Running head: AMAZON/WHOLE FOODS
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Amazon and Whole Foods
Today Amazon is known as one of the world’s largest retail stores and technology
companies. Before Amazon became a giant, it was just an idea in the mind of Jeff Bezos, a
former Wall Street hedge fund executive (Hall, 2018). Bezos conducted research on online
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stores and found that books were the most logical product to initially sell online, but he always
had a vision for explosive growth and e-commerce domination (Hartman, 2017). He knew that
he wanted Amazon to be “an everything store” (Hartman, 2017).
Mr.. Bezos wanted the company to have a magical name and originally chose the name
“Cadabra”, but he was advised that it sounded too similar to cadaver which is a human corpse
used for dissection (Hartman, 2017). His next choice was “Relentless” before finally settling on
Amazon primarily because it is the first letter of the alphabet and its association with the world’s
longest river in South America (Hall, 2018). The original company logo was a trapezoid with a
river passing through it to make it appear as an “A”. Although the name Amazon was chosen,
entering relentless.com into a web browser will still take you directly to Amazon’s website.
Whole Foods is America’s largest grocery chain that specialized in organic food. The first
Whole Foods opened in Austin, Texas in September 1980 after two independent grocery chains
joined forces (Lewis, n.d.). John Mackey and Renee Lawson Hardy, owners of SaferWay Health
Food Store, and Craig Weller and Mark Skiles, owners of Clarksville Natural Grocery along with
a staff of 19 employees achieved immediate success (Lewis, n.d.). Heath food stores were not as
common as they are today, so there were less than half a dozen natural food supermarkets in the
United States, which made Whole Foods very popular (Whole Foods Market History, n.d.). The
store was so loved that customers and neighbors voluntarily joined the staff to repair the store
after a flood severely damaged the store in 1981 (Whole Foods Market History, n.d.). Investors
and creditors also provided financial relief, which was the first step to expansion.
Whole Foods Background
Under Mackey’s lead, Whole Foods’ first expansion was in 1984 starting with Houston,
then Dallas, and finally New Orleans after purchasing Whole Foods Company in 1988 (Lewis,
n.d.). Whole Foods continued to build stores from the ground up, but most of their growth came
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from acquiring other natural food store chains. They experienced rapid growth along the east and
west coast in the 1990s by acquiring Wellspring Grocery of North Carolina, Bread & Circus of
New England, Mrs. Gooch’s Natural Food Markets of Los Angeles, Bread of Life of Northern
California, Fresh Fields Markets on the East Coast and Midwest, Florida Bread of Life,
Merchant of Vino of Detroit, and Nature’s Heartland of Boston (Whole Foods Market History,
n.d.). In the 2000s, Whole Foods acquired Food for Thought in Northern California, Harry’s
Farmers Market stores in Atlanta, and the international expansion into Canada and the United
Kingdom with the acquisition of seven Fresh & Wild stores (Whole Foods Market History, n.d.).
Whole Foods’ core values are the commitment to selling the highest quality of organic
products available with an emphasis on employee satisfaction and happiness. Customer service
and employee happiness are embedded in their mission but the organization’s micro-culture
varies by store location since the local cultures are honored (Ransford, 2017). Whole Foods’
dedication to providing the highest quality products also led to high prices and declining sales
(Lewis, n.d.).
Amazon Background
Starting as an online bookstore, Amazon.com, Incorporated originated in Seattle,
Washington and it was incorporated in 1996. Now, it currently employs more than 200,000
employees within the United States and over 560,000 worldwide (Amazon.com, 2018). It also
offers a wide variety of products and services through its online website. In 2017, the company
acquired Whole Foods for $13.7 billion, becoming the largest e-commerce giant in the grocery
and delivery industry and a game-changer for the e-commerce sector (Welshans, 2017). In July
1995, Amazon launched its online bookstore to compete against the familiar brick and mortar
giants Barnes & Noble, Waldenbooks, and Crown Books (Easter & Paresh, 2017). Bezos gave
himself a thirty percent chance of success, which was better than the ten percent success rate of
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internet-based business start-ups in the 90s (Easter & Paresh, 2017). Financial journalist and
analyst criticized Amazon’s business strategy claiming that Amazon would lose the market to the
established aforementioned book chains once they launched competing e-commerce sites (Hall,
2018).
