Posted on September 6, 2017
Even by the standards of Amazon.com Inc.’s (AMZN) traditional breakneck pace, the speed at which the company has moved to close its $13.7 billion acquisition of Whole Foods (announced in mid-June) and begin integrating the upscale supermarket chain with its empire has been pretty impressive.
For all the obvious differences between the businesses, one could draw some parallels with the speed at which Amazon raced to create
a broad and unmatched ecosystem for its Alexa voice assistant, or the pace at which Amazon Web Services (AWS) has rolled out
one new service after another to maintain a feature set lead against Microsoft Corp. (MSFT
) and Alphabet Inc./Google (GOOGL
Here are a few thoughts on Amazon’s first moves
since officially closing the Whole Foods deal on Monday, and where Jeff Bezos’ company might go from here.
1. Amazon’s first price cuts for Whole Foods don’t move the needle much, but do send a message.
It’s hard to fault anyone for thinking that the price cuts
Amazon enacted for bananas, apples, avocados, butter and a handful of other Whole Foods offerings amount to a PR stunt. After all, we’re talking about 15 items within grocery stores stocking thousands of items, and six of the discounts were for less than 20%. On the surface, the selloffs seen in Walmart Stores Inc. (WMT
) , Kroger Co. (KR
) and various other grocery sellers following Amazon’s announcement look irrational.
But considering that Amazon — a company with quite the reputation for sacrificing profits for the sake of long-term growth — is applying these price cuts to a grocery chain often mockingly referred to as Whole Paycheck, it’s hard to ignore the broader message Amazon is trying to send about overhauling Whole Foods’ pricing strategy. That’s especially true since Amazon is promising more price cuts will arrive, and that it will try to drive prices lower by innovating in fields such as merchandising and logistics.