Amazon, the biggest online retailer, has so far taken only tentative steps into groceries, the biggest retail market. It has launched AmazonFresh and its Amazon Go no-cashier stores, but it has been held back by the seeming incompatibility of the food business and Amazon’s traditional business model: People often buy small quantities of fresh products frequently, and they like to be able to see – and feel – the fresh products they are buying.
The acquisition of Whole Foods Market in June 2017 will take Amazon’s food presence to another level. Amazon has lacked a great range of food products; Whole Foods is a recognized, trusted brand with a fantastic assortment. Amazon did not have expertise in running a groceries business; the acquisition brings with it an understanding of on-the‑ground food retailing. And by combining sales of food and other items, Amazon will gain scale that reduces the cost of delivery and enables price reductions across the grocery range.
