Amazon buying Whole Foods, making strong move into groceries

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

They are going to pay $42 per share in cash for Whole Foods, which is a 27% premium on the company's closing price. It operates approximately 456 stores in the United States, Canada, and the United Kingdom.

Amazon already offers grocery-delivery services in five markets, but the Whole Foods purchase would let it expand to many more.

"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's founder and Chief Executive Officer Jeff Bezos said.

Armed with giant warehouses, shopper data, the latest technology and almost endless funds - and now with Whole Foods' hundreds of physical stores - Amazon is set to reshape a US$800 billion grocery market that is already changing rapidly.

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Meanwhile, Whole Foods - with a fleet of more than 460 stores - has come under fire from activist investors for dreary sales as organic grocers such as Sprouts Farmers Market and Natural Grocers and traditional grocers such as Walmart, Kroger and Target, increasingly offering their own organic options, hone in on the Austin-based grocery chain's turf.

But Whole Foods customers are loyal, and some shoppers are excited about Amazon's purchase. (NASDAQ:AMZN) "a launching pad not just for food but possibly drugs as well where customers aren't willing to wait even a day".

Whole Foods, known for its selection of organic foods, has one store in the Santa Clarita Valley, in the Valencia Crossroads shopping center on Valencia Blvd. It's easy to imagine that Amazon might later decide to integrate this technology from its warehouses to its Amazon Go shops, and probably Whole Foods stores, too.

Amazon has been accused of destroying portions of the entire brick-and-mortar retail economy.

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Those stores solve much of Amazon's "last mile" delivery challenge for fresh groceries.

Jon Hauptman, senior director of retail for grocery consulting firm Willard Bishop in Long Grove, Ill., said e-commerce in the supermarket industry is not highly developed.

These early forays into groceries provide clues for what consumers could expect from a combined Amazon and Whole Foods, a deal expected to close later this year.

Whole Foods wove its way into the crowded and competitive Dayton grocers market in 2015, with its first Dayton-area store, in Washington Twp.at 1050 Miamisburg-Centerville Road. Amazon, which for years has been testing new technology and innovations in quiet corners, would now have a network of physical locations to test and implement those ideas. Just as Walmart is using Bonobos to get access to higher-end consumers and a more technologically savvy way of selling clothes, Amazon is using Whole Foods to get the expertise and physical presence it takes to sell fresh foods. The stock is up more than 31% so far this year.

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Almost $1.5T: Amount spent by Americans on food in a year. Whole Foods gives Amazon a tremendous amount of credibility around the quality of the food and the reputation they have with their customer base.

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