Amazon devours Whole Foods grocery chain for $13.7B, expanding AmazonFresh delivery avenue...

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A blockbuster deal announced Friday morning will see e-commerce giant Amazon buy organic and all-natural food vendor Whole Foods in an all-cash deal -- and other retailers and grocers are seeing massive stock drops because of it.




Amazon had already said that Whole Foods stores will continue to operate under the same name, as a discrete division of the company. Whole Foods Chief Executive John Mackey is staying in place, as is the company's headquarters in Austin, Tex.

"Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy," Amazon founder and Chief Executive Jeff Bezos said in a statement. "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."

A report in December 2016 claimed that Amazon was planning on opening up more than 2,000 self-branded grocery stores. In September 2017, Whole Foods had 456 stores, and 87,000 employees.

The deal gives Whole Foods shareholders a 27 percent price premium, valuing the company at $42 a share. The deal is having repercussions throughout stock markets, with many grocery chains down 10 percent or more as a result. Walmart and Target are also seeing impacts, down 6.1 and 9.2 percent respectively at the time of this report.

"This partnership presents an opportunity to maximize value for Whole Foods Market's shareholders," said Mackey. "At the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers."

Amazon has been reticent to expand its AmazonFresh delivery grocery market, and the deal appears to be an easy way to expand this market by utilizing the Whole Foods infrastructure to do it. At present, Amazon Fresh services 18 metropolitan areas worldwide, and has 500,000 items available.
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Comments

  • Reply 1 of 90
    plovellplovell Posts: 819member
    I guess that same-day local-pickup for Amazon packages will come very quickly.
  • Reply 2 of 90
    rob53rob53 Posts: 3,010member
    I thought Walmart was bad for retailers, now Amazon is going to mess with grocery stores. We'll see what happens when Amazon undercuts (sells at a loss) other grocery stores to gain sales by harvesting their personal information and selling that (SOP for them). People complain about Apple but look at what Amazon is doing. I can't see it stopping with Whole Foods, who typically over prices everything.
    tallest skil
  • Reply 3 of 90
    jd_in_sbjd_in_sb Posts: 1,600member
    Getting drive up windows for existing Whole Foods stored isn't going to happen.
  • Reply 4 of 90
    macxpressmacxpress Posts: 5,389member
    I'll stick to Wegmans thank you very much!
    hexclockdewme
  • Reply 5 of 90
    Mike WuertheleMike Wuerthele Posts: 6,516administrator
    jd_in_sb said:
    Getting drive up windows for existing Whole Foods stored isn't going to happen.
    I think this is less about store pickup, and more about reefer trucks, large storage facilities, and infrastructure.


    Personally, I'm an Aldi's, Harris Teeter, and Wegmans man, myself. I have AmazonFresh delivery in my area, but just haven't used it.
    edited June 2017 dewmejbdragon
  • Reply 6 of 90
    ddawson100ddawson100 Posts: 481member
    Whole Foods' future seems like it's been a little unclear. This provides stability. I'm not a big fan of the prices but love (what I understand as) their emphasis on treating employees well, influencing the conversation about local, organic, seasonal, healthy living, etc. Walmart and Target might be able to claw away some of the market share by copying some of their ideas but they're a long way off from being leaders in connecting food producers and artisans to consumers. That said, why is this here? Amazoninsider?
    ireland
  • Reply 7 of 90
    GrimzahnGrimzahn Posts: 64member
    This company needs to be stopped.
    tallest skil
  • Reply 8 of 90
    Mike WuertheleMike Wuerthele Posts: 6,516administrator
    Whole Foods' future seems like it's been a little unclear. This provides stability. I'm not a big fan of the prices but love (what I understand as) their emphasis on treating employees well, influencing the conversation about local, organic, seasonal, healthy living, etc. Walmart and Target might be able to claw away some of the market share by copying some of their ideas but they're a long way off from being leaders in connecting food producers and artisans to consumers. That said, why is this here? Amazoninsider?
    Do you buy things from Amazon on your iOS device? This is a big deal, and will have wide repercussions for one of Apple's biggest obstacles in services and digital media sales.
    SpamSandwichroundaboutnowronnsockrolidradarthekatbadmonk
  • Reply 9 of 90
    mike1mike1 Posts: 3,024member
    Grimzahn said:
    This company needs to be stopped.
    Uh, why?
    iSalmanPaksockrolid
  • Reply 10 of 90
    The difference between Whole Foods and Walmart and others is healthy (non-GMO) food or at least limited GMO and marked properly like that garbage Monsanto. Now Whole Foods may get more GMO garbage that many (like myself) avoid. I hope not.
    magman1979ireland
  • Reply 11 of 90
    georgie01georgie01 Posts: 422member
    It's hard to see this as a benefit to consumers. It often makes me uncomfortable when companies buy other established companies. Buying other companies can make sense but it's often enough not a result of a passion for a service or product, but simply to grow a company primarily for the purpose of further profits or accomplishments. The idea of serving the customer only goes so far as is necessary to maintain or grow a business, which isn't actually serving a customer at all but rather using other people to achieve more self interest.

