Amazon is certainly making moves. Last week, the company announced plans to purchase Whole Foods Inc. for $37 billion – that’s $42 per share.
By getting into the grocery business, Amazon has the goal of becoming a major player in the grocery delivery business. Already, Whole Foods provides a grocery delivery service through its partner, Instacart. With Amazon’s streamlined expertise in deliveries, it’s only a matter of time before Amazon gains a big chunk of that market.
This will mean more competition for other major players in the industry. Kroger is America’s largest chain of grocery stores, and stores like Walmart and Costco are household names.
Scaling down and streamlining
Already, Amazon is powerful enough to engage in margin-busting negotiations, making it harder for small businesses to compete.
Plus, Amazon will offer its own version of store-brand items, in addition to Whole Food’s 365 Everyday Value items.
Data acquisition and management
Amazon already has a ton of consumer data. By going through that data, Amazon can provide custom offers tailored to its target audience.
Plus, other companies can purchase expertise in analyzing consumer data. This creates another avenue of profit-making for Amazon.
This move means there will be an increase in competition among major grocery store chains. Ultimately, it means that consumers will benefit, at least in the short run.
Just recently, the value of an Amazon share crossed the $1000 mark.
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