Amazon continues to make headlines as they continue expanding their reach across industries. What are their plans for the purchase of Whole Foods? Whole Foods’s locations across the country provide an impressive network of distribution centers. Could this be more than location though? What else is Amazon planning? Keep your eyes open. We might be seeing some big things from Amazon in close future.
Amazon just announced its largest acquisition to date: a $14 billion purchase of Whole Foods. Why did they do it?
Some analysts believe Amazon will now look to disrupt the entire food industry. Others believe Whole Foods will represent a strategic shift to retail locations. But what if they’re all wrong? What if Amazon’s real intent is to gain a network of distribution centers that blankets the country?
Amazon is building an e-commerce fulfillment machine. The company is seeking to provide same-day, and in some cases, same-hour fulfillment. But how can they do so without a global network of warehousing locations, across all major markets?
This is where Whole Foods comes in. With 465 stores, Whole Foods has a footprint across the entire country. With a network of distribution centers, Whole Foods can give Amazon entry to every major market. Imagine if the next time you buy from Amazon, you got it in one hour, fulfilled directly from a Whole Foods location?
The next issue is robotics. What if Amazon decided to use its investments in automation to slice the labor costs in the food business? The food industry employs over 3 million people. With Amazon’s labor-saving technology, could they cut those costs and accelerate the speed at which Amazon can deliver an order right to your doorstep?
And a third issue is reverse logistics. It costs 10x as much money for products to go backward in the supply chain in comparison with forward. When you return a product, the company loses money. With 465 locations, can Amazon find a way to slash those reverse logistics costs?
In the end, for Amazon, it may be all about logistics and the last mile.