Ecommerce giant Amazon.com Inc.’s (AMZN) executives didn't say much in their first comments on the company’s proposed $13.7 billion acquisition of Whole Foods Market Inc. (WFM) on Thursday. Many are curious as to the tech giant’s future plans for organic grocer Whole Foods, as the company fails to follow through with its promise to restore comparable sales growth.
While management failed to dive into specifics of the merger -- in part because it hasn’t closed yet -- they did say that the acquisition is part of a broader experiment to test out different store formats. In this fashion, the global corporation will continue with Amazon Fresh, Amazon Go and its other efforts to reinvent the means by which consumers shop.
The addition of Whole Foods “will be a big boost for us as we expand our offerings in consumables and grocery,” said Chief Financial Officer (CFO) Brian Olsavsky.(See also: Birkenstock CEO to Amazon: ‘This Is a Middle Finger to All Brands’.)
Online Retail Giant Thinks Long-Term
Bulls suggest that even if Whole Foods makes no profit it all, solely the logistics experience and addition of more than 400 retail locations is worth the hefty price tag. The move also positions Amazon more strongly against brick-and-mortar retailers and niche startups such as meal-kit delivery service Blue Apron Inc. (APRN).
The first comments on the Whole Foods deal came with Amazon’s quarterly earnings miss, dragged down by the etailer’s rising costs. The Seattle-based company’s smallest quarterly profit in two years reflected a 77% decline over last year and was shrunk by its heavy spending on new warehouses and delivery capacity for its retail business and data centers for its cloud services arm. Capital was also burned on new engineers for its artificial intelligence Alexa service and the hiring of additional warehouse workers. (See also: Amazon Surpasses $500B Mark, Bezos Briefly Becomes the World’s Richest Person.)