Jeff Bezos and Amazon’s Purchase of Whole Foods: A Sign of Things to Come!

Dear Commons Community, 

On Friday, Amazon announced that it would buy the upscale grocery chain Whole Foods for $13.4 billion.  This deal will expand Amazon from a mostly online shopping giant into a merchant with physical outposts in hundreds of neighborhoods across the country. Since the announcement, the media including yesterday’s Sunday morning talk shows have been on a frenzy predicting what Jeff Bezos, Amazon’s founder, intends to do with Whole Foods.

Some observers see the acquisition as simply an escalation in the Amazon’s  long-running battle with Walmart, the largest grocery retailer in the United States, which has been struggling to play catch-up in Internet shopping. On Friday, Walmart announced a $310 million deal to acquire the Internet apparel retailer Bonobos, and last year it agreed to pay $3.3 billion for Jet.com and put Jet’s chief executive, Marc Lore, in charge of Walmart’s overall e-commerce business. 

But others see it as Bezos’ attempt to experiment with grocery buying in a way that few companies have ever considered.  For example, here is one scenario courtesy of the New York Times Upshot:

“You walk into a store and are greeted by name, by a computer with facial recognition that directs you to the items you need. You peruse a small area — no chance of getting lost or wasting time searching for things — because the store stocks only sample items. You wave your phone in front of anything you want to buy, then walk out. In the back, robots retrieve your items from a warehouse and deliver them to your home via driverless car or drone.”

A little futuristic but not out of the realm of the possible.  The Upshot piece goes on to present the potential for large-scale automation in retail businesses and concludes with a quote from Erik Brynjolfsson, director of the M.I.T. Initiative on the Digital Economy:

“Amazon’s plans could be much bigger than simply automating stores.

“The bigger and more profound way that technology affects jobs is by completely reinventing the business model,” he said. “Amazon didn’t go put a robot into the bookstores and help you check out books faster. It completely reinvented bookstores. The idea of a cashier won’t be so much automated as just made irrelevant — you’ll just tell your Echo what you need, or perhaps it will anticipate what you need, and stuff will get delivered to you.”

It will be interesting to watch how Amazon re-imagines the retail grocery business.  It may portend of a whole new way of shopping for anything.

Tony

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