It has taken me a while to digest the Amazon play for Whole Foods. There was so much hype and speculation at the time of the announcement that I couldn’t focus.
Amazon recorded a paltry 0.19% of grocery sales according to GlobalData Retail. Whole Foods logged 1.21%. No, the amount of the proposed transaction does not equal the gain in retail sales. What then is the driver?
Seems that the logical answer is the distribution system, since Amazon is all about distribution. Whole Foods is primarily located in zip codes with the highest per capita income – Amazon now will have a base in those locations to further its reach into the customer’s wallet.
There might be some collateral benefit to Amazon for fostering the local support that Whole Foods has given to small growers and makers. Organic and natural is trendy and Whole Foods embodies that notion. But never lose sight that Amazon is all about distribution – getting you the products that you need in a time frame that is acceptable at a price that is reasonable.