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article imageAmazon's disruption of the food business

By Tim Sandle     Aug 25, 2017 in Business
Amazon has announced it is close to completing its purchase of the U.S. company Whole Foods. The aim is to transform the formerly criticized high-priced “Whole Paycheck” grocery chain into more affordable organics.
Through the purchase Amazon intends to disrupt the way food reaches consumers through applying its consumer-friendly cost-cutting regimen to a range of Whole Foods products. According to Fortune, this move will involve Amazon drawing in Whole Foods into its digital engine. Whole Foods Market Inc. was founded in 1978 and it is an established U.S. supermarket chain that only features foods without artificial preservatives, colors, flavors, sweeteners, and hydrogenated fats.
The Amazon purchase will add 400 physical stores to Amazon's e-commerce assets. In a deal worth $13.4 billion, Amazon will be rapidly transformed into a merchant with physical outposts in hundreds of neighborhoods across the country; at the same time, Amazon will provide whole food orders, raised through its U.S. websites, directly to consumers. According to Brittain Ladd, a strategy and supply chain consultant, one reason for Amazon's new direction is to take on the biggest physical store in the U.S. - Walmart. Announcing the plan, Jeff Wilke, CEO of Amazon Worldwide Consumer told CNN: "Everybody should be able to eat Whole Foods Market quality -- we will lower prices without compromising Whole Foods Market's long-held commitment to the highest standards."
For consumers wishing to order whole foods online, the Whole Foods established loyalty program will switch to Amazon Prime, providing consumers with free delivery, together with other benefits. A further development, in relation to the physical Whole Foods stores, will be the placement of Amazon's delivery “lockers” in Whole Foods stores. Here an Amazon customer will be able to pick up any Amazon order, while purchasing organic produce.
The Amazon case shows how a once unthinkable business-to-business venture can come off, where one company associated with the digital sphere can effectively synergize with a non-digital brand. Commenting on the Amazon initiative, Professor Lee McKnight of Syracuse University's school of information studies told NPR we could be about to see "the first of a new breed of cyber-physical retailers."
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