Amazon’s acquisition of Whole Foods – what does this mean for local food?

Like most of you, we woke up this morning to discover that Amazon had acquired Whole Foods for approx. $13.7B.  What does all of this money being thrown at the low margin space of grocery stores mean?   Here is our take at Food4All.

  1. The internet is about to disrupt the once thought untouchable grocery store business. Old school grocery companies are about to start scrambling for an answer.  Webvan, Peapod, and others have tried this before and failed, but things have changed since the 90’s.  This acquisition validates Food4All’s business model.  One of the many reasons we started Food4All was because we felt the current grocery store business model and the greater food systems in the US and globally are ripe for disruption.
  2. It’s all about healthier, fresher, and less processed food. Amazon could have bought anyone in the food industry.  They could have bought SYSCO, the world’s largest food distribution company.  They could have bought a traditional grocer such as Safeway or Albertsons, at a much lower price – and with lower cost structures, and larger distribution networks.  But they didn’t – they bought Whole Foods.  A strong brand, but higher prices, with a smaller number of locations, and a smaller distribution network.Amazon’s acquisition of Whole Foods validates the shift toward purchasing organic and wholesome foods at a premium.  While a vote of confidence in the ability to change consumer behavior to pay more for food, our challenge at Food4All is to further educate that same consumer on the incremental benefits of buying local.

     

  3. Amazon sells convenience. People want what they want when and where they want it.  And they want to buy and track it with their phones.  Offering consumers the convenience of buying groceries online and then picking them up is the model’s Amazon is experimenting with Whole Foods.  We know this pick up model has been in place with farm to consumer CSA’s for over a decade.  Amazon’s validation and extension of the pick up model to click-and-collect further validates Food4All’s click-and-collect model for local food.

If only we at Food4All had $14B sitting around, think how fast we could accelerate the local food movement!  We consider this transaction further affirmation that we are on the right track.  Stay tuned.