Taiwan based tech strategist Ben Thompson has a different, and interesting perspective on Amazon- Wholefoods, he writes:
(The big issue is ) logistics: Amazon is building out a delivery network with itself as the first-and-best customer; in the long run it seems obvious said logistics services will be exposed as a platform.
Amazon has never had sufficient scale in the grocery business to attract the best deals and to provide the cheapest service.
Scale is what was missing from Amazon’s grocery efforts: there was no first-and-best customer. Absent that, and given all the limitations of groceries, AmazonFresh was doomed to be eternally sub-scale.
WHOLE FOODS: CUSTOMER, NOT RETAILER
This is the key to understanding the purchase of Whole Foods: to the outside it may seem that Amazon is buying a retailer. The truth, though, is that Amazon is buying a customer — the first-and-best customer that will instantly bring its grocery efforts to scale.
heres the supply chain model that manufacturers and retailers work with
Today, all of the logistics that go into a Whole Foods store are for the purpose of stocking physical shelves: the entire operation is integrated.
What We should expect Amazon to do over the next few years is transform the Whole Foods supply chain into a service architecture based on primitives: meat, fruit, vegetables, baked goods, non-perishables (Whole Foods’ outsized reliance on store brands is something that was very attractive to Amazon).
What will make this massive investment worth it, though, is that there will be a guaranteed customer: Whole Foods Markets.
So rather than buying Wholefoods as a retailer to supply consumers, Amazon has bought primarily generic brand Wholefoods to give it scale in another new business: a new business where scale means profits or at least break even.