Why did Amazon acquire Whole Foods?

By: | Issue #652 | at 07:30 AM | Channel(s): Logistics  

“All of the above”

Amazon’s acquisition of Whole Foods may have generated screaming headlines and stock market convolutions, but it really shouldn’t have come as a huge surprise. Amazon has been trying to gain a foothold in the grocery business for years.

The pairing of an e-commerce giant and a grocery store may seem odd at first, but close observers of Amazon know CEO Jeff Bezos has been trying to gain market share in this retail subsector for years, not only in the United States, but internationally. But the Whole Foods acquisition gives Amazon with much more than a source of groceries. It provides the e-commerce giant with a logistics network, including 15 food-grade distribution centers as well as hundreds of retail outlets through which Amazon can execute an omnichannel retail strategy, today every retailer’s dream. Amazon currently operates less than 100 distribution centers in the U.S.

Amazon has sought entry to US grocery retailing for a decade, but in those years has garnered a market share of less then one percent. Elsewhere, Amazon has started up grocery initiatives in several international markets, including the United Kingdom, Spain, Italy, France, Germany, and Japan. In Milan, Italy, Amazon delivers 30 kinds of fruits and vegetables that traditionally would have been bought at local open-air markets…

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Peter Buxbaum's avatar

American Journal of Transportation

More on Peter Buxbaum

Peter Buxbaum has been writing about international trade and transportation, as well as security, defense, technology, and foreign policy, for over 20 years. Besides contributing to the AJOT, Buxbaum's work has appeared in such leading publications as Fortune, Forbes, Chief Executive, Computerworld, and Jane's Defence Weekly. He was educated at Columbia University.