The company takeover was the subject of rumours for months. It is possible that in the next five to ten years, something big could come from Amazon's laboratory, but that doesn't help Amazon in the short term. Leaping to mind are "Walmart's worst nightmare" followed by "this changes everything", the latter effective immediately in natural and organic foods retailing and, longer-term, potentially with regard to all grocery, not just in the USA but worldwide, notes David Lummis, market research analyst with Packaged Facts.
Amazon's expertise with data crunching could benefit both companies, especially as Whole Foods moves to collect more customer information through the rollout of its loyalty program.
U.S. Foods Holding (USFD) has dipped almost 3%.
Chicago-based Grubhub, the online restaurant delivery service? The culture and mission of Amazon is very different than that of Whole Foods. There could be a bidding war if someone puts in a better offer. Reuters was first to report that Wal-Mart wasn't making a counterbid, sending Whole Foods stock down 0.6 percent to $42.95.More news: Off-Duty Officer 'Treated As Ordinary Black Guy,' Shot By Another Cop
More selection, lower prices and delivery accuracy will be the pillars of a successful acquisition. Many current Whole Foods stores are in locations with limited parking space, so this could create problems for current building owners. Since capacity and reliability are always challenges in organic procurement, Amazon is starting from a strong position.
Amazon is also known for being disruptive by nature, across varied markets. 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.
But even with the push to the web, brick and mortar stores are popping up all over the place. The prototype version, now open in Seattle, allows consumers to walk in a store, pick food products, and leave.
Up to now, grocery has been a tough nut for Amazon to crack. A growing number of consumers aren't willing to wait in line to give a retailer money. It's available in most Southwest Florida communities.More news: Kim Kardashian and Kanye West to hire surrogate for third child?
"If they figure that out, it portends well even for brands like ours", he says. That's when Apple introduced the revolutionary iPods and the iTunes music store for convenient, legal access to music. According to industry watcher Gartner, the market for public cloud infrastructure will grow 36.8% to $34.6 billion worldwide this year.
The same fate awaits food retailing if it doesn't embrace the future. Only time will tell. But overnight, Amazon is the number one brick-and-mortar seller of natural and organic foods in the USA, and if Amazon can parlay that out to grocery overall the rewards are potentially vast. For all intents and purposes, Amazon still considers Canada as a pilot project, but that may change quickly. Amazon is undoubtedly viewing the opportunity as a more lucrative one. The company accounts for about half of new spending online in America. Most are barely in the online game (the average rating of Canadian grocers' iPhone apps is 2 out of 5). "We're not Whole Foods people and Amazon people". And since millennials have a long-standing relationship with online shopping, that competitive advantage is key. With a portfolio of new fashionable private labels like Happy Belly, Wickedly Prime, Presto! and Mama Bear, millennials are clearly on Amazon's mind.
Wal-Mart spokesman Greg Hitt declined to comment on whether the company is considering a bid for Whole Foods. This is a whole new world. That leaves Amazon with few likely rivals after its $13.7 billion deal to buy the organic grocer on June 16.More news: Liberal Steve Thomson BC's new Speaker in likely short-lived government
Sylvain Charlebois is senior fellow with the Atlantic Institute for Market Studies, dean of the faculty of management and a professor in the faculty of agriculture at Dalhousie University, and author of Food Safety, Risk Intelligence and Benchmarking, published by Wiley-Blackwell (2017).