Amazon is considered one of the largest online retailers that offers a variety of products
as well as personalized shopping services for little or no cost. According to Welshans (2017), the
technology teams at Amazon and Whole Foods integrated Amazon Prime into the Whole Foods
point-of-sale system, which allowed Amazon Prime members to receive special savings and in-
store benefits. John Mackey, Whole Foods Co-founder and Chief Executive Officer (CEO),
believed by working together with Amazon and combining several key areas, the company can
lower prices and double down on its mission of reaching more people (Welshans, 2017). The
assignment will explore the various changes Amazon has endured since its existence and provide
a detailed analysis of the acquisition merger of Whole Foods in 2017. We will also discuss
Amazon and Whole Foods’ financial stability. Any potential threats and weaknesses that the
organization has faced or could potentially endure will also be addressed.
In the 1990s and early 2000s, Amazon suffered extreme growing pains. Power outages
would shut down facilities and the distribution had not matured or developed systems for the
expanding category of products. (Hartman, 2017). By 2000, Amazon’s sales surpassed one
billion, but the company had not turned a profit (Easter & Paresh, 2017). Bezos also created a lot
of chaos in the distribution centers from moving extremely fast and pushing others past their
abilities. He was a demanding boss that would verbally explode at employees if he disagreed
with what they reported (Hartman, 2017). Working conditions in Amazon’s fulfillment centers
are known for being notoriously bad. When customers would email Bezos, employees had a few
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hours to solve the issue before a ticking time bomb exploded. Bezos also felt that communication
is dysfunction and working in unison meant communicating less (Hartman, 2017).
Since the 2010s, Amazon has been recognized as one of the best fortune 500 companies
to work for. Amazon is a trend-setting technology giant that became the “everything store” plus a
manufacturer of electronic hardware, a book publisher, and a movie and television show
producer. Bezos' vision it started with the motto “get big fast.”
Part 1: Change Process
Throughout the years, Amazon has implemented many changes that have driven them to
its successful place today. Leblanc (2018) reported that by Amazon revamping many of their
procedures, they are on track to reach $1 trillion by 2027. One of their procedures they
overhauled was their supply chain management in where they evaluated the timeliness of their
shipping. In order to please their current customers and increase their consumer database, they
decided to feature their “two-day” shipping with a prime membership. When this tactic was
implemented, many got on board. In 2018, Soper (2018) reported that Mr. Bezos revealed the
number of Amazon Primer subscribers, which surpassed 100 million and is still growing as of
today.
Amazon itself has grown tremendously. As a personal customer from Amazon, I can say I
am extremely pleased with their service. Living outside the continental United States, shipping is
extremely difficult. They are many places that do not deliver to Hawai’i, which puts a strain on
my family and I. A prime example is K-Mart. We used to have a Kmart on the island, which
made it extremely beneficial to just go in there and shop for my exercise attire at a really decent
price. When I deployed to Guam, they also had a K-Mart there. However, the pick-up in store
feature did not apply to Guam or Hawai’i. After coming back home, the K-Mart in Hawai’i had
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closed! When I tried to buy online, I could not ship to my house due to them not shipping outside
the continental United States. That is when I turned to Amazon Prime. Although the two-day
shipping feature does not apply to us, I still get the items I order off Amazon within 3 – 5 days.
Due to my long work hours, I usually do my shopping on the weekends. However, now I can
literally buy the majority of the items I need (such as books, accessories, household items, etc.)
online and have them shipped right through my door. Amazon Prime has freed up my weekend
time and now I can concentrate on other items or errands I need to accomplish.
Definition: Merging Two Companies
The merging of two successful companies like Amazon and Whole Foods brought many
advantages and disadvantages to Mr. Bezos and his team. The employees of Amazon and Whole
Foods had the same concerns just like the employees at Yingscape and Yangsearch. Jick and
Peiperl (2011) highlighted that the employees at Yingscape and Yangsearch not only needed
guidance during the merge but also needed their vision to “translate the vision into a reason for
being for each employee…” (p. 117). During mergers, many employees fear for their jobs, which
causes a huge amount of personal and professional stress. This stress can actually extend out to
their work counterparts and family members if the employee facing the merger displays it.
