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Amazon Has Benefited from Its Whole Foods Acquisition

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Amazon is building more Whole Foods stores

It’s been a year since Amazon (AMZN) announced its largest acquisition deal ever: the deal to buy organic food retail chain Whole Foods for $13.7 billion. Amazon seems to like Whole Foods’ flavor despite reports of tensions between Amazon’s executives and those who joined from Whole Foods.

Amazon is building dozens more Whole Foods stores, according to a Wall Street Journal report. There are at least 38 Whole Foods stores under construction, according to the report, which cites real estate trackers. There are currently 484 Whole Foods locations in North America and the United Kingdom, according to the retailer’s website. Amazon also operates a number of physical stores under its own name, such as the Amazon Go cashier-free convenience store. Amazon could be aiming for as many as 1,500 store locations across the United States, according to the report.

Amazon made $650 million in online grocery sales

Amazon’s acquisition of Whole Foods was seen as its trying to bolster its competition in the grocery business, which is currently dominated by traditional retailers such as Walmart (WMT), Target (TGT), Costco (COST), and Kroger (KR). The fact that most people still prefer to touch and feel the texture of the food before they buy it is the reason traditional retailers with wide physical store networks have tended to have a leg up in the food retail business compared to their online rivals.

But Amazon is making an aggressive push for food spending. The company’s US online grocery sales grew 48% to $650 million in the first quarter, according to One Click Retail.

Selling devices at Whole Foods locations

With Whole Foods stores, Amazon allows customers to interact with food more closely when shopping. Amazon also uses Whole Foods locations to sell not just food items but also devices such as Echo smart speakers. Whole Foods has also made Amazon’s Prime program more attractive, as the company now delivers grocery orders from Whole Foods stores to the doorsteps of Prime customers.

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