering its selection of grocery items through the Whole Foods acquisition: It’s made similar moves by purchasing Diapers.com and Soap.com in 2010.
How long has Whole Foods been around?
Whole Foods was founded in Austin, Texas, in 1978 by Mackey and Renee Lawson, and the first store opened two years later, at a time when there were few natural food supermarkets in the U.S., according to the company’s website.
By 1984, the company began expanding beyond Austin and continued to grow. It went public in 1992 at a price of $2.13 a share.
Today, Whole Foods has more than 500 stores in the US, Canada, and the UK, according to the company.
How has the Amazon acquisition changed Whole Foods?
Amazon has centralized much of Whole Foods’ operations at its Austin headquarters and has expanded online ordering and delivery, including opening more “dark stores” to fulfill online orders.
Whole Foods’ private label, 365, also got a new look in 2020, and dozens of new products were added.
What’s the difference between Amazon Fresh and Whole Foods on Amazon?
Amazon Fresh is an online and brick-and-mortar grocery store, featuring everyday products, including brands that most consumers are familiar with. Whole Foods focuses on healthy, organic, and often more expensive products.
Both Amazon Fresh and Whole Foods offer in-store shopping and online ordering for pickup or delivery. Orders can be placed on the Amazon website. There are many more Whole Foods physical locations.
Can you buy Whole Foods on Amazon?
Amazon Prime members can shop Whole Foods at Amazon.com for delivery and free pickup in certain ZIP codes, according to the company.
Can I use my Amazon Prime membership at Whole Foods?
Prime members have access to weekday sales and deals both online and in-store. In Whole Foods stores, shoppers can scan a barcode on their Whole Foods or Amazon apps to access the deals. Additionally, Amazon Prime members can purchase Whole Foods items at Amazon.com for delivery or pickup.
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