Amazon has been dabbling with groceries since the beta-launch of Amazon Fresh in 2007. Despite its technological advantage and deep pockets, its online grocery model has failed to garner significant traction. As estimated by market research company GlobalData Retail, Amazon Fresh only has a 0.2 percent share of the US grocery market in 2016.
“This partnership presents an opportunity to maximise value for Whole Foods’ shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers,” said John Mackey, co-founder and chief executive officer, Whole Foods.
Mr Mackey will remain as the company’s chief executive officer and stores will continue to operate under the same brand, and source from trusted vendors and partners around the world.
The web company’s acquisition of the grocery giant will provide them a physical presence in almost 450 outlets across the US. This highlights the importance of physical locations in competing in the grocery segment.
“Amazon’s acquisition of Whole Foods for US$13.7 billion is a testament to the potential of the grocery retail sector, in the future of commerce,” said Guillem Segarra, chief executive officer of HappyFresh, an online grocery platform in Southeast Asia. “The acquisition highlights the enormous value of a new retailing model that combines both physical and digital experiences in an integrated way.”
Mr Segerra went on to say that the grocery segment is the largest category of household spends in Southeast Asia, especially with a growing population of 640 million people. The growing middle class and rapid urbanisation is predicted to fuel the growth of modern grocery retail formats and the adoption of online grocery retailing. For retailers to remain competitive in the market in Southeast Asia, they should leverage technology and stay ahead of the trend.