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Amazon’s Whole Foods Strategy: It’s Not What You Think

Ever since Amazon.com announced it was acquiring Whole Foods earlier this week, the pundits have been jumping on the story, each one theorizing about Amazon’s motivations for the acquisition.

Amazon’s problem with perishables: $75 and up for a gallon of milk, with an 18-day delivery window.

Amazon’s problem with perishables: $75 and up for a gallon of milk, with an 18-day delivery window.

Some guesses make more sense, in particular, that Amazon wants to expand its grocery business. Others might leave you scratching your head, like the theory that Amazon wants to be more like Walmart.

Upon closer analysis, however, even the more popular theories have weaknesses, leaving us to wonder whether Amazon is essentially taking a $13 billion crap shoot – or making the biggest blunder of CEO Jeff Bezos’ career.

Peeling Back the Layers of the Whole Foods Onion

Our starting point: the official Amazon party line. “Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,” crows Bezos in the official Amazon press release. “Whole Foods Market has been satisfying, delighting and nourishing customers for nearly four decades – they’re doing an amazing job and we want that to continue.”

Bezos is clearly playing his cards close to the vest here, as he is saying nothing that would indicate why a global ecommerce leader would be interested in a supermarket chain. In fact, this statement appears so baldly disingenuous that one wonders whether a committee of PR wonks actually wrote it, rather than Bezos himself.

Nevertheless, the most likely explanation for the acquisition is that Amazon wishes to expand its grocery business – not simply by adding bricks-and-mortar supermarkets, but by expanding its core ecommerce efforts in this category.

The question then is: why Whole Foods, rather than a more mainstream supermarket chain like Kroger or Albertson’s? After all, Whole Foods’ business model is fundamentally broken in many ways: its ‘whole paycheck’ prices are too high, its selection is poor, and many of its products are based on quackery, targeting a gullible customer base who believes, for example, homeopathy is something other than pure nonsense.

Read the entire article at https://www.forbes.com/sites/jasonbloomberg/2017/06/23/amazons-whole-foods-strategy-its-not-what-you-think/.

Intellyx publishes the Agile Digital Transformation Roadmap poster, advises companies on their digital transformation initiatives, and helps vendors communicate their agility stories. As of the time of writing, none of the organizations mentioned in this article are Intellyx customers. Image credit: Jason Bloomberg, from Amazon.com.

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Jason Bloomberg is a leading IT industry analyst, Forbes contributor, keynote speaker, and globally recognized expert on multiple disruptive trends in enterprise technology and digital transformation. He is ranked #5 on Onalytica’s list of top Digital Transformation influencers for 2018 and #15 on Jax’s list of top DevOps influencers for 2017, the only person to appear on both lists.

As founder and president of Agile Digital Transformation analyst firm Intellyx, he advises, writes, and speaks on a diverse set of topics, including digital transformation, artificial intelligence, cloud computing, devops, big data/analytics, cybersecurity, blockchain/bitcoin/cryptocurrency, no-code/low-code platforms and tools, organizational transformation, internet of things, enterprise architecture, SD-WAN/SDX, mainframes, hybrid IT, and legacy transformation, among other topics.

Mr. Bloomberg’s articles in Forbes are often viewed by more than 100,000 readers. During his career, he has published over 1,200 articles (over 200 for Forbes alone), spoken at over 400 conferences and webinars, and he has been quoted in the press and blogosphere over 2,000 times.

Mr. Bloomberg is the author or coauthor of four books: The Agile Architecture Revolution (Wiley, 2013), Service Orient or Be Doomed! How Service Orientation Will Change Your Business (Wiley, 2006), XML and Web Services Unleashed (SAMS Publishing, 2002), and Web Page Scripting Techniques (Hayden Books, 1996). His next book, Agile Digital Transformation, is due within the next year.

At SOA-focused industry analyst firm ZapThink from 2001 to 2013, Mr. Bloomberg created and delivered the Licensed ZapThink Architect (LZA) Service-Oriented Architecture (SOA) course and associated credential, certifying over 1,700 professionals worldwide. He is one of the original Managing Partners of ZapThink LLC, which was acquired by Dovel Technologies in 2011.

Prior to ZapThink, Mr. Bloomberg built a diverse background in eBusiness technology management and industry analysis, including serving as a senior analyst in IDC’s eBusiness Advisory group, as well as holding eBusiness management positions at USWeb/CKS (later marchFIRST) and WaveBend Solutions (now Hitachi Consulting), and several software and web development positions.