Thursday, November 24, 2022

How Much Did Amazon Buy Whole Foods For

Don't Miss

Why Did Amazon Buy Whole Foods Market

We ask Alexa about Amazon buying Whole Foods

The acquisition of Whole Foods by Amazon makes it possible to combine two leading brands, both focused on a customer-centred approach. Partnering with Whole Foods will allow Amazon to expand its multichannel offering and further enhance the customer experience. The potential for development is enormous because Whole Foods Market is mainly present in the United States today, but the concept could be extended to other countries. Lastly, Amazon is now confronted with the challenge of seasonality: 33% of annual sales are made in the fourth quarter of the calendar year. Diversification into food would help to smooth out its cash flows.

Nonetheless, the acquisition raises some important questions. The first is employment, because Whole Foods places considerable importance on its employees. It has been considered one of the top 100 US companies to work for 20 years, according to Fortune magazine. As at September 25, 2016, Whole Foods Market has approximately $3.5 billion in fixed assets on the balance sheet and $1 billion in long-term leases for some other stores. In the foreseeable future, will Amazon keep all the Whole Foods brick-and-mortar stores, and all the employees who work there?

The third question concerns the digital investments Whole Foods Market has already made and is continuing, for example, with the introduction of EMV technology at the point of sale and the distribution of digital discount coupons.

Amazon Paid $9b For Whole Foods’ Goodwill: Cnbc

Goodwill isnt a balance sheet item that most investors give much thought to, but with $9 billion of Amazon.com Inc.s Whole Foods Market purchase price coming from goodwill, they may want to think again.

According to CNBC, Amazons goodwill accounted for $9 billion of the $13.7 billion acquisition price for Whole Foods. That means roughly 70% of the price Amazon paid was for the future growth it expects to get from Whole Foods while a mere 30% was based on the value of Whole Foods current business and assets. CNBC reported Amazons goodwill balance was at $13.4 billion as of the end of 2017, which it said was the largest in the companys history and the first time it represented more than 10% of total assets.

Big Food Is Getting Crushed

As the grocers react, food companies also have been affected. Emphasis on private label, fresh food and specialty food takes shelf-space away from the country’s largest packaged foods companies. And the focus on price means margins are being squeezed. Meantime, if Amazon’s acquisition of Whole Foods expedites the shift to online grocery shopping, that means a new frontier for consumer giants. They will need to fight for eyeballs and learn new tricks to prompt impulse purchases.

Other factors are also challenging Big Food like rising costs, upstart competitors and a generation distrustful of all large brands. It’s been a tough year for them.

Many, including General Mills, Hershey and Campbell, are reacting by making large, expensive deals. It’s too soon to say whether this strategy will save them, but the stakes are high.

Recommended Reading: Amazon Prime Connect Twitch

Why Amazon Bought Whole Foods

The retailers $14 billion bet isnt just about the future of food. Its about the future of commerceespecially for rich urban consumers.

Amazon announced on Friday morning that its buying Whole Foods for just under $14 billion, the retailers largest acquisition ever. The purchase holds implications for the future of groceries, the entire food industry, andas hyperbolic as this might soundthe future of shopping for just about anything.

But lets not get ahead of ourselves. At the simplest level, the deal represents a straightforward confluence of interests. Amazon needs food and urban real estate, and Whole Foods needs help.

Thats the most straightforward analysis. But then again, Amazon always seems to be not just several moves ahead of its competitors, but playing another game entirelychess versus checkers, as they sayso its worth thinking through some of the more long-term, hypothetical implications of this deal.

Humane Treatment Of Animals

This Is How Much Amazon Has Cut Whole Foods Prices

In 2002, People for the Ethical Treatment of Animals began petitioning Whole Foods to take steps to ensure the improvement of treatment of animals sold in the stores.

