issa snack: AMAZON gobbles up Whole Foods

In a shock move a few days ago, e-Commerce behemoth AMAZON announced that it was acquiring organic foods retailer Whole Foods Inc. for $13.7B — in cash. The deal, should it go through, will be Amazon’s biggest purchase till date (the company bought online shoe retailer ZAPPOS for $1.2B in July 2009).

WATCH: (Video courtesy CNN)

The move is largely seen as a strategic move to consolidate on its online retail grocery market share or perhaps an expensive mistake by eccentric CEO, Jeff Bezos (many have joked that he merely intended to make a purchase from Whole Foods on the “Alexa” — Amazon’s voice controlled virtual assistant). Either ways, it seems Amazon is looking to reinvent the grocery business and quite possibly chart a new business model. The company recently opened two Drive Up grocery stores in the Seattle area termed AmazonFresh Pick Up where customers can grab their online grocery orders and reportedly had plans to open up about 2,000 more of these stores over the next decade.

Amazon Fresh Pick Up Store (picture courtesy K5)

What does this move mean for the Amazon brand? Also, will Whole Foods retain its brand under Amazon ownership? Hard to say at this point. Whole Foods CEO John Mackey has hinted that the company might create another brand with different standards. In a press release relating to the acquisition, Amazon maintained that “Whole Foods Market will continue to operate stores under the Whole Foods Market brand” — a brand largely viewed as one with overpriced organic products, a sharp contrast to Amazon who prides itself as being the low cost leader (arguably).

Amazon as a brand is constantly evolving and innovating. “Our job” explains Jeff Bezos, “is to invent new options that no one has ever thought of before and see if customers like them”. That is possibly the intention and strategy with this latest acquisition — to reinvent how consumers purchase groceries (an estimated $800B business) while providing the most innovative way to do so.

The company’s steps in the coming months will determine how Amazon looks to integrate Whole Foods into the family with talks already about the e-commerce giant possibly acquiring GrubHub next.

“Your move, Jeff..”