What you need to know about: Amazon

Would you buy groceries from the world's largest e-tailer?

by Andrew Saunders
Last Updated: 17 Jul 2017

Formative years

On a cross-country drive from New York to Seattle in 1994, an ambitious ex-hedge fund exec named Jeff Bezos wrote up the business plan for his new venture - a mail-order bookstore based on a then little-known technology called the internet. Wonder if it ever caught on?

He called it Amazon.com after the world's longest river - a name whose meaning only slowly became clear: 23 years later the firm's interests encompass almost every aspect of business all the way from the headwaters to the open sea.

Recent history

So now you can buy practically anything from Amazon - a book to a bicycle, a garden table to Jeremy Clarkson's The Grand Tour - it is the world's largest online retailer and still growing at a whopping 28% per annum despite having hit $136bn in sales (just don't ask about profit).

But there is one big branch of retail that eludes Amazon's fast-flowing tide of disruption - groceries. Food accounts for half of all shopping and yet Amazon Fresh remains a microscopic mosquito on the massive flanks of Wal-Mart et al.

In an effort to address this failing, in June Amazon announced its intention to spend $13.7bn on upscale US organic chain Whole Foods Market. It's the firm's biggest ever deal so there is clearly a lot more riding on it than a few packets of vegan-friendly alfalfa sprouts.

Who's in charge?

That self-same former hedge fund manager remains in the hot seat 23 years later, only now he is worth over $80bn and is perhaps the single most successful internet entrepreneur of all time. Part-big picture visionary, part-micromanager, Bezos' vision for Whole Foods seems to be a life-size laboratory to get to the bottom of how the tricky groceries business really ticks. If he can pull it off, the party may be over for major supermarkets worldwide.

Don't mention

Questions over the size of Amazon's tax bill rumble on, but the biggest problem the Whole Foods deal is likely to throw up will be cultural. Ethical food nice guys meet 'intense' megacorp with a penchant for low pay and employee metrics. What can possibly go wrong?

VITAL STATISTICS
Sales: $135.98bn (2016)
Profit: $2.37bn (2016) 
Employees: 341,400

Image: Steve Jurvetson/Flickr

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