Menu

What Will the Amazon-Whole Foods Merger Do to Small Business?


Nov 21, 2017 | Jessica Ogilvie

The acquisition of Whole Foods by Amazon left some feeling nervous, a foreboding of something unseemly, or something, at least, somehow unfriendly to small business. After all, what happens to the little guy when two behemoth corporations merge into one monstrosity — let alone when one of those companies makes its money by dominating the entire retail sector?

But all is not lost, nor is all even bad, because of this new mega-corporation. In fact, in a recent USA Today article, a handful of small business owners explained why they were looking forward — looking forward — to the union.

Anupy Singla, author, chef, and owner of the Chicago-based Indian as Apple Pie, told the paper that, “I’m a little nervous because we’re a smaller player, but as an entrepreneur, I’m excited about the distribution potential… even though there’s uncertainty.”

Alejandro Velez, owner of Oakland-based natural food company Back-to-the-Roots, added, “I couldn’t be more excited about the potential… Too many people are writing it off as if this is going to become a store that loses its values and its soul and its purpose. There will just be more structure, and I think that’s good.”

Indeed, there’s a lot of potential good that could come along with something like this — and a lot of potential not-so-good. Let’s take a look at the pros and cons.

Pro: Amazon’s Distribution Levels Are Off the Charts

At the end of 2015, Amazon announced that it had 304 million active user accounts. Now, if you’re in the business of making, say, specialty honey farmed from your own fleet of bees, that might sound like more than you can manufacture at once. But if you gain a loyal following, it’s entirely possible that you’d reach a level of capital where you could expedite manufacturing, reaching far more potential customers than you would if you were only on shelves at your local Whole Foods.

Pro: Eyeballs Upon Eyeballs Upon Eyeballs, All Across the Globe

Speaking of just being in your local Whole Foods, in many instances, small business’s products don’t make it beyond their neighborhood shelves. That’s all well and good, but with the implementation of something like Amazon, you could find yourself reaching niche markets that might never have known your brand existed. Plus, with Amazon’s personalized shopping suggestions, if your product makes it onto the site, it will get in front of eyeballs that are primed to receive it. They’re also primed to trust the source, if Amazon’s debut of a feature that allows delivery folks to get into you house is any indication. And that’s despite the fact that they’ve never spoken to a single actual human at the company.

Con: The Market Isn’t Open to Everyone

Okay, here’s where it gets tricky. Because like anything in this world, the merger can’t just be all eyeballs and no consequences. Whole Foods has been a tried-and-true way for small brands to get distribution and gain a loyal following. Those brands have also been able to charge more for their products when they’re in development. But with the oversight of Amazon, that might change. Ron Tanner, the vice president of philanthropy, government, and industry relations at the Specialty Food Association, said in the USA Today story that Whole Foods may not serve as the stepping stone that it once was for small businesses. The stepping stone is instead likely to be “specialty foods store, it could be a local grocer, it could be other things and then they move into larger stores” — like Whole Foods — “as they go forward.”

Con: More Competitors

Just as your product could potentially get in front of more eyeballs, so could your competitor’s product. That means that you’re not just competing with the other beekeeper down the road; you’re competing with beekeepers the world over. Of course, we know and you know that your honey is better than their honey and that it brings all the customers to the yard. But you’ll have to keep producing at maximum potential in order to stay relevant. In other words, it may be time to rethink that vacation you were planning for next summer.

At this stage of the game, it’s too early to say whether the merger will ultimately be good or bad for small businesses; and no doubt each business will have its own tale to tell when all is said and done. But in the meantime, the best thing to do is to keep your nose to the grindstone — and churn out your very best product with the hopes that you rise to the top (you will! We know you will).

Seed is available now in the US. Apply for membership.

Banking Services provided by The Bancorp Bank, Member FDIC. The Seed Visa® Business Debit Card is issued by The Bancorp Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted. The opinions, findings, or perspectives expressed in this content are those of the author and do not reflect the official policy or position of The Bancorp Bank, its affiliates, or their employees.

      close