Vertical Research Partners, Stamford, Conn., USA, has delved into the recent acquisition activities of Amazon, and how its expansion into the grocery sector in particular could impact the U.S. packaging sector. The report, titled Containerboard - Could Amazon's Move on Whole Foods Add to U.S. Box Demand? examines several key questions in regard to the recent Amazon acquisitions.

This past week, the report notes, Amazon announced the acquisition of Whole Foods Market (WFM) for $13.7 billion. Amazon had already entered the grocery sector with an online presence through Amazon Fresh and Amazon Now. However, it is unclear whether these services have gained traction, especially in light of other, more-established online grocery options. It appears the WFM move is designed to both bolster Amazon’s presence in online groceries while adding to the company's nascent move into brick-and-mortar retail.

In regard to the question of whether this proposed Transaction could signal more box demand, the report points out that Amazon has already opened several brick-and-mortar stores, but these are supplemental and "supportive" of its primary online channel. In this vein, it is unlikely that the proposed Whole Foods 

acquisition is being undertaken mainly to expand Amazon's physical-store presence. Rather, the report authors see WFM primarily assisting Amazon in the rollout of its online grocery offerings (regardless of whether the implementation occurs within the WFM operations or the legacy Amazon). Therefore it is reasonable to believe that the proposed AMZN-WFM deal will soon give a boost to the online grocery shopping market.

In regard to shopping for groceries online, the report points out that the U.S. grocery sector generated more than $650 billion in sales in 2016 (nearly 4% of U.S. real GDP), with approximately 2% of these sales taking place online. Indeed, the grocery sector represents one of the largest (if not the single largest) retail segments, and represents perhaps the most significant opportunity for online retailers due to the combination of the large market size and the low online penetration. That being said, the limited online penetration is not surprising due to the many challenges the grocery business poses to e-commerce, such as the perishable nature of many products and their inconsistent quality (and varying expiration dates) that incentivize shoppers to examine individually products before purchase.

Other key question addressed by the report include: What Are the Current Offerings?; How Will Amazon Approach Groceries Post-Deal?; What are the Packaging Options for Online Groceries; Bottom Line—Grocer. More information about this report is available online.