According to a recent analysis, Walmart could acquire the Phoenix-based grocer Sprouts Farmers Market to compete with Amazon's recent purchase of organic grocery chain Whole Foods, KTAR News reported on Tuesday.
After online retailer Amazon bought Whole Food for 13.7 billion U.S. dollars, Walmart "could consider purchasing Sprouts Farmers Market Inc," according to the analysis originally posted on TheStreet.com.
"Sprouts' market capitalization is just over 3 billion U.S. dollars and its valuation -- at 28 times trailing earnings -- is more reasonable than Whole Foods." As a much larger company that Sprouts, Whole Foods' annual revenue is 15.86 billion U.S. dollars, which is three times more than Sprouts' 4.18 billion U.S. dollars.
However, "when it comes to selling the products of these respective companies online via Amazon and Walmart, those revenue figures may be irrelevant," TheStreet pointed out.
The analysis also pointed out that picking up online orders would be a big problem for either Amazon or Walmart.
As Starbucks is already facing difficulties to manage pickups, big retailers with larger customer base and larger orders will have more challenges if they offered the similar option for its grocery stores.
The analysis also stated that, as Walmart is already selling groceries, instead of purchasing another company, it could also develop its own business to be more competitive than Amazon.