As the whole world knows by now, web retailer Amazon announced that it will buy the Whole Foods upscale grocery chain. The merger will give Amazon access to dozens of brick-and-mortar supermarkets in virtually every major city in the U.S.
Amazon has made some pretty interesting acquisitions over the years, including some real head-scratchers -- I still can't figure out why it needed to buy the Washington Post.
This one, however, may turn out to have a historic impact on American business and the world in which we live.
At first blush, it may seem that Amazon needs a retail grocery outlet as much as a fish needs a bicycle. But a closer look reveals an incredible strategic vision.
To understand the Whole Foods connection, I think you have to understand that it isn't at all about food or consumer staples. It's about real estate.
Amazon's goal for quite a while now has been to become the dominant internet retailer for virtually all types of merchandise. Its vision is a world where, with one or two clicks, you can order anything and have it delivered to your doorstep that same day or the next.
That explains Amazon's investment in drone technology, as well as its current plan to build distribution and fulfillment centers (otherwise known as warehouses) in virtually all of the 50 U.S. states.
Food and other perishable items pose a particular challenge to this vision, because they often have to be delivered in a matter of hours, or sometimes minutes, to avoid spoilage. By acquiring Whole Foods, Amazon now has the distribution centers it needs to handle perishable merchandise of all kinds, at least within the cities that have Whole Foods stores. With Amazon's financial clout behind it, Whole Foods is in a position to expand into virtually all of the largest consumer markets in the U.S., giving Walmart and supermarket chains a run for their money.
And you can bet your bottom dollar that pretty soon, Whole Foods will be stocking a much wider variety of merchandise than just high-quality organic free trade quinoa.
Buying Whole Foods signals that Amazon's new goal is not just to become the dominant online retailer in the U.S. but the dominant retailer (SET ITAL) period (END ITAL) -- the universal emporium; the perfect store.
Picture the world if Amazon is successful. You will not need to go shopping anywhere, anytime. Whenever you want something, you simply order it online wherever you are and it arrives in a matter of hours, or even minutes. You have absolutely no reason to ever leave your home (you can visit friends via social media). You are notified of deals and special offers via text message in real time, and can respond instantaneously 24/7, so you no longer need to clip coupons or scan the supermarket's weekly circular.
A brave new world, wouldn't you say? For a science fiction forecast of this exact world, see Ray Bradbury's short story "The Pedestrian", published in 1950.
Amazon's operations will almost certainly be fully automated: the distribution centers operated by robots, the deliveries made via drone or self-driving vehicles. No more need for grocery clerks, baggers, truckers, takeout restaurants or those suicidal bicycle delivery people.
And no need for competition, with Amazon striding the entire distribution chain like a colossus.
So why aren't the antitrust authorities screaming bloody murder about an Amazon monopoly? Well, they actually might at some point, but it's unlikely right now, because of the way U.S. antitrust law works.
Antitrust law does an overall competent job of preventing monopolies within a single industry. If Amazon were to acquire Barnes & Noble, for example, the antitrust authorities would call foul in a heartbeat because the resulting company would virtually control the distribution of books, music and other media products.
But a media store acquiring a grocery chain? No prob. They're two entirely different industries, and there's plenty of room for competition from other chains, such as Krogers or Aldi, and from other book and media outlets, such as eBay and Alibris.
Unless, of course, you look at the bigger picture -- the possibility of a "monopolization of distribution channels and technology across industry verticals," for lack of simpler words. A single company acting as gatekeeper between manufacturers and consumers is the ultimate middleman.
In looking at the Amazon-Whole Foods merger, I'm reminded of a famous aria from the Gilbert and Sullivan operetta "Iolanthe," written more than a century ago during another great wave of industry consolidation. In the song -- a rambling account of a character's nightmare from the previous evening -- a group of sailors learn from their lawyer about a new giant company. He sings: "It's a scheme of devices to get at low prices all goods from cough mixtures/ to cables/ (which tickles the sailors), by treating retailers as though they were all/ vegetables." Or, perhaps, as though they were all organic free trade quinoa.