Whole Foods and the Amazon Monopoly
Written by Vanna Mavromatis
Despite the fact that no one really knows what Amazon plans to do with its acquisition of Whole Foods, the fact that its stock has soared means that, no matter its plan, people believe it will be successful.
We have long come to accept the presence, influence, and power that Amazon wields in the online marketplace. Earlier this year, however, Amazon moved into yet another domain: brick-and-mortar stores. With its acquisition of health- and organic-food chain Whole Foods, Amazon continues its expansion into every sector of consumer life.
Broadly, the rationale for Amazon’s acquisition goes back to, “be[ing] a complement to their other business competitors,” Professor John Horton says. Amazon might want to, “jumpstart [its] home delivery business, [have a] space to showroom new Amazon products, or get data from shoppers to be used for other purposes.” The precise reason, however, cannot be pinpointed.
Despite the fact that no one really knows what Amazon plans to do with its acquisition of Whole Foods, the fact that its stock has soared means that, no matter its plan, people believe it will be successful. Though there is technically an antitrust lawsuit against Amazon, it’s unlikely to go anywhere because we, the consumers, don’t want it to go anywhere. We’ve accepted Amazon as a monopoly in exchange for increased convenience, and the future will likely be filled with more of the same.
The average consumer is not overly concerned with Amazon’s potential to abuse its near-monopoly of the online marketplace. “Amazon’s position as a monopoly is irrelevant to the average consumer because of how convenient and cost-effective it is,” said Stern sophomore. “No one is scared of Amazon.”
It is still notable that this is not Amazon’s first foray into the brick-and-mortar market—lest we forget Amazon Locker or Amazon Bookstores. Whole Foods is just the next step, meaning Amazon has likely found sustained success in the physical marketplace.
The real question is: what comes next? “Hard to say,” Horton said. “Whole Foods was less than 3% of the market. Amazon, more broadly, [is] big, but not even that big with respect to retail overall. Furthermore, they seem to specialize in lowering prices, improving service quality, and plowing profits back into the business. Maybe they have a phase II to their plan, [such as] “jack up prices once everyone is out of business,” but that doesn’t seem to be the case now, and if it did start to happen, there are tools [to prevent it].”
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