Whole Foods created the Animal Compassion Foundation in January 2005, on December 5 2014 the organization registration was canceled nonprofit organization, to help other producers evolve their practices to raise animals naturally and humanely. According to Whole Foods Natural Meat Quality Standards and Animal Compassionate Standards, pulling feathers from live ducks, bill trimming, bill heat treatment, toe punching, slitting the webs of the feet, and toe removal are all prohibited in the raising of ducks for Whole Foods Market. Any ducks treated in this manner, treated with antibiotics or antimicrobials, cloned, genetically modified, or not allowed medical treatment when necessary are to be removed from Whole Foods Market stock.

Read Also: Should I Create An Llc To Sell On Amazon

Does John Mackey Still Run Whole Foods

Yes, John Mackey is still the CEO of Whole Foods Market and will be until September 2022, despite having sold the company to Amazon in 2017. So while he now works for Jeff Bezos, he still makes all the primary operating decisions regarding Whole Foods.

But, in fact, hes not simply the CEO he co-founded the company in 1980 .

However, he did recently announce his retirement, which will take place on September 1st, 2022. So he wont continue to run Whole Foods Market after that date. Whole Foods Markets current COO, Jason Buechel, will become the new CEO after Mackey retires.

So hes a pivotal figure in the companys history and growth. Besides being an entrepreneur, hes also a writer and libertarian. A college drop-out who has a passion for natural food, thats what led him to borrow $45,000 from family and friends in 1980 to start a hippie-like natural food store, which eventually grew into the best corporate natural food store in its niche.

Its a testament to his outstanding leadership that the company he co-founded and is leading has not deviated from its original mission and has dominated its niche for almost four decades, leading to an eventual sale worth $13.7 billion!

Hes known for the philosophy of conscious capitalism.

He co-founded the conscious capitalism movement and was recognized by Fortune Magazine as one of the worlds 50 greatest leaders.

He said, Do we love absolutely everything about Amazon? No. We probably love 98%.

Does Jeff Bezos Own Whole Foods

When you ask Google who is Whole Foods CEO, you will find John Mackey as the answer, but then, you might also come across the fact that Amazon owns it. So does Jeff Bezos own Whole Foods?

Lets clear out the confusion:

Yes. Jeff Bezos owns Whole Foods Market, as Bezos company Amazon acquired Whole Foods in 2017. Bezos purchased it for $13.7 billion. However, Whole Foods Market founder John Mackey remains CEO.

In this article, Ill share interesting info about the acquisition and about Whole Foods.

I was a leader at the company for twenty years. So, you could say that I know a thing or two about it. And as part of Amazons purchase, the company ceased being traded on the stock market. So what happened to all those who held stock in the company?

Lets cut to the chase.

Amazons acquisition of Whole Foods is a game changer for the grocery industryheres why:

Forbes

You May Like: How To Cancel Amazon Prime Music

Amazon To Buy Whole Foods For $137 Billion Wielding Online Might In Brick

By Lauren Hirsch, Jeffrey Dastin

6 Min Read

– Amazon.com Inc said on Friday it would buy Whole Foods Market Inc for $13.7 billion, in an embrace of brick-and-mortar stores that could turn the high-end grocer into a mass-market merchant and upend the already struggling U.S. retail industry.

Amazon used aggressive pricing to become an e-commerce retail juggernaut and has recently been experimenting with brick-and-mortar outlets. It will take over a natural and organic grocer pioneer with 456 stores, a mecca for young, high-end shoppers, that has been struggling to rein in prices and integrate technology.

The deal represents a dramatic turn in strategy for Amazon, which has offered food delivery through its Fresh service for a decade but has not made a major dent in the $700 billion grocery market.

The ramifications for all of retail are seismic not just retailers that sell grocery, but for everyone, Gordon Haskett analyst Chuck Grom said.

For graphic – Whole Foods at a glance – click: tmsnrt.rs/2skJDSv

Amazons shares rose 2.4 percent to $987.71, adding $11 billion to its market capitalization, which in one sense makes the acquisition nearly free for Amazon shareholders.

Related Coverage

See more stories

Amazon agreed to pay $42 per share in cash for Whole Foods, a 27 percent premium on the Austin, Texas-based grocers closing share price on Thursday.

Amazon’s New York Bookstore Is Picture

Did Amazon Really Cut Prices at Whole Foods?

