Amazon Company is now making its foray in the retail industry
We can buy almost anything on Amazon. But there was still one sector where Amazon didn’t have the significant grip which was the retail sector. But now the company is making its foray in the retail industry too. The online retail giant has signed a deal and has bought the Whole Foods. So now the Amazon Company is having a small slice of the grocery industry too which is around 1.2 %.The takeover of the Whole Foods by the Amazon has left many grocery chains plummeting. This is because competing with Amazon is quite terrifying even for an established grocery business and the executive team of the Amazon Company is operating on a radical model.
The takeover of Whole Foods by Amazon has left many leading US grocery chains plummeting
The company is now eyeing on the grocery industry and this can have far reaching implications on the industry. The purchase of the Whole Foods at the cost of around $ 13.7 billion can make the company a major player of the US grocery market and this deal actually came as a surprise for many of the retailers, shoppers and other companies who are associated with the grocery industry. This move of Amazon could actually slice the profit margin of many food manufacturers along with the other supermarket chains like the Kroger and the Walmart which are the leading grocery chains operating in the US.
This move could actually slice profit margins of many leading retail giants
It is also going to pose a tough competition in front of many companies that are involved in delivering groceries and ready to cook food items to the customer’s doorsteps. Since Amazon has the retail presence now, there is a threat that the company could bring the price pressures as it could reduce the price of the food items and other retailers also have to reduce the prices in order to sustain otherwise they will lose their market share.
The already operating grocery retailers have to face tough competition from Amazon
From the past many years, Amazon has entered into the new areas of businesses by providing the convenience and high efficiency of shopping online. So the acquisition of Whole Foods by Amazon Company has actually sent the shocking waves to the other whole foods grocery retailers and now they have to face a tough competition from the Amazon.
This deal will surely long term financial implications on the US grocery market
Just after the deal, the Whole Foods has acquired more than $ 3 billion which is up to around 29%.The grocery chains in the US are already operating on the thin profit margins and the Whole Foods under the Amazon would certainly be accepting the lower profit margins than what it could have done as an independent grocery chain. This is surely going to spell whole lots of trouble for the already existing players in the grocery industry. There is no doubt that he financial implication of this takeover is bleak even if the Amazon Company is not very successful in carrying out the long term transformation of US grocery industry.