But as a power move from Amazon CEO Jeff Bezos, it's a masterstroke.
- Amazon made its first attempt at full grocery delivery in 2007 with Amazon Fresh but has been slow to roll out that service. "What's the one thing people want?"
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?
Adam Levy owns shares of Amazon.
Amazon, which reported $12.5 billion in cash and equivalents and a free cash flow of $10.2 billion in the year ended March 31, has plenty to spend. In a sense, the surprising deal is preordained by his mission to construct the everything store: A company that delivers everything to everyone, at the best possible price and within the shortest amount of time.
"Amazon's acquisition of Whole Foods is one of those".
Last week, at the ATMOsphere America 2017 conference in San Diego, Calif., Accelerate America magazine presented Whole Foods with a best-in-sector award in the food retail category for its myriad natural refrigerant pilots, including 10 stores with transcritical Carbon dioxide systems, one with ammonia/CO2 cascade and one with propane/CO2 cascade, as well as more than 50 stores with at least one propane self-contained case (shecco produces ATMOsphere America and Accelerate America as well as this website). In the past, physical retail and all of its associated complications have seemed anathema to Bezos - expensive, inflexible obligations whose costs are hard to defray by advances of technology.
Shares in Target Corp, America's second biggest retailer lost 5.1% and shares of Wal-Mart Stores closed down 4.6%, a drop of $US11 billion in value alone and the single biggest loser in the sector on the day. John Mackey will remain as CEO of Whole Foods Market and Whole Foods Market's headquarters will stay in Austin, Texas.
Reportedly Amazon was not only interested in Whole Foods.
But shoppers could start to grow more comfortable buying, and Amazon sees the grocery business as a hot market because shoppers buy weekly or even more often for items they run out of.More news: Palestinians Deny IS Claim for Deadly Attack on Israeli
Wal-Mart is offering curbside pickup of online grocery purchases at 700 locations, with 300 more planned by year end. In this concept store, Amazon experimented with making cashiers and checkout lines obsolete by using sensors to track what foods you buy, so you can just pick up your food and go.
Amazon has been opening a limited number of book shops in some USA cities such as Seattle, New York (one opened in the Time Warner building on Columbus Circle three weeks ago) and two are planned for the San Francisco area this year.
"I just hope they keep the integrity of Whole..."
But home delivery of goods has proven to be a big hurdle due to costs and the difficulty of selling meats and other perishables.
And there's a big security blanket on Amazon that means those numbers probably aren't going anywhere.
The theme of Bezos' 2016 letter to shareholders was that it will always be "Day 1" at Amazon. "You can also count on us to work hard to find a fourth".
With the sheer square footage of your average Whole Foods store, there's no reason why Amazon couldn't take a similar tactic.
Shares of dozens of supermarkets, food producers, payment processors and shopping malls collectively lost at least $35 billion in USA market value on Friday as the news reverberated across financial markets.
Latham & Watkins corporate partners Adel Aslani-Far and Mark Gerstein are representing Evercore Partners in its role as financial adviser to Whole Foods on its proposed sale to Amazon, while Weil Gotshal & Manges banking partners Morgan Bale and Heather Viets, capital markets partner Faiza Rahman, M&A partner Raymond Gietz and tax partner William Horton are acting for Bank of America/Merrill Lynch and Goldman Sachs, both of which are providing bridge financing for the acquisition of the grocery store chain.