Today Jeff Bezos' Amazon announced that they would be acquiring the 450 store grocery chain "Whole Foods" in a move that would give the start up a brick and mortar footprint. Previous attempts by Amazon to grow their own brick and mortar presence have highlighted structural problems in the way Amazon grows when left to its own devices.
The 42 US dollar per share price is a 27% premium over Whole Food's closing share price of 33.06 US dollars yesterday. This aggressive move into the low margin grocery business comes as Jeff Bezos is seeking a public bailout over an earlier misadventures in the higher margin education business.
Not quite "low margin", this one. WF is one of major suppliers of "real food" in USA ( and, as custom dictates, also of "I will pay 5x because the sticker is green" nonsense. )
The higher price tag doesn't necessarily mean a higher margin.
It does when the item is a bottle of tap water, say.
But what happens when the people paid with the understanding they sweep near the tap water don't and then INFESTATION!!!
COGS isn't the only expense line on the grocer's sheet.