Not slowing down on its e-commerce ambitions, Walmart also on Friday unveiled a $310 million cash deal to buy online men’s retailer Bonobos. That acquisition follows a string of purchases of other online stores, including Moosejaw, ShoeBuy and ModCloth.

Whole Foods exploded in popularity two decades ago by offering a wide selection of organic and natural foods at a premium price. But the chain in recent years has struggled to stand out as other supermarket chains expanded their own organic and natural food offerings, often at lower prices. In February, the company said it was reducing the number of stores — the first time since 2008 — as it cut its forecast for the year.

Whole Foods posted revenue last year of about $16 billion and its shared closed at $33.06 on Thursday. The acquisition price was $42, an 27 percent premium.

Amazon, whose revenue last year was just under $136 billion, saw its shares rise 3 percent to $994.47 in recent trading. Meanwhile, shares of Walmart, Kroger and Target all sank.

First published on June 16 at 6:19 a.m. PT.Update, 8 and 9:24 a.m. PT: Adds comments from source and analyst, plus more details.

CNET Magazine: Check out a sample of the stories in CNET’s newsstand edition.

Tech Enabled: CNET chronicles tech’s role in providing new kinds of accessibility.

Read Also: Can You Buy Food On Amazon With Ebt

More Fulfillment Centers Means Quicker Delivery

Amazons Prime Now service promises to deliver certain products ranging from paper towels to electronics in an hour or less, which Amazon sources from 70 fulfillment centers in the U.S. With its purchase of Whole Foods and the hundreds of grocery stores it operates which sell everything from fresh food to beer, bakery items, flowers, and pet supplies Amazon has an opportunity to expand the products it can deliver under Prime Now. This is particularly useful for Amazon considering that the food options in Prime Now have been limited to gourmet markets like DAgostino and Billys Bakery in Manhattan.

Amazon Acquires Whole Food

Amazon is an American E-commerce and cloud computing company based in Seattle, Washington. It is a largest Internet based retailer in the world by total net sales [around $ 136 billion and by market capitalisation which is currently stood at around $ 465 Billion. Amazon also manufactures and sell electronic devices and world largest provider of cloud infrastructure services.

Whole Foods Market, is the leading natural and organic foods supermarket based in US, having a current market capitalization of around $ 13.46 Billion. In fiscal year 2016, the Company had sales of approximately $16 billion and has more than 460 stores in the United States, Canada, and the United Kingdom and averaging over eight million customers visits each week. It is the sixth largest grocery store.

Recommended Reading: Hbo Included With Prime

Whole Foods Will Get Cheaper For Everyone Starting Monday

“Customers will enjoy lower prices on products like Whole Trade bananas, organic avocados, organic large brown eggs, organic responsibly farmed salmon and tilapia, organic baby kale and baby lettuce, animal-welfare-rated 85% lean ground beef, creamy and crunchy almond butter, organic Gala and Fuji apples, organic rotisserie chicken, 365 Everyday Value organic butter, and much more,” the companies said.

It’s Going From Regional To National

Amazon may have launched a bidding war for Whole Foods ...

One of Whole Foods’ biggest challenges has been taking what set it apart lots of niche and often regional products and streamlining that into becoming a cost-efficient, national retailer. Many small brands point to Whole Foods as the birth ground for their new products. For Whole Foods though, devoting shelf space to small brands, especially those that aren’t driving traffic, was not always good for the bottom line. Dealing with each brand on a regional basis could prove complex.

Whole Foods has been trying to solve that challenge since before its sale to Amazon, hiring Target’s Don Clark in 2015 to help with the efforts. The grocer’s sale to Amazon though came with its own set of uncertainties, which resulted in those moves being viewed with a different level of scrutiny and tension.

It has begun to centralize purchasing for its suppliers. That means many small brands need to go through WFM headquarters in Austin, Texas, to get placed in a store, not through their regional Whole Foods representative. That approach simplifies operations and makes it easier for a brand to scale without traveling region by region. The drawback is small brands with little plans to grow at such a scale might feel squeezed out.

