Why Amazon is buying Whole Foods: An easy explanation

pexels-photo-264636.jpgNowadays Amazon is everywhere, for everyone who has been living in a hole for the past decade, Amazon is an international e-commerce company and the biggest retailer today.  Two days ago Amazon announced that they were buying Whole Foods in a deal of 13.7 billion dollars. Naturally many questions have arisen as to what such a huge online company would possibly gain from a company functioning in real life stores, especially since previous attempts at online food marketing had failed. So why is Amazon buying Whole Foods?

The simplest answer is that Amazon could greatly benefit from Whole Foods and Whole Foods desperately needs to be saved as their stock prices have been falling since 2012.

In more depth, Amazon has seen the great potential in catering customer convenience. This basically means that most customers can’t be bothered to actually get dressed and physically go shopping, It is much more convenient to order their desired products online, as with groceries. There are a few difficulties with online grocery shopping. Most people want to examine what they buy, like when you touch fruits to see if they’re ripe, and they also need to be home when the food arrives. However, if anyone will overcome these hurdles, it’s Amazon. Once these issues are set aside, the online grocery business is a gold mine, with more and more people using the sloth tactic aka sitting around at home.

Amazon is creeping into the physical business as well, buying more and more locations. And with the Whole Foods deal, they just bought 431 more locations to distribute their goods, as said by Dennis Berman, WSJ’s financial editor. These stores are located in upper-income spots and wealthy Whole Foods customers could bring Amazon additional thousands of dollars yearly per customer.

Last of all, Jeffrey Dorfman, an economist at Forbes, suggested that Amazon could bring in a whole new system: Customers would order their goods, like food and household items, on Amazon and be able to pick them up at their nearest Whole Foods while still being able to pick out the things they wanted to touch in person, a problem we discussed earlier.

To sum up, if Amazon and Whole Foods combine their strengths, they are sure to succeed and rule out all other online food retailers.


Links used/Further information:

Forbes Jeffrey Dorfman

Forbes Richard Kestenbaum

The Atlantic Derek Thompson













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