Starting as a bookseller, Amazon has become a huge conglomerate that now sells space on computer servers and has ambitions to make space available to the public.
The business philosophy is simple. Money is divided into two pots. Money that is spent on Amazon and money that is not spent on Amazon.
$1 trillion is spent on food in America. The grocery business is a low margin business with lots of pressure points. Amazon got into this marketplace with the purchase of Whole Foods about a year ago for a cost of $13.7 billion. They promised lower prices on a selection of best-selling staples.
When I recently picked up some items at a local Whole Foods Market, I was pleasantly surprised. Many of the prices were lower. There were also discounts promoted for “Prime” members. The membership costs $99 per year and opens a side door to lots of Amazon benefits.
Chill out I thought. I also noticed a lurking presence of behemoth. Amazon thinks that America is PRIME for it’s entry into the supermarket near you.
In fact, Prime was a prominent word used in many of the displays I saw as I walked to the checkout stand
One-fifth of the money Americans spend on goods is spent on food. Amazon is using food to draw more customers into its ecosystem. This could be like Costco on steroids. This is giving more people a good reason to join the Prime membership club and thus buy more Amazon goods and services at a discount.
The online powerhouse is dragging more and more into its web. This will prove to be more unwanted and costly competition amongst the food a beverage industry for your lunch money.