    It is easier in smaller businesses to have genuine customer service and interest, so I generally support that. Not that Whole Foods is small, but they just became a lot bigger and probably even more profit directed as more people will invest who care not about food but money.
    ireland
  • Reply 12 of 90
    SoliSoli Posts: 10,033member
    rob53 said:
    I thought Walmart was bad for retailers, now Amazon is going to mess with grocery stores. We'll see what happens when Amazon undercuts (sells at a loss) other grocery stores to gain sales by harvesting their personal information and selling that (SOP for them). People complain about Apple but look at what Amazon is doing. I can't see it stopping with Whole Foods, who typically over prices everything.
    Which is it, "sell at a loss" or " over price everything"? I suppose it can be both at the same time but then you're talking about an woefully ineffective business model—but your single paragraph covers both actions as negatives.
    edited June 2017 fastasleep
  • Reply 13 of 90
    SpamSandwichSpamSandwich Posts: 33,407member
    Wow. Congrats to John Mackey and the Whole Foods folks. Should result in same day delivery for more Whole Foods items, greater supply chain and logistics efficiencies that will help press down prices.
    Soliboltsfan17
  • Reply 14 of 90
    hexclockhexclock Posts: 1,072member
    macxpress said:
    I'll stick to Wegmans thank you very much!
    Amen to that brother!
  • Reply 15 of 90
    First agenda for Amazon should be to eliminate overpricing at Whole Foods.
    rich gregoryben20
  • Reply 16 of 90
    robin huberrobin huber Posts: 3,640member
    Amazon eat world. 
    loquiturrotateleftbyte
  • Reply 17 of 90

    its fashionable to bash Whole Foods prices. Yes, the prices scale up to absurd levels but the basics are priced competitively. I'd rather shop for basics at Whole Foods in a big beautiful space with happy staff than enter the dystopian nightmare of the regular supermarket across the street. We'll see if any changes by Amazon erase that advantage.

    StrangeDays
  • Reply 18 of 90
    SpamSandwichSpamSandwich Posts: 33,407member

    its fashionable to bash Whole Foods prices. Yes, the prices scale up to absurd levels but the basics are priced competitively. I'd rather shop for basics at Whole Foods in a big beautiful space with happy staff than enter the dystopian nightmare of the regular supermarket across the street. We'll see if any changes by Amazon erase that advantage.

    John Mackey started the company and he's staying on. All of the changes to Whole Foods will be in them being able to leverage Amazon's efficiencies with data and logistics. Imagine 5-7 years from now with autonomous robot delivery systems bringing you the best food or grocery items within an hour to your home.
    edited June 2017 fastasleep
  • Reply 19 of 90
    MisterKitMisterKit Posts: 454member
    Waiting for Amazon Prime Beef.
    SpamSandwichloquiturStrangeDayspscooter63[Deleted User]beowulfschmidt
  • Reply 20 of 90
    FolioFolio Posts: 698member


    Huge news. Potential ramifications for all AMZN rivals, including Apple. Biggest point not mentioned so far:

    If Amazon offers Whole Foods customers discounts only if they become Amazon Prime members [as AMZN does to customers at its brick bookstores], then Jim Bezos taps into much of Apple’s demographic base, giving them access to free Prime media, etc. Becomes a turf battle with Apple Services.


    PS Surprised that Whole Foods founder (ex Congressional staffer) John Mackey sold to Amazon, as Whole Foods unusual in NOT tracking its consumers through loyalty cards. 

    Much remains to be seen. Wouldn't want to prejudge. To my pleasant surprise, Bezos ownership is partly responsible I believe for improved tenacity of the Washington Post.

    Solimdriftmeyertenthousandthings
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