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July 1, 2017
B2B

Whole Foods is to be acquired by Amazon for $13.7B and is viewed to be the most significant move in grocery getting of the century. However, this is far from a slam dunk. How does one stock, fulfill, deliver and reinforce the receipt of a perishable item? Not to mention seasonality and hotter parts of the country that could easily promote food spoiling and let’s not even get started on the liability of food-born illnesses. There is much more than spilled milk at stake here. In addition, someone has to be on the receiving end of a time sensitive, temperature sensitive grocery delivery. 

How is the very consumer that is too busy to visit a grocery store become the same customer that is ever available to open the front door and ensure that the ‘Whole Foods’ delivered stay fresh and intact?

Remember WebVan? It turns out Amazon resurrected the company in 2009 and we have to pause and truly digest where it went wrong and what in fact Amazon can do to make it right. 

Let’s give credit to Amazon though, they have truly pioneered anticipatory buying and selling. The immediacy surrounding their intersection of validation curated recommends, and hassle free purchasing is unparalleled and impressive–complete with the ability to manifest the very item you did not even know that you needed. Intuitively served up, sold and delivered with a simple yes or no proposition. It all serves as an awe inspiring filter with which to lens next level grocery shopping, but a smiling brown box sitting on your front stoop looses it’s ‘surprise’ and ‘delight’ when it’s packed with old eggs and spoiled milk.

For $13.7B, this moment of drama has eclipsed its achievement. Yes, 97% of all transactions start on the internet, but only 6% of retail transactions currently happen online. That is the personification of ‘show-rooming’ and Amazon does make shopping, buying and taking delivery breathtakingly easy. They even have 18-wheelers that will transport your digital files and information should you not want to wait for 100 petabytes of data to store and upload to the cloud. They are known as snowmobiles and serve as a very large, physical reminder of just how far Amazon is willing to go to ‘deliver’ convenience driven consumption.

There is an opportunity here. Whole Foods represents credibility for folks who like to see and touch their food before they buy it. Amazon has delivered confidence and reoccurring income within its Prime offering, however perishable food items present financial challenges in the form of price fluctuation, the timing of delivery, temperature and rotation of inventory. These are issues that Amazon is uniquely built to overcome, but am not convinced that this is a declaration of war on all other groceries. 

A pithy excerpt from Jeff Bezos’ email to employees on Amazon’s purchase of Whole Foods, as a fitting close. “I am beyond excited by the possibilities of this merger moving forward and I hope the team feels the same. The combination of our two companies will account for over 85% of all hipster purchases in the United States. I’m looking forward to capturing the remaining 15%.”

Would love to know what you think.

Daniel B. Abernaty
Co-founder and Creative Director at Hierarchy, Inc. | Creative confidante
dan@gethierarchy.com