Amazon Bought Whole Foods And Is Aiming For Slack, Who's Next?

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This is Amazon's $13.7 billion bet on dominating the grocery and food delivery business.

Carmen Clark, 37, a six-year employee at a store in Mount Pleasant, South Carolina, said some workers worry that Amazon-led automation could lead to job cuts. This could be good news even if you don't shop at Whole Foods. Grubhub shares traded at about $45.14 midday on Monday, up more than 4 percent compared to the previous close.

The massive acquisition raises the possibility that Amazon could disrupt both the grocery market and the in-store shopping experience more broadly. Its own delivery service has been relatively successful but the traditional giants like Walmart still dominate the old-fashioned grocery shopping space. Several hundred grocery chains, convenience stores, dollars stores as well as mom and pop stores account for the rest.

IBD'S TAKE: Amazon.com has bounced off its 50-day moving average following the news that it's buying Whole Foods, but is a bit extended for a secondary buy. Amazon clearly wants to do to supermarkets what it did to bookstores.

Oppenheimer's Jason Helfstein says: "Our analysis assumes no incremental investment by Amazon, or potential revenue/ cost synergy; however, we believe it's likely Amazon will invest at some level to: 1) increase store efficiency (especially on labor cost); and 2) convert stores to work as online food distribution hubs". How that experiment has panned out so far we don't know for sure.

Parikh added that Amazon's offer appears to be "undervaluing the company's prospects and the powerful brand" and that Whole Foods could do better.

Culpepper, who owns Kroger Co shares, said Kroger is the company that would be most likely improve Whole Foods' efficiency, but that it would have difficulty matching Amazon's cash offer.

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Photo by David Ryder / Stringer / Getty Images.

Expect to see Amazon attempt to swoop into Europe and buy up more supermarket chains of a similar size to Whole Foods and repeat the strategy in other markets.

"We're seeing a lot of hand-to-hand combat in the grocery industry".

Amazon has been desperately trying to break into the grocery business for some time, but that's proven a hard nut for the online mega-company to crack.

Amazon's Worldwide Consumer chief, Jeff Wilke, said at the town hall that Whole Foods' healthier options helped change how people think about food. Whole Foods will be a lab of sorts for Amazon.

Competing with Amazon is terrifying for any incumbent business because the company's executive team operates on a radical model whereby the company's overall net income is almost zero quarter after quarter. As it is, Microsoft already backed away from buying Slack a year ago, but they too walked away before any serious negotiations began.

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