cisz ‘The company reported a profit of nearly $2 billion in the quarter, the largest in its history. Physical store revenue in the fourth quarter, which came mostly from Whole Foods, was about $4.5 billion.’ Amazon sold an estimated $11 million of Whole Foods’ 365 Everyday Value products in 2017. Whole Foods products also helped push sales at AmazonFresh up 35 percent to $135 million in the last quarter of 2017, ‘One Click Retail” estimated that Amazon sold nearly $2 billion in groceries in the United States in 2017. Its online grocery sales accounted for less than 3 percent of the roughly $800 billion US. grocery market.”* Bezos planned to open 20 convenience stores in some major cities in the United States by the end of 2018, according to internal company documents. The stores would be tested in two formats—a more tradi tional grocery merchandise stores and “click & collect” grocery pickup services. Bezos also had plans to open ‘multiformat stores thet offered private-label goods at low prices. Amazon's grocery business was projected to grow at 22 percent annually. According to Cowen and Company, by 2021, Amazon would control about 33 percent of the $70 billion online grocery market PART2 Cases in Crafting and Executing Strategy in the United States compared to 26 percent in 2016, ‘As shiown in Exhibit 9, online sales were projected to account for about 8 percent of the $903 billion grocery market in 2021 compared to about 4 percent of a $795 billion industry in 2016. “The pot of gold atthe end of the road for Amazon is groceries. The war for retail will bbe won in groceries. It's the largest category of consumer retail, and the largest untapped opportunity for Amazon," said Cooper Smith, Director of Research at L2 Inc. The stakes were high for Amazon as the com: pany had been extremely persistent when it came to pursuing groceries. Some key challenges before Bezos were: blending the physical store experience with the convenience of digital retailing; managing the company’s offline needs; successfully merging Whole Foods with Amazon to bring convenience and accessibility to a new high, and attracting custom: ers. According to Chase Purdy, a business reporter for Quartz, “Can Bezos do to groceries what he did to bookstores? And can he cast Whole Foods—a high-quality food store with sky-high pricesin Amazon's price competitive image? Ifo, it will undoubtedly gin up concern in grocery-chain boardrooms across the US." EXHIBIT 9 Growth in Online Grocery Sales, 2016 (Actual) to 2021 (Projected) $9028 ‘ss008 280 360 moter online 14% 340 #20 300 457058 ° 72016 2021 Projected Grocery Sales, 2016-2021 780 be Instore 2% oy $853... $33, $9058. 708 20 60 40 20 Total 2016 Grocery Sales Onine Total 2021 Grocery Sales Ontine “Source: taulmwumekkographles.com/amazors-polsec-for-grovri-grocery ales