Amazon buying Whole Foods in bold move into brick and mortar

Amazon has a patent to keep you from comparison-shopping while you're in its stores

Amazon makes big move into physical retail with $13.7 billion purchase of Whole Foods

Amazon.com, Inc., the world's largest Internet-based retailer, said Friday it will acquire Whole Foods Market Inc., a supermarket chain featuring foods without artificial preservatives, colors, flavors, sweeteners and hydrogenated fats, at a total cost estimated to be 13.7 billion USA dollars.

Amazon agreed to pay $42 a share in cash for the organic-food chain, including debt, a roughly 27 percent premium to the stock price at Thursday's close.

Amazon founder and CEO Jeff Bezos acknowledged the almost four-decade history that Whole Foods has of "satisfying, delighting and nourishing customers", with its natural and organic products.

Amazon is making a bold expansion into physical stores with a $13.7bn deal to buy United States grocery chain, Whole Foods.

Amazon launched Amazon Fresh in 2007, a service that for a fee delivers groceries to customers' homes but that has failed to make a wide impact.

Amazon and Whole Foods Market, Inc. announced Friday morning that Amazon will buy Whole Foods for roughly $13.7 billion. The Seattle-based company recently was granted a patent for technology that would block shoppers from comparing prices from their mobile devices while they're in stores.

Instacart, valued at more than $3 billion, delivers groceries to customer doors in around 65 USA markets; it sources its groceries off the shelves of 160 partner grocers. For example, Walmart has 4,500 stores, while #Whole Foods has a small 460 stores.

Roger Davidson, who oversaw Wal-Mart's global food procurement and now is president of Oakton Advisory Group, said the deal will reduce Wal-Mart's brick-and-mortar advantage.

Amazon's ownership will also likely result in lower prices at Whole Foods, whose expensive products earned it the nickname "Whole Paycheck". Whole Foods will keep its brand and John Mackey, its current CEO, will remain in place.

Some customers said they believe Whole Foods shoppers will quickly adapt if Amazon does widen the online grocery shopping experience. This year, Amazon is expected to the ninth largest retail grocery.

Some investors may be wondering whether Amazon could disrupt grocery stores the way it upended the bookstore business.

"People tend to do what's easy and clicking on something on Amazon is so easy", Funari said.

News of the deal sent shares of traditional retailers such as Walmart, Target, Costco and Kroger tumbling as much as 13 per cent as investors tried to digest the implications of an Amazon-backed grocery chain.

By joining forces with Amazon, Whole Foods gains access to an entirely new distribution channel - which should be good news for anyone hoping to shop for organic kale online. We hope that won't be the case with this proposed acquisition of Whole Foods. Numerous bottom tier retailers will more than likely have to close stores, or get sold to the larger companies as they will not be able to compete with the drop in prices.

Latest News