The Case of Amazon and Whole Foods: Business Opportunity, Risks, Marketing Project, and Impact on So

Retail Shopping Models

Retail shopping models had long been considered binary—either e-commerce or brick and mortar. In practice, the industry involved a long spectrum with pure e-commerce on one end and pure brick and mortar on the other end. In between, many different models were emerging, like ordering online and picking up in-store (Walmart’s Grocery Pickup), shopping in-store and ordering online (Warby Parker and Bonobos made their name in this space—largely facilitating the showroom behavior of consumers), digitally enhanced physical shopping (several companies hold patents in this space with virtual reality promising to push this model), and many others. 

By 2019, Amazon was the world’s most valuable online retailer exceeding $1 trillion (USD). 

Amazon got established on the 5th of July 1994 in Seattle, Washington, by Jeff Bezos. The history of the website is one of its kind. With now more than 351,000 employees all over the world Amazon belongs to the biggest companies world wide. On this amazing website you can find everything from weird Chinese beauty products to really expensive caviar. When it came down to making a first step in the online marketing world Bezos settles with books. He knew that there was a large demand on books worldwide and the low price of books along the huge number of titles available to print made it the best choice he could have taken during that time. Only two months after Amazons first online appearance it already earned over 20,000$/per week.

The memorable Amazon logo with he arrow from A to Z was incorporated on June 19, 2000. The arrow makes the logo look like a smile but more importantly the company wants to show that they offer any product available from A to Z.

Despite Amazon’s online retailing success, the company depended largely on a single modality that constrained the overall customer experience and potentially limited growth. For example, some existing and potential customers liked to hold a physical book before buying it. Others were not comfortable with packages being left at unsecured doorsteps. Home security videos of package-grabbers appeared frequently on social media, especially during holiday seasons. Additionally, while some items, like food, could be delivered to homes, many customers liked the option of being able to touch and smell their fresh produce before buying it. But it wasn’t clear if experimenting with diferent modalities could cause Amazon to lose any of its highly focused and wellhoned advantages in online retail. 

Amazon Go

In 2018 the first Amazon convenience store was opened in Seattle after  couple of years of experiments. This unusual convenience store works different compared to Walmart for example. By walking through the store your online Amazon account got charged with the items you want to buy. The store also eliminated checkouts and especially checkout lines by placing sensors at the exit doors which automatically finalize the bill online in the customers Amazon account.

Whole Food

On June 16, 2017, Amazon and Whole Foods Market, Inc. announced that they have entered into a definitive merger agreement under which Amazon will acquire Whole Foods Market for $42 per share in an all-cash transaction valued at approximately $13.7 billion, including Whole Foods Market’s net debt.

Whole Foods Market, is the leading natural and organic foods supermarket based in US. In fiscal year 2016, the Company had sales of approximately $16 billion and has more than 460 stores in the United States, Canada, and the United Kingdom and averaging over eight million customers visits each week. It is the sixth largest grocery store

Your Task

Research the case of Amazon – Whole Foods and write a report that reflects on and answers the following questions. 

Your answers should be supported by evidence from the data you collect through your research. Your answers should also show how you analysed the data you collected using the marketing theories and concepts, and corporate social responsibility concepts you are learning in this module.

The questions:

1.What was the business opportunity for Amazon? How did the company capture it? 

2.Identify Risks and Opportunities for Amazon in entering in this new market.

3.Prepare a short marketing project for launching the Whole Food and Amazon cooperation, from market research to operational marketing.

4.Analyse the impact of this new business model on the social and economic environment

Write a report answering the above questions. Build clear arguments in your answers. Strengthen these arguments with sufficient evidence from the case study, your research into the market and the company and from the marketing and corporate social responsibility literature as appropriate.