You can now pay a bunch of money to have an Amazon drone supply farm-to-table avocados to your doorstep!
For the last ten years, Amazon has been steadily absorbing the electronic world.
It is a lump sum of cash that might have ended world hunger, but do not act as if you have not already spent $13.7 billion on asparagus water or quinoa or inmate-made goat cheese (is not it supposed to be cage free?)
As hyperbolic as this sounds, this has consequences for the future of groceries, the whole food industry, and the future of shopping for just about everything.
A straightforward analysis suggests this agreement represents a straightforward confluence of interests. Amazon needs food and urban property, and Whole Foods needs help with its newly floundering share rates.
Amazon acquires 456 shops nationwide and a slice of the $750 billion grocery industry. Whole Foods stores are normally seated in prime real-estate places targeting a higher-end demographic. It could become a substantial branding increase for Amazon and a means to boost its physical presence.
In the "brick and click" competition, Walmart is attempting to bolster its online influence, while the e-commerce giant is approaching it from the opposite end -- expanding into groceries and physical places, including bookstores, ironically working itself back to the brick-and-mortar business that it is also disrupting.
Because Amazon was a diminutive startup selling paperback books, CEO Jeff Bezos has disregarded short-term quarterly losses and maintained his sights targeted on the long game.
In a more long-term and hypothetical analysis of the agreement, the first implication is changing food into a shipping service. E-commerce is soaring and food-delivery companies are taking off -- fewer shoppers and diners are passing through grocery stores and restaurants, as Americans are ordering more of the produce and meals on the web. There is also the "grocerant" tendency -- a blending of grocery shops and restaurants.
Traffic is flat in the restaurant industry, and electronic orders are up 45 percent during the last two decades. "Ready, ready-to-eat" items bought outside the house are now 1-in-10 entrees served in American homes.
Giving power and flexibility to the consumer, allowing them to secure the products they need, and having them delivered to their front door looks like the future business model for major grocery chains.
Fresh foods are the last frontier for Amazon, and have shown a tricky challenge for e-commerce giants. If Amazon is to eventually fulfill their existential journey of reaching high-volume growth, getting new food to front doors is a fundamental part of the equation.
The agreement gives Amazon a significant foothold in this space.
AmazonFresh is Amazon's foray into the online grocery industry during the past few decades, but it has not quite mastered it in precisely the exact same way it has mastered books and media.
With Whole Foods, which will continue to function under its own brand name, an Amazon Prime member subscription might function just like a Costco membership. Maybe Prime members would get bargains on Whole Foods produce, and they can elect to have the fresh produce delivered to their residences and apartments.
This deal is frightening because of its competition in part because Amazon's low-margin business pulls each industry it dominates into a sort of deflationary whirlpool. If Whole Foods follows the Bezos playbook, shoppers can expect prices to drop, and investors will anticipate revenue and sales to rise. Perhaps it can eventually shed its long-standing derisive nickname, "Whole Paycheck."
When news broke, Wall Street responded with grocery chain carnage, as stocks for Kroger, Costco and Dollar General plummeted -- all falling over six percent over the hour. The merger might even prove more depressing for Instacart, the grocery-delivery service that's mired in year two of a five-year contract with Whole Foods.
The second implication is Whole Foods functioning as a supply hub -- and Amazon as a physical retail presence. The real estate value of Whole Foods' urban and suburban locations are worth so much, and are so strategically integral for Amazon's delivery industry, that even when the grocer stopped selling food completely, several analysts have said the deal would still prove successful.
Amazon is attempting to become Walmart quicker than Walmart can become Amazon. Soon enough, it won't be only an internet megalith, but also a physical retail powerhouse with dynamic pricing and stocking plans.
This agreement has the makings of wide-scale, far-reaching effects to a lot of sectors -- restaurants, pharmacies and drug stores, perhaps even ride-sharing businesses.
In December, Amazon debuted its flagship grocery store in Seattle with free of checkout line. Clients check in at the store's entrance with a program named Amazon Go, gather their groceries and walk out, all without needing to interact with someone else. This model has the capability to expand. The deal also puts pressure on Amazon to keep developing a intelligent shopping cart that could charge customers automatically each time they drop in.
With more of our shopping visits electronically enabled, this is only going to continue to grow. Increasingly, we are going to do everything from house, meaning delivery and pickup systems are ripe for disruption.
AmazonFresh is currently experimenting with a "click and gather" system; shoppers buy groceries online, then pick them up in person.
With something like drugs, Amazon, whether intentional or accidentally, is building the foundation of the logistical infrastructure for a business that needs specialty pharmacies and quite a specialized distribution of drugs.
With more brick-and-mortar hubs, they could take on more complex logistical challenges digitally.
This may also change the essence of a retail job. Now, a retail employee might need to be somebody who can work out how to handle these complex systems, not someone who will be checking customers out.
However, supermarket chains are not a simple business -- it is now being disrupted by meal-kit delivery services -- and the notion of a grocery store might be completely reimagined a decade later on. These stores could develop and experiment -- perhaps teaching cooking skills, hold courses, and educate about nutrition and dieting -- a complete repurposing of this brick-and-mortar idea.
The third implication is Amazon is becoming a "life package," especially for affluent Americans. Much like a cable package, Amazon could become an annual subscription to a fleet of a range of services that is basically about the merchandizing of convenience.
Driving to the films, or the grocery store, and parking is a pain. Standing in the deli line only after the dimwit who takes a long time to select whether they want honey glazed ham or buffalo chicken cold cuts ought to be an Eighth Amendment violation.
Americans nowadays are harried, increasingly lacking time to store, cook, or dine out.
Between Prime and Whole Foods, Amazon can now accounts for the vast majority of some urban Millennials' discretionary spending -- a growing, committed customer base. More than half of American families with income over $100,000 are already Prime subscribers, spending over $1,000 annually since wealthy families frequently spend $500 per month on Whole Foods.
Amazon could feasibly expect its wealthiest customers to spend thousands of dollars per year through its services. Even as it provides discounts to lower-income Americans, Whole Foods customers will be encouraged to register for Prime while Prime clients will get enticing bargains at Whole Foods. Its a complete scale attack to penetrate an affluent yuppie market, and there does not appear to be an end in sight.
Amazon is already an online goliath, whose products influence just about any online user.
If you've ever got an Amazon package, watched a livestream on Twitch, or assessed an actor's filmography on IMDb, you have dealt with the retail giant's properties directly. If you have streamed a movie on Netflix, booked a flight on Expedia, or sent a selfie on Snapchat, you have also felt Amazon's reach via its cloud computing solutions, now being used by over 1 million online companies.
Now that Amazon is taking its first steps offline and in the physical world, at what point do we begin talking about anti-trust? Or is this only a stage change?
Amazon and Whole Foods are free businesseses, and this acquisition might be the harbinger to Amazon's development into an infrastructure and infrastructure company.
But from the early 1900s, as families moved into the cities, Sears followed, building over 300 shops between 1925 and 1929 that specialized in the hardware demands of the expanding middle class.
Amazon's strategy continues this pattern, ascending to retail stardom using as a browsable sofa product -- its site and delivery service through a fast digitizing and interconnected world which produces the antics of grocery shopping a fading pastime.
However, the future of its business may contain more urban and suburban shops that both hold merchandise for delivery and allow consumers to store.
It is funny how the future can seem like a familiar reconstruction of the past.
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