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         Why Whole Foods Could Be a Good Fit For Amazon

Amazon reportedly considered making an offer for Whole Foods last fall. As activist investors target the grocery chain, here's why it could work.

 

         Why Would Amazon Want to Buy BJís Wholesale Club?

On the surface, Amazon does not have anything meaningful in common with BJís Wholesale Clubóor any other wholesale club operatoróto support an acquisition.

 

 

Why Whole Foods Could Be a Good Fit For Amazon

Amazon reportedly considered making an offer for Whole Foods last fall. As activist investors target the grocery chain, here's why it could work.

 

Jeremy Bowman, The Motley Fool

Apr 19, 2017

 

Whole Foods Market, Inc. (NASDAQ:WFM) stock spiked last week as the activist hedge fund Jana Partners took a stake in the grocer.

 

Jana said it would seek to accelerate the company's turnaround strategy in response to six straight quarters of comparable sales decline, or seek a sale. According to Bloomberg, one potentially interested buyer was Amazon.com (NASDAQ:AMZN), which had considered targeting Whole Foods last fall and has been stepping up efforts to break into the grocery industry in recent months.

 

The e-commerce giant revealed its cashier-less Amazon Go store last December, though the convenience store is still only open to Amazon employees, and it's also announced two soon-to-open grocery pickup facilities in Seattle.

 

With a market value of $11 billion following Jana's investment, Whole Foods would be by far Amazon's biggest acquisition -- which was previously the $1.2 billion it paid for Zappos in 2009 -- but it could be a good fit in at least few ways.

 

Similar customer bases ...

 

Gain supremacy over Instacart ...

 

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https://www.fool.com/investing/2017/04/19/why-whole-foods-could-make-sense-for-amazon.aspx

 

 

Why Would Amazon Want to Buy BJís Wholesale Club?

On the surface, Amazon does not have anything meaningful in common with BJís Wholesale Clubóor any other wholesale club operatoróto support an acquisition.

 

Donna Mitchell, National Real Estate Investor

Apr 19, 2017

 

BJís Wholesale Club is in the spotlight, with a news report claiming that the Westborough, Mass.-based company might be up for sale, and that Amazon may be a bidder.

 

The question for retail industry insiders is: What would attract an industry disrupter like Seattle-based Amazon to a company that is ranked third among wholesale clubs, operates brick-and-mortar stores concentrated in the Northeast and has not been able to fully leverage the advantages of the wholesale club sector?

 

ďI would be really surprised should that transaction occur,Ē says Jan Kniffen, CEO of J. Rogers Kniffen Worldwide Enterprises, an equity research and financial and management consulting

 

firm specializing in retail. He adds that BJís Wholesale Club did not go public because of concerns that it would not have been able to achieve a strong multiple as a public company.

 

On the surface, Amazon does not have anything meaningful in common with BJís Wholesale Clubóor any other wholesale club operatoróto support an acquisition. BJís Wholesale operates out of massive warehouse spaces easily spanning 100,000 sq. ft. It is not a traditional retailer, but it still depends on brick-and-mortar spaces to connect with customers, unlike Amazon.

 

Despite initial surprise about the report, however, Amazon has more in common with its brick-and-mortar competitors these days, and has adapted several operational tactics that draw similarities to that of Issaquah, Wash.-based Costco, and Samís Club of Walmart, headquartered in Bentonville, Ark.

 

Much of Amazonís business is now driven by its membership service Amazon Prime, which offers free two-day shipping on 50 million items. It has that aspect of its operations in common with wholesale clubs like Costco and Samís Club. For its part, Samís Club has struck back by offering free two-day shipping ďon millions of items.Ē

 

Costco is widely regarded as one of the most efficient operators in the retail sector, with Walmart being the only exception. Amazon continues to aim for greater efficiencies, especially in the area of delivery. It recently expanded Prime Now to 18 additional cities, enabling some members to get deliveries within two hours of placing their orders.

 

Industry experts seem skeptical that BJís would attract acquisition attention from such highly efficient operators, especially Amazon.

 

In its fourth quarter 2016 net lease big box report, Northbrook, Ill.-based investment firm the Boulder Group noted that cap rates on single tenant net lease properties had increased by about 42 basis points. BJís properties in particular usually have higher cap rates than those occupied by its peers Samís Club and Costco.

 

ďThey do not have the same credit profile as Costco, Samís Club or Walmart,Ē says John Feeney, vice president at the Boulder Group. ďAlso, they are not as well-known a brand.Ē

 

Down, but not out ...

 

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http://nreionline.com/retail/why-would-amazon-want-buy-bj-s-wholesale-club