Amazon’s Fresh Strategy
Amazon surprised many in June of this year when it acquired Whole Foods Market for almost $14 billion, representing the largest acquisition in the company’s history. The purchase of grocery retail giant transformed online shopping altogether, begging the question of what products and services may become available online in the months to come.
Today, consumers are accustomed to instant and almost-instant gratification afforded by companies like Amazon. The company has changed the way consumers approach shopping as it offers everything – from electronics and home goods to clothing and anything the average streaming user needs. Its success is not surprising; historically, each time Amazon enters a new market, it squelches the competition (if any). Much of the company’s success can be attributed to how it merchandises convenience. That, in a nutshell, is Amazon’s fundamental strategy.
This strategy has served the company well over the last decade. In August 2007, Amazon began dipping its toes in the waters by delivering fresh groceries to Prime customers in select markets. Fast-forward to 2017, and Amazon has found even greater success in with its AmazonFresh Pickup, a grocery service that allows customers to order food online and pick it up at an Amazon location in 15 minutes. While neither of these services took off immediately, they likely help set the course for Amazon’s acquisition of Whole Foods this past June.rde
On the surface, Amazon’s acquisition of Whole Foods was a brilliant move for Amazon because the struggling grocer had been ailing across many fronts.“Amazon did not just buy Whole Foods grocery stores,” tweeted Dennis Berman, the Wall Street Journal’s financial editor, “It bought 431 upper-income, prime-location distribution nodes for everything it does.” This element of the acquisition acts as a safety net that will ensure Amazon’s success even if Whole Foods delivery via Amazon never catches on.
In short, the Whole Foods/Amazon merger enables Amazon to fully enter the grocery market after a decade of testing the waters. Amazon’s strategy of consumer convenience has always been evident in every financial and market decision it has made. It’s this focused, overall strategy that unifies the company and allows for such remarkable success in so many markets.