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Amazon’s acquires Whole Foods

On June 16, online retail giant Amazon bought the organic, artisanal grocer Whole Foods for a whopping $13.7 billion.

Many analysts believe the bid will give Amazon a larger share over food retail and strengthen the company’s existing delivery service.

These incentives may both be true, but Annie’s Homegrown President John Foraker thinks the acquisition could also meaningfully address another issue that plagues communities across the US: food deserts.

Over 23 million Americans, including 6.5 million children, live in urban and rural neighborhoods that are more than a mile away from a grocery store. These are known as food deserts — places where fresh fruit and vegetables (and healthy foods in general) are largely inaccessible to residents.

“The thought of Whole Food’s mission combined with technology and the ability of a company like Amazon to help conquer some of the last-mile issues that have prevented access and distribution into really difficult places seems like a golden opportunity,” Foraker told Business Insider. Products from Annie’s — the General Mills-owned organic food brand best known for its macaroni and cheese — are already available on Amazon and in Whole Foods aisles.

If a family does not live near a supermarket, they could theoretically soon order organic, healthy food on Amazon, Foraker said. Amazon Fresh already offers home deliveries, but he believes the acquisition will widen the reach and offerings of the service.

“So much of consumers’ engagement with food and shopping has moved onto their mobile device. This can be an easy way to get access to these kinds of foods and have them delivered directly to their doors,” he said.

In recent years, Amazon has invested heavily in its delivery service, Amazon Fresh. This delivery infrastructure, paired with Whole Foods’ 450+ stores, has the potential to deliver healthy produce to most homes in the US within an hour or two, Foraker said.

“If you live in an poor urban or rural neighborhood that doesn’t have good grocery stores around, you think, ‘I got to get in a car — if I have one — and drive 30 or 45 minutes to get to a place where I can buy fresher, healthier food,'” he said. “The idea of those two [companies] coming together will give you most of what you need to solve that.”

Amazon Fresh currently delivers to cities in New York, New Jersey, Connecticut, Massachusetts, Pennsylvania, Delaware, Maryland, New Hampshire, West Virginia, and Northern California. To meaningfully address America’s food deserts, the company would need to fill location gaps around the US. Partnering with Whole Foods, which has locations across the country, could help Amazon do that, Foraker said.

Access to produce is not enough to end food deserts entirely. Education around healthy foods is also key. To make a meaningful impact, Foraker said Amazon and Whole Foods could team up with agricultural education nonprofits, like The Ron Finley Project and FoodCorps.

There’s also a cost issue. Nearly half of Americans who live in food deserts are low-income, which means they likely can’t afford Whole Foods’ expensive prices.

Foraker is confident that Whole Foods and Amazon will figure out how to lower prices without paying farmers (or their employees) less. For example, in food desert areas where it makes more economic sense to have delivery available without physical stores, the company may have lower operational margins, helping to drive down food costs.

“The business model needs to be different,” he said. “Amazon has a long history of figuring out how to drive efficiency out of a supply chain. Managing a perishable logistics network is so difficult. But if anyone in the world can figure it out, it’s probably going to be them.”

Source : http://www.businessinsider.com/amazon-whole-foods-food-deserts-2017-6

Amin Lalani
Amin Lalani
Amin Lalani is M.Phil in Internet Retailing with 10 years of experience in Internet Retailing arena along with enterprise experience in setting up SAGE eCommerce and is SAP MM certified. He been a faculty, mentor and SME Internet Retail experts since many years

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