Amazon’s acquisition of Whole Foods for $13.7 billion merges two companies from entirely different industries. History shows that combining large companies across sectors means balancing different priorities, cultures, and goals—which doesn’t happen easily.
Amazon’s acquisition of Whole Foods primes the Internet giant to not only inject its customer experience prowess into the grocery chain, but take over the coveted world of organic groceries. But before the lives of grocery shoppers are changed for good, the tech giant and grocery chain must overcome the organizational and technical union of their unique houses.
That could come with conflict. Take Walmart’s acquisition of Jet, for example. The e-commerce site recently had to phase out Costco's Kirkland brand—despite Jet’s market position as third largest online retailer carrying those products—because Costco is a direct competitor to Walmart. Severing this relationship was necessary for both companies to keep their businesses moving forward under a unified front.
And just this week, the Wall Street Journal reported that after Walmart purchased Jet, it mandated that the online retailers’ employees stop drinking at the office. Many Jet employees were unhappy with the change, forcing Walmart to compromise.
If Whole Foods hopes to maintain its wholesome culture, it should pay attention to this situation. Corporate behemoths have the potential to completely swallow up and morph an acquisition’s culture if left unchecked. Luckily for Whole Foods, it has options to avoid such a fate.
First, both companies must face the challenge of merging two distinct teams accustomed to their own culture and priorities. Whole Foods is known for its “micro-cultures” that fluctuate based on store location. With each store inspired by the surrounding community, its localized company culture is core to who it is as a brand. Merging with Amazon may cause Whole Foods employees to question whether this unique approach will remain intact, or shift to be consistent with their new parent company.
To maintain a strong sense of community, it’s essential that management be open and honest about its plans. For starters, executives from both companies need to clearly communicate what changes employees and customers can expect to see under the new partnership. Will Amazon will still prioritize convenience and competitive pricing, or begin offering more expensive organic offerings as the norm? Will Whole Foods continue to put product quality and health first? How will the employees of Whole Foods—which has a reputation for a supportive work environment—be treated under a massive tech company known for a competitive corporate culture?
Transparency is key. It’s imperative that management set realistic expectations going forward.
Second, Amazon and Whole Foods need to seriously consider the integration of their technologies and systems. It won’t be long until customers can point a smartphone at a tomato to get nutrition facts, details about what farm it came from, and how far it traveled before it hit the shelves. But bringing this technical vision to fruition will be their most prominent and defining challenge.
This modernized grocery experience will only be possible if every Whole Foods store is properly equipped with sensors and beacons and customer data is artfully governed to make their experiences as personalized as possible. Managing these experiences while integrating new technologies is a challenge for any company; doing so while combining two companies will be even more difficult.
The Amazon-Whole Foods deal has huge potential, but will be a heavy lift. If the unlikely pair can practice corporate transparency and adeptly combine their technologies, they have potential to revolutionize our weekly shopping routine.
Laura Brooks is vice president of commerce at Acquia.