Junio 24, 2017

Ecommerce giant Amazon to buy Whole Foods grocery chain in blockbuster deal

18 Junio 2017, 08:57 | Dolorita Barahona

Ecommerce giant Amazon to buy Whole Foods grocery chain in blockbuster deal

Ecommerce giant Amazon to buy Whole Foods grocery chain in blockbuster deal

She's skeptical that groceries will go purely online and thinks it'll be more of a hybrid model, where people use a mix of online ordering, restaurants and traditional grocery stores. Investors are likely anxious that Amazon, once entrenched in the physical grocery store business, will ruthlessly cut prices for food products like it did with books. Amazon will pay $42 a share in cash for the organic-food chain, the companies said on Friday. 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. "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. All of these technologies can now be slowly integrated into Whole Foods stores to reduce headcount, increase profit margins and improve the chain's relationship with customers.

It already runs AmazonFresh, a grocery delivery service that costs $14.99 a month for members of its Prime service, and it recently opened a few grocery stores.

With the Whole Foods acquisition, analysts anticipate that Amazon will be the third largest retail grocery, behind Wal-Mart and Kroger, by 2021.

Whole Foods, a pioneer in organic products, as mentioned, started its business in 1978 in Austin, Texas, building its brand on healthy eating and fresh, local produce, though often with steep price points.

Activist hedge fund Jana, led by Barry Rosenstein, disclosed a almost nine per cent stake in Whole Foods in April.

Groceries are already a fiercely competitive business, with low-priced rivals like Aldi putting pressure on traditional supermarket chains and another discounter, Lidl, opening its first US stores just this week.

Completion of Amazon's purchase is subject to approval by Whole Foods' shareholders, regulatory OKs and other closing conditions. It accounts for less than 5 percent of sales in supermarket chains that offer the service to customers, he said.

Some customers said they believe Whole Foods shoppers will quickly adapt if Amazon does widen the online grocery shopping experience. It's also been testing automation technology at a Seattle convenience store that's now open only to Amazon employees. Whole Foods was, however, costlier in 1992 as compared to today (keep the times in check) and it has been reducing the prices to keep the sales in check.

John Mackey will remain CEO of the company.

Analysts viewed the deal with Whole Foods as a seismic event for the sector.

Following Amazon's move to plant a bigger stake in the food-selling business, shares of Walmart tumbled 4.6%, making it the biggest loser in the blue-chip Dow Jones industrial average.

"No one excels at reducing pricing than Amazon", Steven Johnson of Foodservice Solutions said.

Hartmann said he expects the online retailer to introduce some efficiencies to Whole Foods' operation.

Amazon is a unique threat to many retailers because it doesn't mind losing money for long stretches.

They have indicated that they do not plan to automate cashier jobs in the stores, .

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