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  Amazon’s acquisition of Whole Foods makes a ton of sense to me. On one hand you have Whole Foods, a supermarket retailer with large spaces in high end areas capturing a fair amount of wallet share from consumers who have higher education, technology adoption and education. Further, many of their items are private label which tend to have increased margins. The Whole Foods customer is likely to have Amazon prime membership demographically and psychographically. On the other side is Amazon with a focus on growing retail and home delivery as well as deepening customer experiences with increasing talk of in person sales. More specifically, here’s what I see:
  • Checkout Free stores: Whole Foods has been popular for it’s lunch and being able to grab food and walk out without a cashier visit would be a huge value to the Whole Foods customer who tends to be time starved, or at a minimum value their time more that other stores customers.
 
  • Amazon Fresh: The grocery delivery service can expand exponentially as well as offer a higher end higher margin product coast to coast now with the warehouses that each Whole Foods can provide.
 
  • Prime Now / Amazon Drones: Having transition / drop off points of the roof of a huge grocery stores is not something that crazy. Whether they are staging areas, battery charging locations or just locations for launching more delivery drones, this has huge opportunity to more quickly upend logistics.
 
  • New Product Launch: Whether it is Alexa, Product Demos or highlighting a new brand, this gives amazing shelf space and launchpad for new products, especially of items that sell better when felt in person.
 
  • In Person Returns: Have an issue? Don’t use UPS, come to our grocery store to return that item and buy more stuff. This is something that I am fairly certain will impact UPS’s stock price within the next 3 years. Amazon already has a fleet of trucks to reduce shipping costs, this will significantly increase their opportunities to flex it’s logistical muscle (think Wal Mart owning McLane distributors)
 
  • Amazon Locker: Owning Whole Foods is gives this a huge leap forwards. There is less need to push for using someone else’s stores when they now have 431 new outlets)

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