Whole Foods has also begun to centralize its merchandising, which means it’s now taking care of in-store displays and setup rather than allowing brands to outsource the task to third-party services.

Also Check: How To Cancel Britbox On Amazon Prime

In 2017 An Activist Hedge Fund Jana Partners Purchased A Stake In The Chain Shuffled The Board And Pushed It To Lower Prices To Better Compete With More Mainstream Chains

Mackey, in an interview with Texas Monthly, let loose saying, “Yes, we need to evolve.”

He added: “We need to get better, and we’re doing that. But these guys just want to sell us, because they think they can make forty or fifty percent in a short period of time. They’re greedy bastards, and they’re putting a bunch of propaganda out there, trying to destroy my reputation and the reputation of Whole Foods, because it’s in their self-interest to do so.”

Source: Texas Monthly

Amazon Has Found A Treasure Trove Of Data

It’s beginning to become more clear why Amazon bought Whole Foods. For one, it’s getting its hands on lots of shopping data, which will come in handy as Amazon expands its online grocery business and private label offerings.

As Amazon combines its Prime service and Whole Foods shopping experience, it’s getting even more insight into how the same person shops on and offline. That means a better ability to target ads and promotions than a grocer typically is able to. Because many shoppers still browse groceries online but shop in person, this combination threatens to be particularly powerful.

Don’t Miss: How To Reset Amazon Kindle

Did John Mackey Make A Lot Of Money Selling Whole Foods

Whole Foods Market founder John Mackey was paid 8 million dollars for selling his company to Amazon. Additionally, he was also able to retain his position and title of CEO.

Honestly, while that might seem like a lot of money, considering how popular Whole Foods is and how much money it continues to make, its actually a really low figure.

Its not entirely surprising given how much Whole Foods sales and profits had declined, though. And its also not surprising given that Mackey paid himself an annual salary of only $1.00 for many, many years.

Mackey has accumulated wealth, dont get me wrong. But hes still a modest guy .

The Whole Foodss story is so enthralling. In fact, its no exaggeration that its one of Americas most impressive companies.

The founders started the company on what seems like a foolish idea.

It was based on the idea that they could have a store thatll sell only wholesome products. And that theyll sell only natural and organic produce. This is a notion that we take for granted today.

But when Whole Foods started, no one else was doing what John envisioned for his company.

And while it was successful right out of the gate, consider a few facts. That first store was about the size of a 7-11 . And it was years before they opened a store outside of Texas.

Really it wasnt until they went public in 1993 and began to buy other chains as a way of growing faster, that Mackey began to really accumulate wealth.

The Intersection Of Whole Foods Customers + Amazon

Why Amazon wants to buy Whole Foods
  • Folks who frequently consider Whole Foods were twenty-five percent more likely to use Amazon
  • Folks who frequently consider Whole Foods were fifty percent more likely to be Prime members.
  • Forty percent of Prime non-members who frequently consider Whole Foods said the potential benefits of this partnership increases their likelihood of joining Prime.
  • Fifty-six percent of Prime members who frequently consider Whole Foods said this partnership increases their likelihood of retaining Prime membership.

What we can see from this data is a self-serving cycle where Whole Foods is driving traffic to Amazon while Amazon is driving traffic to Whole Foods.

“I want to make it fiscally irresponsible to not be a Prime member.” – Jeff Bezos ?

Recommended Reading: How To Sell Prime On Amazon

It’s Also Begun To Tackle The Challenge Of Fresh Food Delivery Again

Through Whole Foods stores, Amazon has renewed efforts to deliver fresh food a service that has been a struggle for it in the past. Unlike shampoo or paper towels, fresh food can spoil quickly. It is costly and complicated to deliver. It is expensive to store. Those challenges plagued its efforts with prior delivery service, Amazon Fresh.

Whole Foods’ stores provide a more cost-effective way to take care of fresh food, while also providing a launching pad to transport those groceries.

Shoppers are more likely to order and trust fresh food and meat from a retailer branded Whole Foods than they are from one named Amazon.

More articles

Popular Articles