Whole Foods acquisition gives Amazon almost as many retail stores as Apple

“Amazon is coughing up a whopping $13.7 billion in cash to acquire Whole Foods Market,” Killian Bell writes for Cult of Mac. “The two companies will merge but Whole Foods stores will continue to operate independently, with co-founder John Mackey retaining his role as CEO.”

Bell writes, “The move instantly gives Amazon almost as many stores as Apple.”

“Whole Foods currently operates around 456 stores worldwide, according to the latest data from Statista, while Amazon owns several of its own locations,” Bell writes. “In comparison, Apple boasts 496 stores across 21 markets.”

Read more in the full article here.

MacDailyNews Take: We’d expect to see an Amazon section, featuring Kindles, Echo devices, Fire TV sticks and more at every location.

40 Comments

      1. I don’t know how commonplace it is in the US, but in the UK most of the major supermarkets offer a home delivery service. You place your order on-line, choose a delivery time slot and somebody picks the order and it’s delivered when you specify. Time slots are available from early morning to late at night every day. The delivery charge varies according to the retailer and is either free on large orders or else a low fixed fee.

        Personally it’s not a service that I use because most of my shopping is fresh food and we prefer to choose exactly which fish, meat and vegetables we buy, but the delivery services have proved to be tremendously successful here and it’s especially popular with people who don’t have a particular supermarket conveniently nearby, people with no car, people with limited free time or people with disabilities. There is even a service where elderly people can get a charity to call them and the operator will take as long as needed to place an order for them with their chosen supermarket and have it delivered.

        There is also a large office near me where the staff can order their shopping on-line to be delivered to the office car park free of charge just before they close on a Friday night. The retailer loves the massive order which can be efficiently delivered to that one place ( sometimes three or four vans at a time ) and the workers love the fact that so long as they place their order by Thursday night, they can go home with their shopping on Friday without having to walk round a supermarket.

  1. If this is in preparation for a large scale roll-out of ‘cashier-less’ stores, Whole Foods may need to prepare their employees to be downsized and/or moved to other responsibilities in the stores.

  2. The nice thing about Whole Foods is that the stores are located in high income zip codes with a nice population density and that they play in the high margin end of the grocery market. Kroger- saddled with a Union workforce at many of it’s stores has high fixed overhead and is largely trapped at the low end of the market where margins are commonly 1-2%. Wal-Mart has a low rent image and it’s stores are also not as well sited.

    German Aldi is aggressively expanding in the US and also own’s Trader Joe’s at the higher end. Lidl- another German chain is also moving into the US aggressively. Expect a bloodbath at the low end of the grocery market and Amazon is not playing there. Put in cellphone terms, Whole Foods is the iPhone and Wal-Mart and Kroger are peddling Androids.

    Amazon is not telegraphing it’s intent, but they could use Whole Foods to rapidly expand Amazon Fresh as every Whole Foods could be a distribution hub for Amazon Fresh.

    One thing for sure is this- Amazon does not tolerate gold bricks or half-steppers. If you work for Whole Foods, things are about to change- a lot.

    1. I disagree with your analysis. I think this is a BAD fit for Amazon, at least if they keep the Whole Foods brand intact. Amazon is all about convenience and low prices. Whole Foods is all about luxury and pampering, Other than the real estate play, Amazon’s experience in inventory control and their desire to be in the grocery biz, I don’t see any real synergy.

      To use your own metaphor, if Whole Foods is the iPhone, then Amazon is more like Best Buy.

      It’ll be interesting to see how this works out.

      1. Like was said today, Wall Street has been bitching that Jeff Bezos does not know what he is doing for years, and he is worth about $80 Billion now. Betting against Jeff Bezos is usually a sucker’s bet.

        I have not bought stocks for a couple of years, but am glad I have held on to my Apple, Tesla, Amazon and VW stock. VW passed Toyota and is now the largest car maker in the world. You know about the others.

