Why Amazon Just Swallowed Up Whole Foods for $13.7 Billion (AMZN)

It's the biggest deal Amazon has ever made. And it's bound to dramatically change the landscape of both online and brick-and-mortar grocery purchase.

Amazon AMZN

The deal has officially entered the books. After paying a hefty sum of $13.7 billion (equivalent to $42 per share), Whole Foods is now owned by Amazon (NASDAQ:AMZN). While Whole Foods gets to keep its brand as well as its CEO John Mackey who will stay on and continue serving in his position, with both companies operating independently (at least at the onset, though that can easily change midway), many, if not everyone in the grocery food business are now probably harboring worrisome thoughts about how this game-changing acquisition will impact their business. For Amazon, however, it doesn’t take much thinking to deduce how they will benefit from this deal.

At the very least, having access to hundreds of Whole Foods’ stores nationwide (440 of them to be exact) will surely provide a big boost for Amazon’s grocery delivery service — AmazonFresh.

As it is, AmazonFresh isn’t exactly kicking off in the way that Amazon is probably envisioning it to be, especially being available in only a few states. Even AmazonFresh Pickup, its latest service that allows customers to order their groceries online and set a specific time for pickup, isn’t doing so well, and the fact that it is only available in two locations (both in Seattle) probably has a lot to do with that.

With the addition of hundreds of outlets that can accommodate their AmazonFresh service, however, a noticeable impact is surely bound to be felt. And Amazon probably won’t even have to think too hard or come up with mind-boggling strategies to kick things off. It’s just easier to market products when distribution outlets are there to facilitate the sale.

Maybe it’s too early to tell, but it’s not that difficult to predict that this ‘partnership’ will be good for both Whole Foods and Amazon, and an impending nightmare for Whole Foods’ competitors like Walmart, Target and Costco to name a few. The fact that just the announcement of the impending acquisition was enough to cause a drop in the market value of its rivals already shows a glimpse of what’s to come.

As Amazon CEO Jeff Bezos previously said in a press release, people love Whole Foods Market because of the natural and organic foods they offer, as well as the way they make it ‘fun to eat healthy’. “Whole Foods Market has been satisfying, delighting, and nourishing customers for nearly four decades — they’re doing an amazing job, and we want that to continue.”

In the simplest of terms, buying Whole Foods’ is bound to help Amazon expand its grocery business — all aspects of it — in a way that has never been possible before. Both Whole Foods’ and Amazon’s customers will have more choices for their grocery purchases — not just in terms of products but also of delivery — and the novelty of being able to choose which is better and which is more convenient will mean more satisfied customers. And as long as Amazon plays it right, there’s no reason to think this multi billion dollar deal won’t pay off handsomely.

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