Amazon Acquisition Of Whole Foods Business Analysis

Amazon acquisition of Whole Foods on June 16, 2017, for 13.9 billion dollars has wiped off $69 billions from various competitors ranging from retailers, pharmaceutical and food delivery companies. The scope of investor angst highlights the conglomerate zeal for disrupting various industries that by lowering consumers prices, driving out competition by extremely low-profit margins and automation (Ovide & He, 2017). Although it seems a long time ago, the internet retailing phenomena that is Amazon was started in 1994, like many of its iconic predecessors (Apple, Microsoft) built out of a garage and listed on NASDAQ in 1997. In its early days it was primarily focused on book retailing and just like a typical internet company the revenue in 1999 was 1.6 billion while losing 600 million in expenses (Damodaran, 2014).
Aswath Damodaran of Stern School of Business, Jeff Bezos has made the ultimate ‘field of dreams’ company by always reminding shareholders about the need for revenue growth at the expense of short-term profitability. “The losses at Amazon are thus a deliberate consequence of the way the company approaches business, selling products and services below cost and with lots of hype, with the intent of inserting itself in peoples' lives so completely that they will be unable to abandon it in the future” (Damodaran, 2014). For example, Amazon Prime incentives customers to always prioritise shopping at Amazon website before they make purchases from a rival