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Amazon's digital disruption of the food business

26 August, 2017, 01:16 | Author: Paula Vaughn
  • Amazon unveils Prime discounts, Lockers at Whole Foods

Amazon's $13.7 billion acquisition of the grocer will go through on Monday. The online giant also says its Amazon Prime members will get special prices and perks.

And "Amazon lockers" will be available in some Whole Foods Market stores - locations had yet to be divulged as of Friday - where customers can have Amazon.com products shipped to stores for pick up, with the lockers also accommodating returns heading back to Amazon. But sharp price cuts on items in stores will put pressure on Amazon to find cost savings elsewhere at Whole Foods, analysts said - for example, by making the logistics network that delivers goods to stores more efficient.

Whole Foods has more than 460 shops with the bulk of stores in the U.S. and Canada and seven in the UK. The acquisition will close on Monday, Amazon said in a press release on Thursday.

"We're determined to make healthy and organic food affordable for everyone", said Jeff Wilke, CEO of AmazonWorldwide Consumer, in the news release.

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On the very first day Amazon officially owns Whole Foods, it's going to lower the price of items like bananas, avocados, salmon and kale. Ahead, 14 products that we know for sure are going to be cheaper at Whole Foods starting this Monday, August 28. By then, Amazon Prime could become a one-stop shop for all consumer needs, from groceries and clothes and home appliances to on-demand entertainment and concert tickets.

If you're an Amazon Prime member, you will have another way to use your membership and take advantage of lower Whole Foods prices. Signs at the Westport store this week promoted Whole Foods' delivery services; this week, Stew Leonard Jr. predicted that within five years, 20 percent of the sales rung up at his Stew Leonard's chain will be delivered to customers. Whole Foods Market Inc. was founded in 1978 and it is an established USA supermarket chain that only features foods without artificial preservatives, colors, flavors, sweeteners, and hydrogenated fats.

News of Amazon buying Whole Foods shook the grocery industry in June, and these new plans are doing the same. Shares of Kroger, which was rumored late previous year to be considering its own takeover of Whole Foods, fell more than 8 percent.

John Mackey will remain chief executive of Whole Foods and the company will operate as a subsidiary and continue to be headquartered in Austin, Texas, the companies said on Thursday. The Amazon case shows how a once unthinkable business-to-business venture can come off, where one company associated with the digital sphere can effectively synergize with a non-digital brand. Meanwhile, Amazon's distribution centers can also function as Whole Foods distribution centers. Walmart, the largest grocery seller in the country, saw a 2 percent drop.

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