Consumer groups are challenging Amazon’s buying Whole Foods on antitrust grounds. They have it wrong. This isn’t a case of a monopolist gobbling up a competitor, but an innovator trying to stay one step ahead of the competition.
The same day that Amazon (AMZN) announced its plans to acquire the struggling Whole Foods (WFM) grocery store chain for $13.7 billion, Wal-Mart (WMT) announced that it was buying online menswear company Bonobos for $310 million.
While the prices are wildly different, both acquisitions are equally important. On the one hand, Amazon is making clear that it needs a presence in the real world to keep competing.
It has been busy opening physical bookstores — it now has stores in eight different states. Last year, it started talking about Amazon Go — a grocery store that would let you shop without ever going through a checkout lane using “just walk out technology.” It’s supposed to debut sometime this year. If Amazon disrupts the staid grocery business, that will likely mean more choices, better prices, and improved service.
But while Amazon is starting to compete in the physical world, retailers like Wal-Mart are getting more sophisticated about competing against Amazon online. ..
… Wal-Mart has some advantages over Amazon. As any shopper knows, it is already in the grocery business, and its physical presences lets people shop online and pick up items at the store the same day.
This is what free market competition looks like.