Can Amazon persuade enough people to buy fresh food online?

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"Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy", said CEO Jeff Bezos.

Armed with giant warehouses, shopper data, the latest technology and almost endless funds - and now with Whole Foods' hundreds of physical stores - Amazon is set to reshape a US$800 billion grocery market that is already changing rapidly. In some cases, local governments have blocked Wal-Mart's plans to build stores.

The move comes at a challenging time for grocers. Investors are likely anxious that Amazon, once entrenched in the physical grocery store business, will ruthlessly cut prices for food products like it did with books.

By coming under the Amazon umbrella, Whole Foods may develop new methods for distributing food that could also allow it to reach more customers, Eggers says.

"We are always concerned when there is some loss of brick-and-mortar stores out there", Mullins said after just hearing of the news early Friday. Among the company's largest acquisitions are its 2009 purchase of online shoe retailer Zappos.com for roughly $1.2 billion, and video game streaming site Twitch, which it bought in 2014 for roughly $1 billion. The deal on the surface seems valuable for stakeholders in both companies.

Whole Foods sent a letter to customers after the merger announcement, calling the agreement a new chapter in Whole Foods' history and an incredible opportunity.

"This deal should leave no doubt that Amazon is deadly serious about dominating all aspects of retail", said Mr Paul Cuatrecasas, chief executive of Aquaa Partners, a London-based investment banking firm, in an e-mail.

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But in the hands of Amazon it would be a potent weapon against archrival Wal-Mart, the world's largest retailer, which dominates the grocery world and has been stepping up its e-commerce. He added that these are likely the higher-income households who tend to buy more expensive brands and cuts of meat.

"Limited-assortment" grocers, such as Kettering's Trader Joe's - stores that typically sell private-label goods and less variety in general - are growing quickly now.

Customers drive past this Whole Foods Market store in Jackson, Miss., Friday, June 16, 2017. The retail giant also announced that John Mackey will remain as CEO of Whole Foods Market, while its headquarters will remain in Austin, Texas.

He said he expects the marketing to begin shortly after the combined company closes the deal in the second half of the year.

SELYUKH: For Amazon, the deal gives it a physical presence in hundreds of locations but also places Amazon smack in the middle of a massive consumer goods market - the stuff people buy over and over again for their entire lives. Year-to-date, the stock is up almost 39%.

Dylan: But there's definitely a lot more going on here than the fact that Whole Foods has 30 locations in MA. Amazon closed up 2 percent.

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