In 2017, Amazon made a significant acquisition: the online retail giant purchased Whole Foods, an upscale grocery store, establishing an unprecedented collaborative partnership between the two well-known companies. After the acquisition, Amazon began offering users of its Prime subscription program to order grocery items from Whole Foods through its PrimeNow app and have them delivered to their homes within two hours (Thompson, 2018). Given that Amazon spent 14 billion dollars to facilitate the collaboration on this technology (Thompson, 2018), it is important to evaluate the relative resource fit and the strategic fit of these two organizations. In hindsight, there are other organizations that could have provided a reasonable fit for Amazon, but the collaboration with Whole Foods was fundamentally sound.
In evaluating the relative resource fit between Amazon and Whole Foods, it is important to examine how Whole Foods enhanced the offerings of Amazons for the customers who used the new technology. Although Amazon had previously delivered some grocery items, the collaboration with Whole Foods made it possible for Amazon to offer customers access to products that cannot be delivered in the mail, such as perishable refrigerated and frozen foods. For Whole Foods, these resources were already readily accessible, so the organization did not necessarily need to make resource changes in order for the collaborative partnership to be successful. Therefore, there was a strong resource fit between Amazon and Whole Foods.
In terms of the strategic fit of the two organizations, one of the strengths of the partnership was that they shared a target customer group for the new technology. Amazon introduced the Whole Foods grocery delivery service to its Prime subscription members, who pay an extra fee to be a part of the program, and Whole Foods traditionally caters to higher-income shoppers who are willing to pay more for their groceries (Bloomberg, 2017). Because of the overlap between the intended customers for the new technology, it made sense for Amazon and Whole Foods to establish a strategic partnership, in that they would be offering an additional benefit to a consumer group with which they had both already established a foothold. At the same time, from a strategic perspective, it is also important to recognize that the partnership between the two organizations probably did not increase the consumer base for either of them, which is a drawback of the partnership.
Another important aspect of the strategic fit is the degree to which the partnership between the two organizations could enhance overall knowledge. By coming together, two organizations with disparate areas of expertise can share intellectual capital in a way that supports organizational growth (Peng, 2008). In this case, Whole Foods already had experience in providing high-quality groceries, while Amazon had significant experience in product delivery. This combination again indicates that there was a strong strategic fit between the two organizations.
At the same time, there are other organizations that could have been at least as strong a fit for a collaborative partnership with Amazon. For example, if Amazon had partnered with a traditional grocery store, such as Kroger, it might have been able to expand its consumer base to include people who are not willing to pay Whole Foods’ high prices for groceries. Also, because grocery store chains like Kroger have more stores than Whole Foods, a partnership with one of these organizations may have made it possible for Amazon to bring the new technology to a greater number of locations around the country. Therefore, while the resource fit between Amazon and a traditional grocery store would have been similar to the fit with Whole Foods, there are some aspects of the strategic fit that may have been improved if the organization had chosen a different partner.