Will Amazon become a dominant force in grocery after acquiring Whole Foods?
Amazon.com’s acquisition of Whole Foods Market is moving full steam ahead after the organic grocery chain’s shareholders approved the merger of the two companies yesterday and the Federal Trade Commission (FTC) gave its okay for the deal to proceed.
With the FTC’s approval, the last potential stumbling block between the parties has been removed. Before yesterday, there were concerns that the FTC’s review process might drag on as members of Congress and others have expressed unease over Amazon’s growing dominance in e-commerce.
Some question whether current antitrust guidelines are able to gauge the influence that technology platforms such as Amazon have on competition within the marketplace. Critics have pointed at Amazon’s profitable Web Services as providing the company with financial stability that it uses to undercut competitors on the e-commerce side of the business.
Lina Khan, a fellow at the New America think tank, told Bloomberg, “Amazon challenges a lot of the current antitrust orthodoxy and at some point antitrust enforcers are going to have to confront that fact.”
President Trump has also recently taken shots at Amazon on Twitter, claiming it “is doing great damage to tax paying retailers” and causing job losses. Much of Mr. Trump’s criticism appears to be connected to unfavorable coverage of his administration by The Washington Post. The paper, which is owned by Amazon CEO Jeff Bezos, is not connected to the e-tailer.
With its acquisition of Whole Foods, Amazon will gain 460 stores along with the distribution centers that supply them. The organic foods chain currently holds a 1.4 percent share of the U.S. grocery market, according to Bloomberg. Amazon’s share of the market is described as “negligible.” Despite this, many see Whole Foods’ locations as a jumping off point for Amazon’s grocery e-commerce ambitions that include both home delivery and in-store pickup.
Industry watchers expect Amazon to move quickly to bring greater automation to Whole Foods stores. While announcing that Whole Foods would continue to operate independently, many believe that Amazon will add scale up the organization to help the organic grocer rid itself of its “Whole Paycheck” reputation.
- FTC allows Amazon, Whole Foods deal to proceed – CNBC
- Amazon’s Whole Foods Deal Wins Swift U.S. Antitrust Approval – Bloomberg
- Trump goes after Amazon on Twitter – The Hill
- What happens now that Amazon is acquiring Whole Foods? – RetailWire
DISCUSSION QUESTIONS: Does the current process for determining anticompetitive activity properly account for companies such as Amazon? Do you expect Amazon to become a dominant force in the grocery business with its acquisition of Whole Foods?