Amazon is buying Whole Foods for over $13B. What business insights does this big move provide for entrepreneurs and business owners?
The big purchase of Whole Foods by Amazon could wind up being a far larger deal than many realize in the long run. That is likely to remain true whether it works or bombs. Here are some of the most notable takeaways every entrepreneur and business owner can glean from the news, and how they can apply some of the same tactics to their own enterprises.
One of the biggest factors which many are picking up on is that Whole Foods and Amazon are on opposite sides of the price spectrum. It is anticipated that the acquisition will see a dramatic reduction in Whole Foods’ prices. We could also see more healthy groceries being available for delivery from Amazon. That’s great news for those who want to eat healthy, and for those who are not near a Whole Foods store.
While some might think that the e-commerce giant may be at odds with the physical retail sector, and even a cause of many recent bankruptcies and store closures, Amazon has been a big real estate investor. It has been a major force in the Seattle real estate market. Has experimented with its own stores. Has expanded distribution and logistics centers around the country, and now may be even more heavily invested in real estate across America.
Via Time, Whole Foods’ CEO says one of his big expectations is that Amazon will bring a much better approach to customer service than the company has had so far. From delivery, to ease of ordering and returns, Amazon has definitely turned up the heat and competition when it comes to service. It is certainly a factor which has been behind its great growth and success.
Amazon is essentially inserting itself into the supply chain as a wholesaler. It may wholesale some goods from the new company online. Yet, it has really been striving hard to find a way to move its wholesale product in physical stores. Building a nationwide chain of brand new stores would be insanely slow and expensive. This move enables it to hack right into a big existing user, buyer chain.
While this may have been a logical move given Amazon’s recent efforts, it would typically be seen as odd for a tech company or book store to buy a grocery business. Forbes says Amazon may also end up buying Slack for $9B. This could be the start of a new trend which sees more mergers and acquisitions both vertically and horizontally. This could put a lot of pressure on Publix and Walmart, but is a strategy which can also be used in virtually any business.
$13B is a nice payout for Whole Foods. It’s likely to be just one of many more multi-billion dollar acquisitions and IPOs over the next couple of years. While many may not want to part with their businesses, being bought out can obviously as profitable as growing and maintaining your business. Those who develop great brands and strong user bases, along with having the best talent on staff will be the most desirable and valuable.
No matter what business you are in, Amazon may be getting a lot more important. From its main website to physical stores, and its smart home device, Amazon is only likely to become more important for all businesses with something to sell.
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