Amazon's takeover of Whole Foods might not work

I don't judge business events by stock market reactions, as stock markets can be absurd and have a logic that I can't fathom. That is why, I am questioning the logic of Amazon's buy-out of Whole Foods in spite of the seemingly massive stock market approval and also the jubilation among the proletariat. Stock markets have loved Enron till the day before the scam was disclosed and the general population beliefs have been massively wrong before. I don't claim that this marriage WILL fail, but I think there are many risk factors that are not being considered and because of them this COULD fail.

The Amazon and Whole Foods marriage, to be successful, would need to create synergies. Maybe if a few Amazon or Whole Foods warehouses can be closed without an impact on sales, the buyout would make sense. Or, if Amazon could push its products through Whole Foods (or vice versa) without an increase of cost, it would also make sense. In both these scenarios there has to be some level or merging of strategies or information between the two firms. Not withstanding the study from Harvard Business School that said that 70 - 90% of mergers and acquisitions do not achieve their goals, I raise some questions on the ability of Amazon to create synergies with Whole Foods. 

Let us start from the general business strategy. One of the reasons Whole Foods works is that they are essentially 'local'. So, a store manager can make purchasing decisions without head office approval - like buying potatoes from a local farmer. Their distribution is very decentralized because of such local buying. There are large regional teams with significant autonomy. Of course such operations cost more and so Whole Foods ensures a 30%+ gross margins. Amazon by contrast is centralized, regimented and highly synchronized. The key skill of an Amazon manager is being able to follow the process and not independent thinking. So, the first set of questions - is there any possible synergy between Whole Foods and Amazon? Can the people of these two companies work together? Would a Whole Foods store manager be okay to give up his autonomy? Would an Amazon manager have the competency to be autonomous? 

It is not just about the managers' autonomy. Whole Foods is known to have have 12 different inventory management systems -  they also have autonomous inventory management systems. Whole Foods is trying to reign this in by creating a cloud based solution with Infor, but such attempts in previous firms have had limited success. Whichever ways, Amazon will either inherit a blind system or an Infor based system about which it has very little expertise. Will it be possible to seamlessly integrate Amazon and Whole Foods inventory systems? Will Amazon ever have the same granular level information about Whole Foods stores that it has about its own DCs?

Let us look at it from the customer front. Whole Foods is essentially a bit like a cult. Because of local buying, Whole Foods has fresher produce. Also, such local buying is good for the community. These two differentiators have created a following among a specific class of consumers who are ready to pay the high prices of Whole Foods. What happens to this 'cult' if Whole Foods centralizes the produce? Will consumers still be loyal to Whole Foods? 

The list of questions can go on. Whole Foods has only around 400 stores in the USA. Walmart has more than ten times as many. Will it be possible for a small specialty store to compete with the might of Walmart? Let us say Whole Foods goes on a store opening spree - will it still be able to create the cult among customers with that high rate of expansion? 

I don't have answers to my own questions. But, I do have these and a few more questions. In such times of a general jubilation I know there is a danger of me and my questions being labeled as cynical or old economy, and I am fine with that. I just hope to trigger a few thoughts among some people who can go beyond the general jubilation and think of an alternate - even if for only a few minutes.