Amazon announced that it will acquire Whole Foods Market for $13.7 billion, an amazing deal for Amazon as it gives Amazon 431 physical locations all over the United States and the added benefit of a good business that does almost 13 Billion USD in annual revenue and half a Billion USD in net revenue.
Obviously, the Whole Foods Market customers are more affluent and with high income but the chance of them being already Amazon customers is extremely high, so probably not too much to gain from this.
At the same time, Amazon puts a foot into the grocery market in a way that it would probably take them too long to build all by themselves. On the other hand, it does grow the total Amazon employees by almost another 100.000 employees, getting to almost half a million people being employed directly by Amazon.
So the biggest win for Amazon is the number of locations and we need to put this into context:
- Walmart: Almost 500 stores (including Neighborhood Markets and Sam’s Clubs)
- Aldi: 1400 stores
- Costco: 500 warehouses
- Delhaize (all brands): 2265 stores
- Trader Joe’s: 457 stores
- SuperTarget: 240 Stores
- Kroger: 2800 stores
So it is not the biggest of chains, but it is a great way to reach the all important affluent consumers.
Amazon buying Whole Foods Market is going to create an interesting business relationship with Instacart as Whole Foods Market has invested in Instacart on top of their existing partnership.