Question

Please answer the following questions. The aim here is to discuss. Where appropriate please support your claims with data.

Amazon acquired Whole Foods Market. How would you evaluate the impact of TVM on this transaction?

Answer 1

Do you remember the furor that exploded when we all began to realize the serious impact that Amazon was going to have on the future of book retailing? It seems like a long time ago now. And besides, disrupting the paperback market may have been where it all started for Amazon, but it certainly wasn’t where the story ended.

And now we are faced with the opening of a new chapter. On June 16th, Amazon announced that it would be buying organic grocer Whole Foods Market in a deal valued at about $13.7 billion. The move catapults the ecommerce giant straight into over 450 physical locations, and immediately fulfils its long-held desire to sell more groceries.

“Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,”

That’s all well and good, but the immediate implications for the grocery industry are huge – and there’s more than a whiff of fear coming from retailers of all stripes as the potential ramifications begin to sink in.

Competing Stocks Plummet

Amazon’s takeover of Whole Foods sent the stocks of competing grocery chains plummeting. Walmart sank $3.67 (4.7%), Target fell $2.85 (5.1%), Costco dropped $12.95 (7.2%). The list goes on and on.

Why?

Because competing with Amazon is a terrifying prospect for any incumbent business. This is primarily due to the fact that Amazon operates on a radical model whereby it doesn’t make any money – and that’s a big problem for every other grocery chain, which has to contend with razor-thin margins already.As indicated Amazon works on growth model but this year Amazon created 10 billion dollar. So company will be profitable soon. TVM doesn't create that much of impact on Amazon.