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The New York Post reports this morning that New York-based e-grocery pure play FreshDirect is for sale, with its largest investor, JPMorgan, seeking a buyer for the business.

Among the companies that reportedly have examined its books: Amazon and Walmart.

According to the Post, "It would be at least the third time that Amazon and Walmart — both of which are heavily investing in the grocery business — have considered acquiring FreshDirect, whose affluent customers and online delivery platform have long been attractive to rivals.

"While service glitches have besieged the company since last year, when it moved to a sprawling new facility in The Bronx from Long Island City, FreshDirect still has fiercely loyal and wealthy customers in the Big Apple, one of the most coveted food delivery markets in the country."

In the past, FreshDirect has been stubborn about staying independent. The Post says that at various times it rejected a $2.3 billion offer from Amazon and a $2.6 billion offer from Walmart. But JPMorgan now wants out, which has changed the calculation. In fact, the story suggests that the only thing stopping a sale is the likelihood that potential buyers believe that time will only drive the price down.

MNB fave Burt Flickinger tells the Post that FreshDirect's performance has been underwhelming: “FreshDirect was built to be a multi-regional operator across seven states and now it is a successful operator in four counties and one state,” he says.

The story says that "instead of expanding to new markets, FreshDirect has been fighting to keep its current customers, many of whom became irate because of botched deliveries — while others dropped the service altogether, according to social media posts … The delivery snafus were largely the result of a new technology platform for FreshDirect’s pick-and-packing functions, which control miles of conveyor belts in its Bronx warehouse. The new platform just didn’t work with the customer-facing software, according to a former executive with knowledge of the issues."
KC's View:
Even with all the problems, an acquisition of FreshDirect would certainly give both Amazon and Walmart a boost in the markets that the e-grocer serves. I would think that its expertise in fresh foods and meals would be helpful to both, while they also could bring their approaches to logistics to a company that seems to need help in that area.

I'd guess that Walmart is in more need of a footprint in the geographic areas that FreshDirect serves, but that also makes me wonder if a company like Kroger might be interested. After all, Kroger has no presence in the New York metropolitan area … but it may be that this kind of acquisition could be beyond its capabilities at the moment.

Also, it is worth noting that FreshDirect has a union workforce, which could be a deal-killer for both Amazon and Walmart. Kroger, on the other hand, is used to dealing with unions.

Or, just to get crazy for a minute, how about Alibaba?

Just musing here.