Amazon buying Whole Foods, making strong move into groceries

Amazon to buy Whole Foods Market in deal valued at $13.7 billion

Amazon to buy Whole Foods Market in deal valued at $13.7 billion

"This deal has dramatically flipped the table on traditional companies". It's so successful that there are approximately 80 million Amazon Prime members in the USA alone. Although frequently criticized for its high prices, Whole Foods has found its home in the food industry and continues to be the grocery store of choice for many consumers. Amazon tends toward competitive pricing, while some of Whole Foods' products are so expensive the company has been dubbed "Whole Wallet".

Supermarket stocks and shares of companies that sell groceries are now spoiled in the eyes of investors after Amazon announced a almost $14 billion purchase of Whole Foods Market on Friday.

Amazon is a beast in the world of online retailers. He added that the deal will make it harder for the incumbents to maintain their market shares.

Amazon, meanwhile, has been expanding its reach in goods, services, and entertainment. The company offers customer pickups at certain locations on a test basis.

The deal comes a month after Whole Foods announced a board shake-up and cost-cutting plan amid falling sales. This deal gives Amazon a major foothold in that space. The company's market cap is $466.15 billion and P/E ratio of 185.06. Clearly, CEO Jeff Bezos thinks he'll do better in coming years - and many experts agree. "Either way, it's good for consumers like myself", said Di Wu, a NY resident in her early 30s who is a member of Amazon's Prime fast-shipping club and who shops at Whole Foods at least twice a week. 'Those grocers will respond by cutting prices and that will cut profits for the distributors'.

"There's a large part of consumer spending that the AmazonFresh strategy hadn't tapped into", said Munster. Mr. Bezos could easily extend the benefits of his company's popular Prime membership into goods and services at grocery stores, thus giving them additional reason to buy even more from Amazon. Having customers pick up their purchases in Whole Foods stores might help. Shoppers skip the checkout line, and their Amazon accounts get automatically charged.

Whole Foods, founded in 1978, has more than 460 stores in the United States, Canada and the United Kingdom, employs 87,000 people and is the leading natural and organic foods supermarket. Meanwhile, the more than 460 Whole Foods stores in the U.S., Canada and the United Kingdom could be turned into distribution hubs - not just for delivering groceries, but also as pickup centers for online orders.

Amazon, known for its low prices and selling virtually everything, including groceries, will likely take market share from competitors and hurt their profit margins if they have to lower prices to compete. "Amazon will price things sharply".

That's frustrated investors saddled with a drop of almost 43 percent from the start of 2014 through Thursday, while the rest of the stock market marched 32 percent higher to record heights.

Yes. That's an extraordinary penetration for a supermarket chain with just 431 stores. The figure fell again, by a worse-than-expected 0.2 percent, excluding gasoline, in the most recent quarter.

With the Whole Foods acquisition, analysts anticipate that Amazon will be the third largest retail grocery, behind Wal-Mart and Kroger, by 2021. Bank of America Corp also provided financing to Amazon, while Evercore Partners Inc advised Whole Foods.

With Whole Foods, Amazon gets an established business that it can transform through its technology and supply network expertise.

However, the Wall Street analysts remain slightly bearish. The 52-week range of the stock is $682.11-$1,016.50.

That's a lesson Amazon's stunned rivals in the grocery business are likely taking to heart right now.

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