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Freight Waves | Amazon’s Whole Foods Purchase Increases Its Distribution Channels

07.11.17 | Brian Straight, Freight Waves

With refrigerated distribution warehouses, Whole Foods opens the door to growth in Amazon’s food delivery business

Amazon sent shock waves through the grocery business on Friday with its announcement that it will acquire Whole Foods in a deal valued at $13.7 billion, which includes assumption of Whole Foods’ debt. But the purchase may be giving Amazon something even more valuable than Whole Foods' customers - a distribution network.

“Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,” said Jeff Bezos, Amazon founder and CEO. “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.”

The deal gives Amazon something that it has been lacking in its push to expand its grocery business Amazon Fresh and also a leg up on Walmart, which according to at least one report was best positioned to handle the growing online grocery business.

“Amazon will eventually be moving most of its freight in dedicated networks through local distribution points that have the option of self pickup,” Noel Perry, truck and transportation expert with FTR Intel, told FreightWaves. “This will reduce parcel volume [and] Whole foods will be an early example of this. It is good for the customers in that it reduces dependence on expansive parcel shipping. [Whether] it's good for industry participants depends on one's point of view.”

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