Amazon’s Purchase of Whole Foods Shows Brick-and-Mortar Still Lives

Today Amazon purchased upscale grocery chain Whole Foods for $13.7 billion in a deal that turns the e-commerce giant into a major brick-and-mortar retailer.

This news doesn’t directly impact the jewelry business, though it could affect Fred Meyer Jewelers parent Kroger. (Amazon once tried—and failed—to enter jewelry.) But let’s look at the whole picture: Amazon already had a grocery service, AmazonFresh. What it gets by acquiring Whole Foods is its network of over 400 brick-and-mortar stores.

Having become the dominant force in e-commerce, Amazon wants to expand its reach. Some 90 percent of sales are still done at brick-and-mortar stores. That’s clearly where it sees growth.

This isn’t Amazon’s first foray into brick-and-mortar: It’s opened up a few bookstores as well as a (seemingly now obsolete) grocery store.

Which proves that, as much as e-commerce is here to stay, brick-and-mortar isn’t going away either. In the last few months, we have seen e-commerce and physical commerce converge more and more. We saw this when Blue Nile and Brilliant Earth opened webrooms. Or when Walmart purchased Jet and Bonobos. (The latter deal was also announced today, but was overshadowed by the Amazon news.)

We traditionally think of brick-and-mortar and physical retail as different things. But now it is becoming clear that it’s all retail, regardless of channel. The future belongs to stores that can service customers however and wherever they wish.

(Image from Wikipedia)

JCK News Director

3 responses to “Amazon’s Purchase of Whole Foods Shows Brick-and-Mortar Still Lives”

  1. Brick-and-mortar cannot go away but the game sure has changed when it comes to Fine Jewellery. Margins has reduced drastically and as not much steps have been taken for improvement it will just get worse.

  2. It’s not brick and mortar stores that they wanted. t his is not a victory in that sense. Amazon wanted the 400 very large freezer facilities at those stores that amazon needed to expand their online grocery sales by having regional warehouses already built.

    • Hi Jim. Thanks for your comment.

      Interesting point. My thought is that Whole Foods stores are located in very expensive retail locations with pricey rents. If Amazon wanted just the facilities to build distribution centers (another possibility people have brought up) I have to believe they could have done it cheaper.

      Regardless, Amazon now owns 400 b and m stores. We’ll see what they do with them.

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