Whole Foods has struggled for quite some time with increasing same-store sales and boosting short-term profits. Whole Foods will still operate stores under its name and will continue to be headquartered in Austin, Texas.
In the US "this adds 440 refrigerated warehouses within 10 miles of probably 80% of the population", said Michael Pachter, an analyst for Wedbush Securities.
The deal could be "transformative", Moody's lead retail analyst Charlie O'Shea said, "not just for food retail, but for retail in general".
This deal points towards Amazon's big focus on the grocery business, especially in the US. It announced Friday that it's buying online men's clothing retailer Bonobos for $310 million, following a string of online acquisitions including ModCloth and Moosejaw.
Amazon is revolutionizing shopping and making life easier for every one of its customers.
But it was Whole Foods that fell behind as shoppers found alternatives to the organic and natural foods it helped popularize since its founding in 1978.
In Whole Foods, it is acquiring a company that has recently come under pressure from investors for its lagging performance.
And while department stores, electronics chains and other retail sectors have been closing stores, the number of grocery stores has continued to grow.
It is unclear how Amazon will use Whole Foods, as the company would not go into detail about its plans.
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Now that Amazon is in the brick-and-mortar business selling books and groceries, who knows where it will set its sights next?
Amazon got through the upscale grocer's checkout line first.
Hartmann said he expects the online retailer to introduce some efficiencies to Whole Foods' operation. But its stance could attract rival grocers to partner with Instacart in a broader bid to resist Whole Foods' new corporate resources. "We can only imagine the technological innovation that Amazon will bring to the purchasing experience for the consumer".
Several have, however rebuked the over-priced "extravagant" reputation of the organic supermarket chain as not being in line with Amazon's vision.
"This might be an opportunity for consumers who have felt that Whole Foods is inaccessible", said Lauren Beitelspacher, a marketing professor at Babson College in MA.
The market reverberations of the announced deal traveled beyond the retail industry - shares of food companies like Hershey and Campbell Soup slid, too. Bank of America Corp also provided financing to Amazon, while Evercore Partners Inc advised Whole Foods.
The deal sent shockwaves across the food distribution market and beyond.
Customers who visit the store use an accompanied app that enables them to pick any item of their choice, and walk out without stopping at the cashier section.
"I love the prepared foods and the produce", Hiddeman said. The stores could also showcase gadgets such as Kindle e-readers and Fire tablets.
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