Amazon closes Whole Foods acquisition. Here's what's next

FTC Clears Purchase by Amazon of Whole Foods Market

FTC Clears Purchase by Amazon of Whole Foods Market

Amazon's acquisition of Whole Foods Market closes Monday, and Amazon has announced immediate price reductions will be taken on a range of items.

While Whole Foods accounts for less than 3 percent of USA grocery and supermarket sales, the purchase gives Amazon a foothold in a fragile industry that can ill-afford more price cutting. But under Amazon, those stores will be turned into warehouses that can distribute groceries to homes around the country.

The cuts add another front to a price war that's already raging across the supermarket sector.

Price was the biggest barrier to customers of Whole Foods, said an industry analyst.

The company aims to make Amazon Prime the rewards program for Whole Foods customers, and offer members special discounts.

With lower prices for higher quality goods, Amazon is posing a direct threat to America's major supermarkets.

RBC Capital Markets analyst Mark Mahaney thinks Alexa could be the next big thing for Amazon, potentially generating $10 billion in revenue by as soon as 2020.

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Concerns over their readiness to withstand Amazon's advance have weighed on Kroger and Target shares since Amazon said it was buying Whole Foods in June. "We see lower pricing leading to accelerating WFM [Whole Foods Market] share gains". That, along with an aggressive rollout of kerbside grocery order pickup, helped the company record its best food sales growth in five years in its most recent quarter.

Amazon, Google, Whole Foods, and Walmart all claim they want to make shopping easier by making grocery shopping from Walmart and Whole Foods available online.

"I literally came here today just for the vegan pancake mix", he said. The marked-down items had orange signs reading "Whole Foods + Amazon". They've already begun lowering prices in their brick-and-mortar locations. For instance, an organic rotisserie chicken at the store is now $9.99, down from $13.99, and crunchy almond butter is now $6.99, down from $7.99, the publication wrote.

The marriage between the upscale grocery chain and Amazon has promised to change the way its customers shop for their groceries.

Whole Foods headquarters will continue to be located in Austin, Texas but is stated to have access to Amazon's data and innovative processes that will eventually be rolled out such as the use of Amazon lockers in some Whole Foods locations. Customers can have products shipped from Amazon.com to their local Whole Foods Market store for pick up or send returns back to Amazon during a trip to the store.

Keep in mind, too, that this is just the beginning.

And Whole Foods' strength in organic products has gone from a niche category to a mainstream obsession as competitors such as Wal-Mart and Kroger stocked up at cheaper prices.

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