There has been a long-standing myth that AWS was born out of excess capacity built by Amazon to support its retail operations. While this story has never been acknowledged or backed by any of the speeches or the book on Amazon, it is absolutely true that most of the thought process that went into Amazon’s own IT, were extended/ expanded to offer what we now know as Amazon Web Services.
Amazon has been working on acquiring Whole Foods for a while now, including a failed/ abandoned attempt sometime in 2016. They finally completed the acquisition this week, and within 2 business days, the Amazon impact was felt on the Whole Foods business model. Not only were prices slashed, but the entire catalog of Whole Foods was available on amazon.com’s shopping website, including special channels such as Prime and Prime Fresh.
Now lets pause for a moment and think about M&A. Organizations spend an eternity trying to figure out how to streamline the products of the acquired company, to the acquiring company. There are entire departments in organizations dedicated to M&A — but most importantly, the questions around what to integrate, how to integrate are answered long after the acquisition is complete. Sometimes they take years. Some organizations let the child company “operate on its own” for a long time — often because of this uncertainty. YouTube took a very long time to be integrated into Google. LinkedIn is still considered a separate entity and a business partner of Microsoft of sorts, and less like a part of Microsoft.
Amazon’s timing on the integration of Whole Foods into their model is reflective of a few things –
1. Competion and Urgency — Amazon perhaps does not have the liberty of taking months or years to integrate them. In fact, lot of the work must have been going on for several months.
2. Customer First — This acquisition is very consistent with their Customer First strategy. Instead of internal process dictating what, when and how the customer should be benefited, it is the customer demand that drives the T minus plan.
3. IT — This is probably the most under-appreciated angle. Their IT must be capable of just a seamless integration.
I hope Amazon’s Whole Foods acquisition becomes a case study someday, from which everyone can benefit.