Can Amazon Trim Fat at Whole Foods?: Case Analysis

Can Amazon
trim fat at
Whole
Foods?
Case Analysis
A bit of History…About the Whole Foods
The Success Story and then
What happened later?
• Whole Foods was successful and sustained the
competitive advantage because they used to offer the
best natural and organic foods,
• They operated under the image of People trusted not
having to check the ingredient labels on products sold in
whole foods and they were sure of just buying knowing
that they would be free of artificial ingredients,
preservatives, colors, and flavors.
• However the concept of organic came at the high cost
too,
• Whole Foods suffered a Competitive
Disadvantage later because of the Credit
Crisis that led to people cutting down on
What Happened budget, making the organic produce
unaffordable-External Environment Cause
Later? • This made Whole Foods to rebrand itself
under the eat healthy vertical to sustain its
business, however the wrong labelling
incident created Trust issues amongst the
customers
• This incident hit a bullet straight through
the Good Will of the Whole Foods,
Problem
Statement-
Rephrased !
Whats next in the Grocery Market?
Can Amazon Sustain Competitive
Advantage against the Big Players?
Amazon-Whole Wins for Amazon Wins for Whole Foods
Foods deal is a Good • Gateway for Amazon to • Whole Foods Goodwill is
Introduce a new vertical of now healed with the loyalty
One Strategically? entering the Retail Grocery membership of Amazon
Market. Prime Members.
Elaborating the Win- • Got the access to the Retail • Whole Foods fill the Missing
Win Situation Brick and Motor stores
spread all over the Country,
piece of Expertise that
Amazon was lacking in the
Grocery Business,
• This is perfect Grocery
Setting to Implement the • Whole Foods can continue
Amazon Go User Experience to stay in business and
sustain their reputation for
• Just Walk Out Technology is
being a leader in Fresh Food
the Competitive Advantage
they are trying to Sustain
here,
• To Serve Amazon’s “the earth’s most
customer centric company” Food and
groceries are strategic to Amazon
simply because of their market size,
• To compete with Walmart, Krogers,
ALDI etc., Amazon has to accelerate
its investment in the Brick and Motor
store to serve the customers’ needs
of "Inspect & Select”.
• The Strategy of merging Pantry,
Prime now, Amazon Fresh, Subscribe
and Save with the competitive
advantage of a brick-and-mortar
store with the Amazon Go technology
with a widespread presence of whole
foods can make it possible.
• Amazon has just acquired a national
The Union- How it Finally

physical presence, and a network of
mini-distribution centers for fresh
produce.
Happened.
• Stopped Sourcing Locally,
• Took out the Specialty items, and stick to the
standard assortment
• Reduce Produce Variance across the stores, thus
eliminate the small suppliers
• Whole Foods should start selling the consumer- The New
Wholefoods
packaged goods by combining Organic,
• Amazon may rebrand wholefoods, Amazon Fresh
could become an ecosystem of channels centered on
food and groceries will be capable of meeting the
needs of all customers through all available channels
of reaching them and gaining marketshare.
The Last Mile Delivery Strategy- Competing
in a Race !
• Amazon is making people believe they deserve fast

delivery, they are working on making this experience work
to match world’s agility.
• Amazon Fresh- Grocery delivery option and with their
Whole Foods acquisition they have access to to an average
of 42000 SKUs which should accelerate the rapid delivery
Promise.
• With the recent pandemic, and their corporate strategy
working well globally based on the consumer requirement,
they could work on growing this vertical bigger to spin it off
later,
• With all the tech and budget in the world to reinvent this
sector, Amazon could transform grocery shopping
experience for people.
• Competitive Rivalry- Quite High, with a lot of
Local players in each geography playing low cost
advantage.
• Threat of New Entrants- Medium, with this sector
becoming more capital intensive and relying on
the tech to serve customers majorly large players
are expected to pump in, For Example-Jio in India,
• Threat of Substitutes-High, this Business Model
created by amazon is easy to imitate and a
number of local players have already set this up
sourcing directly from the farmer’s
• Bargaining power of Suppliers-Low, As much as
Amazon has invested in Forward and the
Backward integration, mastering the value chain
by creating ecosystem themselves this force
doesn’t have much effect
• Bargaining power of customers-Very high, as
there is very low switching cost and with the
number of players, the loyalty of customers isn’t
like the Costco loyalty. Amazon has set a very high
customer expectations which it should constantly
strive to achieve, as that plays as a business
differentiator for them.
Whats Next for Amazon?
• Pharmacy Industry tapping into the

healthcare insurance sector
• The Homeservices Market, such as
Salons,cleaning services, Handyman,
Appliances Installation, repair and
insurance,
• Peer to peer selling powered by Amazon’s
supplychain
• Gasoline delivery
• Online Education platform powered by AWS
• All of this on Alexa enabled, creating a
customer centric ecosystem to build loyalty
and retain marketshare.

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Can Amazon

The Union- How it Finally

• Amazon is making people believe they deserve fast

• Pharmacy Industry tapping into the

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