Amazon and Whole Foods announced in a joint statement that the acquisition will be completed by Monday, August 28. But the real surprise came with the news that as the first initiative of their combined vision, Whole Foods will offer lower pricing on a selection of best-selling grocery staples.
Among other Whole Foods items getting discounts Monday: avocados, tilapia, baby kale, apples and rotisserie chicken - all organic, according to an Amazon press release.
Noting that a large chunk of Amazon's profits stem from its cloud services and data businesses rather than its online sales, McKnight says the new strategy could benefit both elements of Amazon's business.
Amazon's willingness to take lower profit margins ups the ante in the increasingly costly grocery price war.
Amazon is experimenting with automation technologies that could save costs in physical stores by eliminating cashiers, but it has vowed not to use those technologies at Whole Foods to lay off workers.
Wilke also noted that this announcement is "just the beginning" of planned changes at Whole Foods. But under Amazon, those stores will be turned into warehouses that can distribute groceries to homes around the country. Walmart has also significantly increased its investment in online shopping through acquisitions to better compete with Amazon on its main turf.
There is room for expansion, as well.
Now that Amazon has access to Whole Food stores, and it's planning to sell these products at lower prices, these chains will have more competition.
"Generally Whole Foods goes into markets with six-figure incomes and college-educated residents".
Amazon sent the buy-side grocery sector into a whirlwind of activity earlier this year when it announced its intent to purchase Whole Foods. True to the promise, the items are favorites of many shoppers, including organic produce, fair-trade items, and goods from Whole Food's own generic line, 365 Everyday Value. Amazon said the two companies will invent in additional areas over time, including merchandising and logistics to enable lower prices for Whole Foods Market customers. Prices will be continuously lowered as Amazon and Whole Foods conduct innovations together. By then, Amazon Prime could become a one-stop shop for all consumer needs, from groceries and clothes and home appliances to on-demand entertainment and concert tickets. The online marketplace, famous for disrupting the book industry and other retail segments, also laid out its plans for combining its business with an established brick-and-mortar chain. "Amazon is taking omnichannel seriously, and they are moving fast". "So they have to maintain the perception that everything is going to be all right". Walmart, which has the largest share of the USA grocery market, is expanding its grocery delivery service with ride-hailing service Uber and announced Wednesday that it will join forces with Google to let shoppers order goods by voice on Google devices.
Smith dismissed the deal as "symbolic", while Livingston said it seemed like a reactionary move geared toward appeasing shareholders. According to the Wall Street Journal, stock values for the six largest food retailers, including Kroger Co., and Walmart, fell off around $12 billion. But under Amazon, Whole Foods poses a legitimate threat.