Amazon expects to reduce headcount and change inventory to lower prices and make Whole Foods competitive with Wal-Mart Stores and other big-box retailers, according to a person with knowledge of the company's grocery plans.
The purchase is a huge leap for Amazon as the company spreads its reach across the $800 billion grocery business.
Amazon.com, Inc (NASDAQ:AMZN) has plans to continue expanding its presence in brick and mortar retail. Meanwhile, the more than 460 Whole Foods stores in the U.S., Canada and the United Kingdom could be turned into distribution hubs - not just for delivering groceries but as pickup centers for online orders.
The move gives Amazon access to Whole Foods' 460 stores in the US, Canada, and Britain - most of which are well-located in desireable areas.
But if Amazon can be the one-stop shop for everything - groceries had been one of the key missing elements - customers would have even less of a need to go to Walmart or elsewhere.
Mackey has been facing investors' ire because of his strategies that were thought to have resulted in Whole Foods' poor performance.
The merger is expected to be completed in the latter half of the current year after receipt of approval from Whole Foods Market's shareholders, regulatory approvals and meeting of certain customary conditions.
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"Whole Foods Market has been satisfying, delighting and nourishing customers for almost four decades - they're doing an incredible job and we want that to continue".
Using computer vision, sensor fusion, and deep learning, the Amazon Go beta technology can automatically detect when you take something off the shelf and charge it to your Amazon account.
"As such, we are not surprised that many of our food names saw stock prices drop off on Friday, given the likelihood that Amazon will use the 365 brand as a focal point of its online food offering". He previously covered Whole Foods for the Austin American-Statesman.
A source familiar with the matter say Amazon may roll out some (possibly extreme) cost-cutting measures to lower prices across the board at Whole Foods.
According to Huang, it is hard for retailers without the speed of a technology company to catch up to firms such as his or Amazon. The price shows that at least some traders see a good chance of Whole Foods being valued at substantially more than Amazon has agreed to pay, as the options would otherwise be worth nothing. They've tried AmazonFresh, Amazon Prime Pantry, and a bunch of other initiatives to get customers to order groceries online, but it's been slow going.
Amazon is planning a bloodbath at Whole Foods, according to a report.
In terms of inventory and infrastructure, Maute said, acquiring Whole Foods could give Amazon a solid foundation for ramping up online grocery sales and delivery via Amazon Fresh. Amazon recently started producing private-label food.
Amazon could also get a better picture of customers by marrying data from Amazon and Whole Foods' loyalty programs. But at a minimum, this move could get Whole Foods into the online space much faster, in theory, than any other retail competitor.