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Category: Retail

Amazon to buy Whole Foods – Realization of New Grocery Shopping Paradigm in the Making or Amazon Fail? -RHujar

Link to RetailDIVE article about Amazon acquiring Whole Foods:

My first reaction to this article was sorrow for the soon to be dead Whole Foods Market. This is a favorite place for my family to shop being vegetarian/vegans and whenever a multi-billion company buys a smaller company it generally means the end of the shopping experience that you came to know.  I have no doubt that this will be the case with this acquisition as well.  What makes Whole Foods great is the organic and environmentally friendly products they found and bought from up and coming new companies with new ideas and the produce (and meats for non-vegan/vegetarians) that came from local farms that was much fresher than what was available from other markets.  Clearly, this must change as you cannot mass-produce this formula and retain the integrity of that formula with the consumer.   This was already happening and causing problems for Whole Foods as they grew extremely fast and other supermarkets were beginning to cherry pick sales by offering some lower cost alternatives in new healthy food sections of their stores.

Enter the mega-giant Amazon with state-of-the-art distribution and logistics technology and methods and lots of cash reserves.   If the mission is limited to providing a better in-store experience with Amazon Go and improved pricing to compete in the retail grocery space with Wal-Mart and others grocery stores then this is probably going to be another Amazon failure of getting into a market they just do not understand.  (See article by Patrick McCarthy “8 Times Amazon Completely Failed to Hit the Mark”

On the other hand, if the plan is to upgrade the in-store experience and supercharge the Whole Foods formula and deliver healthy foods and products right to your door every day then this could be the realization of the home grocery delivery paradigm that has yet to be effectively realized.   Amazon uniquely has the logistics and distribution expertise and technology and the near endless capital to cover losses in implementation until critical mass can be realized.   The timing is also right as the under 30 demographic wants to order online and have their groceries delivered so getting this right now means steady growth.

It remains to be seen if this is another corporate disaster or the beginning of a permanent change in how groceries are bought and delivered that will forever change the food industry.

-Randy Hujar

How is a CSR? [Quora]

Amazon probably will not make any top 10 list as far CSR’s go ( Corporate Social Responsibility) regarding investment in the community as it relates to profits but they do have initiatives that help the community and may be working their way up the chart. Let’s face it Jeff Bezos does not like to be second at anything. One example is AmazonSmile, a program where a customer on Amazon’s website can agree to make a donation and Amazon gives this to charity. The resulting donations come from Amazon from money gathered from their customers.

In late 2014 Amazon appointed a director of social responsibility to answer criticism about business practices. This resulted in a number of initiatives for improved working conditions and the Amazon Frustration-Free Packaging initiative for environmentally friendly packaging. Other programs are Amazon Device Donation Program – for donation of electronic devices to schools located near Amazon fulfillment centers; Girls Who Code- to help get more girls interested in coding, and, Amazon Career Choice Program – which pre-pays 95% of tuition for employees who take pre-approved courses relevant to careers at Amazon.

Amazon also invested in using recycled heat to minimize the energy footprint of their three million square foot office in Seattle. They have also added a Sustainability Landing page on their website that discusses upcoming initiatives like Texas Wind Farms and use of Solar Power.

However, the company has not yet made this a top priority and still, to the best of my knowledge, not released an annual sustainability or a CSR report which is unusual for a company the size of Amazon. They are making progress, but critics say they should be doing more.

Randy Hujar, E-Commerce, B2B & Retail Sales & Marketing Expert

How in the world does Can Amazon compete with Walmart? [Quora]

This question is matching the king of in-store or traditional retail vs. the king of online retail.  They both dominate their respective territories.  Your question is specific to Amazon competing with Walmart.

In online retail, Amazon is winning and it is Walmart that is trying to compete with Amazon.  So far Walmart is doing well with their base of customers in selling products online for convenience, but have not been successful in gaining customers outside their retail base.  This limited online sales success is unlikely to change despite Walmart spending mountains of cash in upgrading their online infrastructure.  Amazon is just too far ahead and continues to pour their own seemingly inexhaustible cash to keep it this way.

In the in-store or traditional retail space, it remains to be seen if Amazon even wants to compete with Walmart or any other retailer.  Why would they?  It cost more to establish and run stores, harder to manage thousands of locations of inventory and is just less profitable with higher risk.  Instead, Amazon is going to invest in technology that retailers will buy/license from them to run their stores more profitably by allowing customers to shop and buy products in-store directly and eliminate the need to go through checkout.  While this is not good for the tens of thousands of check-out clerks working in retail stores today, it will make the process of shopping more convenient for customers and will reduce costs for the retailers.  This will in-turn make retailers more profitable and probably reduce the cost of products at retail stores.

So it is highly unlikely that Amazon will ever choose to compete directly with Walmart.  Instead, they will supply tools and technologies to make in-store shopping a better experience.

Randy Hujar, E-Commerce, B2B & Retail Sales & Marketing Expert

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