Tech

People are 'mystified' by Amazon's Whole Foods acquisition, says investor

Key Points
  • Amazon didn't talk much about the Whole Foods acquisition during Thursday's earnings call because the deal hasn't closed yet
  • But Michael Yoshikami, founder of Destination Wealth Management, says it's all about long-term vision.
  • "People are mystified. It's all about the vision and the future," Yoshikami said.
Amazon and Blue Origin founder Jeff Bezos
Photo by Bloomberg

It's still unclear exactly why Amazon decided to buy Whole Foods, a company with thin margins and slowing growth.

But one investor believes there's a very clear reason for doling out $14 billion on the upscale grocery chain: long term benefits.

"What are they going to do with Whole Foods? People are mystified," Michael Yoshikami, founder of Destination Wealth Management, said on CNBC's "Closing Bell."

Yoshikami said even if Whole Foods makes no profit at all, Amazon still benefits from the deal because of the 400-plus retail locations and logistics experience it brings with them, not to mention Amazon's positioning against upstarts like Blue Apron.

"It's all about the vision and the future. Jeff Bezos is not looking next year. He's looking 20 years down the road and always has," he added.

When asked about the deal during Thursday's earnings call, Amazon CFO Brian Olsavsky didn't dive into the details, as the deal hasn't closed yet. But he implied that the acquisition is part of a broader experiment to test out different store formats that most appeal to its customers.

"We believe there won't be one solution, so we're experimenting with a number of different formats: physical pick up points and Amazon Go to online ordering and delivery to your door through Prime Now and Amazon Fresh. We'll see how customers respond," Olsavsky said.

"We think [Whole Foods] are very customer-centric just like us, they've built a great business focused around quality and customers, so we're really glad to join up with them," he added.