Diagnosis
As previously stated, Amazon has been successful throughout the past couple of years.
Unfortunately, the same cannot be said about Whole Foods. Nadar (2018) wrote on how Amazon
would acquire Whole Foods for $13.7 billion and that Whole Foods would function “as a
subsidiary of Amazon” (p. 31). He analyzed that Whole Foods’ revenue was negatively impacted
by all the competition out there. Living in Hawai’i, I do not see many people food shopping at
Whole Foods. The majority of the population here either shop at Walmart, the commissary,
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Safeway, and/or Foodland. We personally shop at Costco. Although it is bulk item shopping, we
would rather buy it in bulk at a more inexpensive price than at Safeway. Soper and Giacomma
researched and found out that a Consumer Growth survey showed Whole Food items are price
around 50% higher than those seen at Walmart or another grocery store. Food products are
extremely expensive here especially the dairy products. Grub street (Amazon Merger Is Bringing
Whole Foods the Most Shoppers It's Had in Years, 2017) reported that Whole Foods asserts their
customers that their products are the most superior. However, from a personal standpoint, Whole
Foods sell eggs for $6 - $8 while Costco and the commissary sell them for $2 - $3. These prices
fluctuate depending on the season.
Part 2: Management Intervention
Leaders drive the company. Good and bad leaders can lead the company to success.
However, it also is dependent on the team you have. Leaders with a solid team who align their
goals with the company’s can make a big, positive impact. Technically, so can bad leaders. But
think about it. Do you think an employee will bend over backwards if their supervisor is a
complete pain in their side? The employees can make or break a company. It is best for a leader
to mentor them and grow them professionally. The skills that they are taught will help them not
only succeed in the organization but also help manager their personal lives better.
One thing I personally live by is transparency. Transparency must exist among all
employee tiers. When no guidance is given from Senior Leadership, subordinates may not only
run amuck but there will be confusion and chaos amongst each other. A prime example is Ofra
Sherman in the Glaxo-Wellcome case study. No one gave Ofra any guidance on what the end
result of the merger would mean to her and her team. Jicke & Peiperl stated that Ofra was “…
wondered again about what she should do” (p. 356). She was extremely successful in the
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company but her leadership did not advise her on the impacts this merger would have on her
team. As much as she tried to be transparent with both employee tiers, she could not give false
hope to her subordinates and her leadership did not give her any information on what everyone’s
next steps would be.
Recommendations
Amazon and Whole Foods Senior Management Leaders would need to establish a clear
and concise vision statement that would not only align with what their goals are but also with
their employees goals too. Jick and Peiperl (2011) discussed when creating a vision, it must
“translate the vision into a reason for being for each employee…” (p. 117). When we had to
rewrite our Squadron vision, our Commander took all the Officers in the room and we all
decided to put our own piece to the vision. Not only did she include her subordinates but she also
had us take our vision back to our subordinates and get their feel/taste for it. She wanted for
every single person in the Squadron to add his or her own personal view/touch to our vision. She
felt by doing this, more people would be prone to accomplish the mission effectively and
efficiently.
Summary
In conclusion, the merger of Amazon and Whole Foods will bring a lot of competition.
Amazon wants to expand its wings and align more companies with themselves. Although Whole
Foods was not doing so well, Mr. Bezos and his team’s vision for its future will help Whole
Foods increase its customer database and revenue. To this day, a lot of the competitors out there
have been hurt by Amazon’s success hence why many companies and organizations will try to
mirror the services that Amazon and Whole Foods provide. Brainstorming innovative changes,
overhauling old process, and visualizing how changes could play out in the Whole Foods and
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Amazon world will help the merger succeed. Addressing all the staff and getting them involved
when conducting and carrying out the implementation plans/changes will help it be accepted
smoothly. As long as Mr. Bezos and the leadership team instills and maintains transparency,
guarantees customer satisfaction, and provides quality products to their customers as Amazon
and Whole Foods focus, they will thrive on all matters and blow the competitors out of the water.
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