The $13.7 billion deal lifted shares for both companies, punished the stocks of grocery companies who now have even more reason to fear Amazon's moves onto their turf, and added a cool $2 billion to Jeff Bezos' net worth.
Dylan: But there's definitely a lot more going on here than the fact that Whole Foods has 30 locations in MA.
At least one local shopper at the Andover Whole Foods store had a much different perspective on the deal.
The deal would give Amazon control of 430-plus U.S. Whole Foods stores, almost all of which are in neighborhoods more affluent and younger than America as a whole, noted David Portalatin, the NPD Group's vice president of food industry analysis.
Amazon will be able to use automation and data analysis to draw more customers to stores while helping Whole Foods cut costs - and perhaps prices - and better tailor its offerings to customers.
But Whole Foods has seen its sales slump and in February said it no longer saw the potential for expanding its flagship chain to 1,200 locations, up from about 460 in the United States, Canada and the United Kingdom.
"The conventional grocery store should feel threatened and incapable of responding", Wedbush Securities analyst Michael Pachter said.
Charlie O'Shea, a Moody's lead retail analyst, told the Associated Press news agency that the deal could be "transformative, not just for food retail, but for retail in general".
The deal values Whole Foods at US$42 per share. It announced last Friday that it had agreed to buy online clothing company Bonobos for US$310 million. Jana and the rest of the clamoring shareholders are off his back, and he's gained the help of a company that excels at supply chain management, technology, customer relationships, and pricing.
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Amazon has recently begun experimenting with bookstores and a small grocery, but this is by far its most ambitious move into physical retail.
The organic grocer, which was founded in 1978, would continue to operate under its existing brand.
He said he expects the marketing to begin shortly after the combined company closes the deal in the second half of the year.
Amazon is considering extending the cost-cutting effort with the no-checkout technology it's developing at its Seattle convenience store, "AmazonGo", according to the person familiar with the matter, who asked not to be named because the plans are private. Shoppers skip the checkout line, and their Amazon accounts get automatically charged.
Amazon would also look to change Whole Foods' inventory, introducing its own private-label products to replace items deemed too expensive to have mass appeal, the person with knowledge of the matter said. That should benefit Whole Foods as it tries to return to sales growth. In an email to customers, the company said it planned to maintain the same standards under Amazon, including bans on artificial flavors and colors. But she would never buy food online, she said. Amazon could integrate it with technological advancements to improve the shopping experience, and, in turn, help Whole Foods rein in revenue. "But I don't really buy any home items on Amazon, not anything I put in my body. A lot of people will love that", said Whole Foods customer Brad Anderson.
But mostly, online business gives shoppers choices, he said.
Food industry experts say the online giant tapping into the brick-and-mortar world is a game-changer for traditional grocery chains.
Walmart and Amazon have had their sights on each other for years, each aiming to be the dominant seller of goods - however consumers of the future want to buy them. The stores could also showcase gadgets such as Kindle e-readers and Fire tablets.
It's not yet clear how its drone delivery program or Prime one-day delivery could change Whole Foods.
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