          1. You do realize a significant portion of Apple’s iCloud runs on Amazon Web Services, right?

            Bezos drives Amazon and has poured cash flow into expansion, development, and improvement rather than payouts to Wall Street and that is why they hate him. He took over the Washington Post a couple of years back when nobody wanted them and has turned the company around in the Newspaper business- one of the toughest around. Regardless of what you may think of the WaPo’s editorial voice, they are vibrant, growing organization and they had been written off for dead.

            Blue Origin is making the first rocket motors for sale to ULA so they do not have to be dependent upon Russian rocket motors to get US launches to orbit.

            Amazon is not afraid to try stuff or to fail- unlike most modern companies. It will be interesting to see what happens with Amazon.

            I own stock in Amazon, but stopped buying shares a number of years back. My personal feeling is that the stock market is due a correction and the only real questions are when and what will set it off. Maybe the State of Illinois tanking financially will be the spark. The Multi-state Lottery people said they will kick Illinois out unless they get their finances in order. There are other states with very shaky finances and consumers are carrying way too much debt.

            All bubbles eventually find a pin. Be careful out there if you trade stocks or invest in them for your retirement.

    2. Your analysis makes a number of good points, except you left out the fact that Whole Foods’ growth and profit picture hasn’t been looking that enticing lately.

      Most supermarkets keep stepping up their organic and other “yuppierific” games, and lots of smaller, regional natural market chains and even local retailers are opening in many locations.

      I used to travel 40 miles to stop a Whole Foods for a few exclusive items now and again (also with other stores to visit in that area on the same day), now I go three miles into a warmer, less snooty atmosphere.

      I still travel the same distance – regularly – to get to a Trader Joe’s, though. TJ’s is like going to a party. Everything and everyone is upbeat and informal, the prices are good, the selections unique.

      Going to Whole Foods on the other hand is like walking into a country club where a normal person feels distinctly underdressed and not sure if you’re “good enough” to be there.

      So unless he has a change-the-model play in mind (and he is a genius and not to be underrated, granted), not on the face of it necessarily the greatest acquisition.

      1. Interestingly, Amazon paying 4.5X the priceApple paid for Beats Audio. WFM makes over $1 share/year. WFM has over 70,000 employees vs Amazon with over 300K thousand. Should be accretive to AMZN since it is paying cash. Believe there can be some efficiencies in distribution and home delivery. Perhaps a part of the store becomes a pickup location saving on last mile delivery costs. Saw a Prime Air jet at Honolulu airport last weekend. Guess their business is booming in the isles. Not much cargo to backhaul though.

      1. The business inside brick and mortar will be very different than what has gone before.
        The irony is that the old retailers campaigned to get sales taxes charged on Amazon and that forced Amazon to come straight at their business. Without sales taxes there was little reason to shift the business model.
        Most mainline grocery companies are old, poorly run, larded with debt, have huge overhead and operate on paper thin margins.
        In The NY Times there are comments from readers saying this will not impact me, but they do not realize the supply chain that ships groceries to small town America is scaled financially to include the urban areas. As Amazon disrupts groceries it will change the business fundamentals of even their competitors.
        Bezos has not tipped his hand, but he is like Steve a Jobs in that he goes after what he wants and gives not a flip about what Wall Street thinks.

        1. Was it a coincidence that you said “old, poorly run, larded with debt, have huge overhead and operate on paper thin margins” and immediately thought of the NY Times?

    1. I don’t think there’s any ‘approval’ involved at this point. The source article appears to indicate that the purchase has been made but final paperwork in the acquisition will take a few months to settle since it involves a huge stock purchase.

  3. Maybe, but at least from my experience in Whole Foods, people don’t go in there looking to spend hundreds of dollars on a phone, or even a few bucks on an electronic gadget. It will be interesting to see how they market it. Whole Foods doesn’t feel like a Best Buy.

    1. Amazon wants to deliver fresh, healthy food that you order from Alexa, just as it delivers books and cosmetics, but needs specialised infrastructure for perishable goods to replace the simpler warehousing scheme they use for durable goods. Amazon continues to experiment with hybrid e-commerce/brick-and-mortar delivery systems. Next up, if they can get FAA approval to use drones, your vegetables will arrive at your kitchen window as fresh as can be.

