Amazon's shares rose 2.4 percent to $987.71, adding $11 billion to its market capitalization, which in one sense makes the acquisition almost free for Amazon shareholders.
Can Amazon, the company that persuaded people to buy ever more items online, win enough of them over to having their fresh groceries arrive in an Amazon box?
The news shook a grocery sector that is already grappling with consumer unease, currency volatility, geopolitical uncertainty and increased competition from the German hard discounters Aldi and Lidl.
So watch the initial negative reaction hit the shares of a host of Australian retailers from today - Woolworths (with its troubled and Big W chain), Metcash, Super Retail, Bapcor, The Reject Shop, Harvey Norman, Jb Hi Fi, Super Retail Group and Wesfarmers (Coles, Kmart and its troubled Target chain).
However, local food marketing and retailing experts tell MiBiz that early stock market reactions are not necessarily the best indicators of long-term challenges.
The Australian market looks set to open modestly higher after Wall Street closed mixed although little changed in its last session despite Amazon's purchase of Whole Food upsetting the retail sector.
Now, Bezos will be Mackey's boss, and the combination of those two pioneers could upend the staid supermarket business. Amazon's move aims at the heart of the Bentonville, Arkansas-based retail giant's business - groceries, which account for 56 percent of Wal-Mart's $486 billion in revenue for the year ending January 31.
"In all reality, I think the stock market is reacting by dumping anyone that's not Amazon or Whole Foods", said Dr. Marcel Zondag, an associate professor of marketing at Western Michigan University. "Amazon gains expertise in grocery and organics in particular".
In April, Whole Foods hired former Office Depotexecutive Heather Stern to serve as its new general counsel and global vice president of legal affairs.
CVS cvs and Walgreens wba shares were down almost 4% and 5.5%, respectively, on Friday afternoon.
Wal-Mart, which upended the grocery sector itself when it made a decision to add food to its general-merchandise stores in the late 1980s, has thus far parried Amazon's advances. "Most of us like to see what we're buying, and it's a good store, but we just wouldn't buy online", he said. Overall, the company's USA online sales rose 63 percent last quarter. This year, Amazon turned its focus to consumer packaged goods, using software that tracks prices across its competitors' stores like Wal-Mart and automatically lowering its prices below the competition.
"This private corporation already dominates every corner of online commerce, and uses its power to set terms and prices for numerous most important products Americans buy or sell to one another", Lynn said. Amazon is a leader in the use of robots.
"This could annihilate them", Jetta said. Sprouts didn't respond to a request for comment. An MIT paper memorably recounted how Amazon production workers were forced to discard extra bananas because AmazonFresh market's definition of a banana bunch was exactly five bananas. "There could be some money left on the table", he said in a note to clients.
It values Whole Foods at an 18% premium to its closing share price on Thursday.
Analysts generally praised the deal as a smart buy for Amazon, but not everybody was applauding. And because Amazon can now offer a mix of in-store shopping, same-day delivery, and its usual style of online shopping, it has room to grow.
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