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Amazon Gains More Than Grocery Stores When It Buys Whole Foods

US grocery chain Whole Foods is more to Amazon than just a large number of retail locations across the country. It gives Amazon a presence in thousands of locations, close to population centres and enables an extension of its click and collect service, better handling of low shelf life products - like groceries - and a potentially much enhanced delivery network for high traffic items.

That's why Amazon has stumped up $14bn to buy the chain.

It's likely that there'll be a short period of consolidation and planning before Amazon unveils its hand, but it seems highly likely that we'll see Amazon initially use the stores to provide a local online shopping presence with sharp delivery times.  Whole Foods already offers grocery delivery. Amazon is going to want to speed that service up. Only after that's successfully running will we see the power the new infrastructure offers the company.

Amazon is all about reducing the friction between customers and their purchases. The easier it is to get product to a customer, the more timely the delivery, the more likely it is that purchase will be made at Amazon.

With stores across the US, as well as some in Canada and the UK, Amazon's has put itself in a position to deliver.