In case you’ve been living under a rock, Amazon has been in the news quite a bit lately. In large part, it’s been due to the massive acquisition of Whole Foods, which surprised many pundits, and proved that Amazon is looking to. But as my Firebrand Group team and I organized the first-ever Innovation Congress in partnership with Social Fresh, I thought it would be a good idea to get ahold of some of the conference’s top speakers and ask them something important: is Jeff Bezos’ takeover of Whole Foods – not to mention Amazon Fresh’s moves to compete against Blue Apron – a good thing for business innovation, or anti-competitive?
Here’s what they had to say:
The dawn of a grocery revolution
For Tyler Riewer, Brand Content Lead at charity: water, Amazon is “Google in real life” — a “physical form of instant gratification.” Amazon delivers any and every item that he “could possibly want or need”, and groceries are no exception.
Riewer thinks that Amazon’s acquisition of Whole Foods is not only in line with the ethos of the company; it also marks the start of a grocery revolution. Grocery stores “are just middlemen for our food”, so eventually we won’t need them anymore. He predicts that food will “come straight from the farm to our homes, likely via drone. It’ll be the return of the milkman — but the milkman will have AI.”
Good for consumers, tough for grocers
Kristen Scholer, senior anchor at video news network Cheddar, sees Amazon’s nearly $14 billion purchase of Whole Foods as a perfect example of Amazon’s ambitions as a company. “By gobbling up the grocery chain, Amazon is trying to capture more grocery purchases and more deliveries,” notes Scholer. But more than that, it’s “a data play that should give Amazon more information about how consumers shop”, while also expanding Amazon’s network and filling distribution gaps.
From a consumer’s point of view, this might be beneficial, “especially if Amazon uses its e-commerce know-how to bring the premium prices at Whole Foods down so they’re near its competitors.” Grocers, however, face a bigger question: how to compete against a giant like Amazon? Scholer points out that, while grocery delivery is growing quickly, Amazon has already captured a significant share of that market through its Fresh, Prime and Prime Now services. Other grocers “will have to decide whether to invest in their own delivery services, give up profits to start-ups or risk Amazon eating more of their lunch”, and companies like Instacart, Peapod and FreshDirect face greater pressure to maintain growth while continuing to deliver quality groceries.
Continuing to change the way we shop
Sharon Feder, Chief Content Officer at The Muse calls the deal fascinating. “Amazon has profoundly changed the way we shop and our expectations around quick delivery time and convenience,” she says. “With this acquisition, they’re positioned to do the same for the way we buy groceries.”
This goes beyond food. With the retail space that Amazon is getting, which includes prime retail spaces in key urban and suburban areas, they will “now have even stronger distribution for quick deliveries.”
A real estate deal
Like Feder, Jason Keath of Social Fresh sees the acquisition as being “as much supply chain and branding as it is a real estate deal.” For him, “there is an obvious alignment between Amazon’s affluent Prime members and Whole Foods organic devotees.” In addition to having a solid consumer base, Amazon has now come into possession of “one of the best organic food supply chains in the US,” as well as one of the most trusted.
In order to prevent Amazon from “quickly [running] away with their end of the market”, however, other grocers need to partner with technology firms or “build their own competing grocery delivery” services. If they don’t innovate, they’ll find it incredibly difficult to compete.
Build, partner or buy
Leslie Bradshaw of Bionic see Amazon’s decision to expand its grocery business as being illustrative of “the process of iterating to learn and find market fit, and, based on that, deciding whether to build, partner or buy.” The fact that Amazon chose to buy Whole Foods outright despite being a company known for “some of the best home-grown, organic innovation out there” suggests that “Whole Foods offered an opportunity Amazon concluded it couldn’t build itself” — namely, their customer base, retail presence and scale in the grocery industry.
Other companies need to learn from Amazon’s example by taking note of “how Amazon approached this challenging market” after “over a decade” of experimentation in the grocery space. In other words, they only decided to make a serious move in the market after long, detailed study of what needed to be done and how innovation could be achieved.
Unexpected, but good in the long run
Noted branded content expert (and fellow Inc columnist) Melanie Deziel thinks that we should “all take a step back and see the logic and potential in a merger like this.” While Amazon’s move may have seemed unexpected, it’s not the first surprising acquisition they’ve made: Jeff Bezos’ purchase of the Washington Post also took many by storm.
For Deziel, even those unexpected courses of action “have come to benefit us as consumers.” She points out that “you’d be hard-pressed to argue that the Washington Post hasn’t benefited from the resources, technology and mindset” that Bezos has provided them with. “The ad products are better, the reading experience is more seamless and the company has taken a more innovative approach to story display and delivery,” she says. “Hopefully we’ll see the same sort of innovation for the grocery buying, ordering, inventory, and delivery experience coming from this merger.”
Ultimately, the Amazon-Whole Foods deal leaves a lot of questions unanswered. One thing is for certain: the next few months will be fascinating to watch.