Amazon has just agreed to buy grocery chain Whole Foods for $13.4 billion. The mega deal will transform the company that pioneered online shopping into a retailer with physical outposts in hundreds of urban centres across the USA.
Amazon, which was founded 23 years ago on the premise of shopping from the comfort of a computer screen, is now moving into the crowded field of brick-and-mortar retail. After almost a decade of trying to sell groceries online, Amazon has realised that the majority of its consumers still have a stubborn urge to buy fresh items like fruits, vegetables and meat in person.
The billion-dollar deal with Whole Foods follows Amazon’s trial of new grocery drive-through stores where customers can pick up online orders, along with a convenience store called ‘Amazon Go’ that uses sensors and software to let shoppers sail through the exits without visiting a cashier.
The addition of Whole Foods now takes Amazon’s physical presence to a new level. The Whole Foods chain includes more than 460 stores in the US, Canada and Britain with sales of $16 billion in the last fiscal year. Whole Foods is best known for its organic foods, building its brand on healthy eating and fresh, local produce and meats.
When the deal is finalised, Amazon and Whole Foods will still only account for about 3.5% of grocery spending in the US, making it the country’s fifth-largest grocery retailer.