Will Amazon’s acquisition of Whole Foods lead to decreased sustainability in terms of quality and supplier relationships?

On June 16^th 2017, Amazon’s acquired Whole Foods. Given Amazon’s poor environmental track record and labor practices, it would be wise to be skeptical that Amazon may hurt Whole Foods branding and values. In our class discussion with guest speaker, Mike Rowlands, Mike brought up an example of Whole Foods best sustainability practices for farmed salmon no longer meeting standards after the acquisition. He claimed that fish were being born without tails or even with two heads. Mike’s sentiment was that Amazon’s strategy to cut prices on organic grocery staples (salmon included) was responsible for the drop in quality. He had no evidence of this, but as a society, we often scapegoat big corporations as we view them as untrustworthy, and often, rightfully so.

Whole Foods’ business model is to charge higher prices to ensure the best natural and organic foods to their customers and ensure responsible production. Mike’s argument stemmed that as margins thin, that this business model will no longer be sustainable in the sense that the true cost of the product would be hidden to consumers. The assumption was made that the consumer benefit of lower prices was offset by negatively impacting the supply chain somewhere along the line.

While we can only speculate on where the supply chain is impacted, we should look more carefully at potential strategic objectives of the acquisition. Whole Foods could become more sustainable, and it seems like a option as Amazon brought into the grocery store retail space because it allows for further Amazon integration. By reducing prices, objectives like market share, traffic, and cross-selling could be enriched. These factors have the potential to increase profits with no detriment to the supply chain. These objectives appear to be the intention as Amazon Prime is being linked to Whole Foods’ customer rewards program, which allows customers discounts on Amazon products when they spend at Whole Foods.

Amazon has the influence to create a vast change in grocery store consumption and purchase habits, and this can be seen by Kroger’s stock dropping by 14.5% after the acquisition announcement. Amazon can create more competition with the space, and has the influence to demand that affordable, healthy organic food becomes the mainstream rather than the exception. Consumers, and even the supply chain, have the potential to be winners here. But Amazon must continue to uphold sustainability by continuing to honor those relationships originally established by Whole Foods.