Amazon wants to sell groceries. They have for a while. Amazon Marketplace has been up and running for years but I don't sense it's gained much traction, possibly because the prices are often atrocious. Every time I buy (non-grocery) items I get an offer for Marketplace credits if I accept something slower than two-day Prime delivery. Then there was the (ill-fated?) experiment with a checkout-free grocery store --- remember that one? Now there's the Whole Foods purchase. Why are they doing this?
The numbers must present some sort of big financial opportunity. This doesn't scan as a speculative, sci-fi style gamble like Blue Origin. This seems more from the cold, calculating side of Bezos and Co. The superficial image is of Amazon using Whole Foods as the latest attempt to enter the market, the long term plan being to remake Whole Foods into a brick and mortar form of Amazon Marketplace and competing against your Trader Joe's and your Albertson's etc.
It may appear that way outwardly, but remember Amazon's plan is world domination. The goal is that all stores will be Amazon. The core underlying asset in this crusade is their distribution network. Think of Amazon in non-grocery terms. If you are a retailer, Amazon can provide you with the most efficient distribution chain and a high end web storefront, looping you into web searches for your product, secure payment processing, and Prime shipping if you want -- all for a cut of your business. You may not like it, but if one of your competitors hooks up with Amazon they will better serve their customers, so you had better also or risk losing business.
Well, that's what this Whole Foods acquisition is about. Amazon is building (or has built) a similar distribution network for groceries. They bought Whole Foods to be their proof of concept customer, in the same way the bookstore was their first general retail customer, leading to the world we have now where thousands and thousands of retailers consist of little more than Amazon storefronts. As Whole Foods becomes more and more efficient, offers more and more forward thinking services, other grocers will be at a disadvantage. At that point Trader Joe's will say, "Gosh, Mr. Bezos, is there any way we can get in on your services?" And within a short time all grocery stores will be Amazon (at least on the back end) and Bezos and Co. will be getting a cut of every meal prepared in every kitchen in a big swath of the world.
This is why people look at Walmart as the only possible competitor to Amazon (in the U.S.). Walmart is a distribution-first company also, unfortunately they seem to be caught flat-footed by every move Bezos makes. I bet Bezos doesn't even think twice about Walmart, and is more concerned with what Jack Ma is up to.
There's a long way to go, but right now the trend is for Amazon to end up with a cut of a huge chunk of all the commerce in the U.S. and possible large and profitable portions of the rest of the world. One day, all stores will be Amazon, and the Amazon drone will be you. (Fade out to Bezos evil laughter...)