      1. I agree that Amazon now has a good and steady source of food for delivery. But that has nothing to do with having physical stores.

        I could see Amazon having a corner where they sell their hardware & services, as has been theorized here.

        Regarding the use of drones for deliveries, I still laugh. Within a safe destination space, I could see it working. Out in the real wide wild world? Nope! It’s simply too easy to knock the out of the sky. And, as we’ve discussed before, mere citizen quality GPS can be off by 30 yards or so. That’s not a reliable zone for delivery. IOW I think of drone delivery as mere Gee Whiz! techno hype.

        As for the FAA, they’re back scratching their heads as to how to deal with drones seeing as registering them has been, ahem, shot down. 🚁💥🔫

        1. You’re right about the ‘safe destination space’. I think they will leverage their current experience with the truck fleets currently employed to support large AWS data transfers for large companies and possibly make them mobile ‘home’ locations to launch and retrieve drones for Amazon Fresh as well as the normal Amazon parcel deliveries. This would minimize flight time and distance for the drones and drastically reduce air traffic compared to a fixed drone ‘home’.

          1. Wishful thinking: Amazon may create their own GPS mapping sort-of system in high Amazon user areas, using further ‘landmarks’ to help drones know exactly where they are. A map of Wi-Fi routers already helps. But I suspect there will be additional ‘landmarks’ added in order to attain actual precision mapping.

            1. The desired landmark could be tech inside the customer’s Echo unit — if not today, then in a future version. Amazon may be working to perfect a two-hop targeting solution – GPS, then a beacon located at the destination

          2. I don’t know what sort of grocery shopping you normally do, but a drone capable of delivering my routine shopping would have to be immensely powerful and I wouldn’t be very keen on having my perishable shopping plonked onto my lawn in all weathers either.

            1. Ok, how about the drivers hand delivering Amazon Fresh orders but the trucks also doubling as drone ‘homebases’ for other Amazon deliveries in the area? Maybe a 2 person team per truck?

        2. The stores themselves are part of an extended infrastructure that Amazon envisions going beyond abstract storage and retrieval mechanisms. Stores are bazaars, community gathering points that promote commerce through direct social interaction that is poisonously absent from detached on-line experiences. Apple proved this, which is the underlying point of comparing the numbers of stores between the two retailers. Branding for general merchandisers is going to take different forms than for specialty manufacturers, especially premium OEMS like Apple. Observers will continually dwell in perplexity over the investments of Jeff Bezos, because they haven’t grasped that Amazon is a company like no other — something that is said of Apple itself.

  4. Umm, so why is he comparing Amazon with Apple here? Not even close to being the same as far as “stores” are concerned. What Apple has created is much, much more than a “store”.

    1. Perhaps, part of the point of Amazon having physical stores is the ‘personal’ connection it provides. As someone mentioned above, WFM is a more ‘pampered’ experience. Extending the Amazon brand with that experience would reinforce the ‘human’ aspect of their brand in all the markets WFM currently serve. WFM for some is more than just another grocery.

  5. Stupid headline and a meaningless comparison.
    Comparing the number of stores of a grocery chain, the likes of which count in the hundreds of thousands, with a super high end, highly specialized technology store chain, is no different than comparing the number of royal palaces to the number of public housing apartments.
    I guess websites have to capture all those clicks & views somehow.

  6. Maybe we’ve been looking at this wrong. Like FedEx bought Kinko’s to create ‘local’ pick up points. It is possible that WFM may be a way to increase Amazon’s local pick-up points for Amazon purchases that are difficult to deliver. At the same time it may increase traffic to WFM locations to promote grocery sales since you’re ‘there’.

    https://www.digitalcommerce360.com/2017/06/16/amazon-solidifies-its-hold-on-affluent-shoppers-with-purchase-of-whole-foods/

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