First off, WOW! Never question the cajones of Jeff Bezos. He plays to win, and win BIG.
Two quick thoughts on the “why” side of this $13.7B deal. One, is that Amazon Prime is the core Lock-in that drives engagement and loyalty within Amazon, relative to other Commerce options (online or offline). I wrote previously on this notion HERE.
Amazon Fresh is the ‘last mile’ since it deals in a same-day type of customer spend and of course, grocery is a recurring spend. Plus, Amazon has already committed the spend to having its own fleet of delivery vehicles (competing UPS, USPS), so being their own delivery logistics is a path that is **already** happening.
Thus, Whole Foods is a gateway to converting the Amazon Prime customer to Amazon Fresh, and for those of us who have Instacart in our markets, it’s clear there is a healthy base of customers willing to pay for the personal shopper, direct to door experience in Grocery.
(Side note: probably not a great day for Instacart, who built their business on the back of Whole Foods, and will likely get squeezed out, if they don’t find a better M&A path.)
Two, is that the Whole Foods customer is already using online pay services like Apple Pay, so the notion of what Amazon is trying to do with the cashless customer paying exclusively through mobile device in store, means that Amazon gains a platform and international footprint to test out a lot of concepts, such as Amazon Go, Amazon Locker, Amazon Alexa, and cross marketing of products that are complimentary to a grocery customer (buy this new Circulon pan with your order, and have it shipped to you by tonight.
These are wild and interesting times for retail, but one now only has to look at what Amazon and Starbucks are doing in using technology in transformative ways, to understand that the wild ride is not going to slow down any time soon.
