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The tech giant Amazon recently closed a deal with the supermarket elite Whole Food has made a lot of question rather than answers. A handful of analysts have been distasteful on the acquisition the prominent tech company has done; this also puts a ripple on the US grocery industry, its impact will soon follow on its new business venture.

It has been Amazon’s third acquisition deal this year; looking back at January, harvest.ai was acquired by the tech giant for $20 million and Souq.com was also acquired this year last March at $650 million. Now, Amazon is looking to expand its grasp in the grocery industry with an acquisition worth $13.7 billion in cash on the grocery giant Whole Foods.

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Amazon Deal Info

Amazon is sinking its teeth deeper on the US market, penetrating the grocery industry scene with its innovative ideas and tech advancement. It is a huge shock and a gamble from the end side of Amazon because of the groceries market lackluster profit margin.

The whole gain Amazon is looking to pounce at is the potential introduction of online food retailing business; with this move, they are looking to combat the kings in this current industry, Walmart, and Kroger. Walmart has been dubbed to be the crowning king of the online food retail business gathering more than one-quarter of the market according to Euromonitor.

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Analysts on the Amazon, Whole Food Deal

According to the senior food retailing analyst at CFRA, Joe Agnese, “Once Amazon is a player in the industry, anything can go,” and “The big threat is what else they can do. Now that they have a retail presence with (more than) 400 stores, long-term they can expand on that threat. They can (bring) pricing pressure. They could bring down prices and everyone would have to match them or lose share."

While according to Rafael Romero of CREC’s retail division, “I don’t think that this will be the last of Amazon’s purchases,” and “They fully recognize that brick and mortar and online retailing is all retailing and you need both." On the other hand, Mark Hamrick of Bankrate isn’t pleased on the tech giant’s acquisition; he noted that "Amazon is smart about mining data. They own data like Saudi Arabia has crude oil. Data is going to become only more (important) for those in grocery store business,"

Citi’s analyst Brian Raymond said that “Whole Foods provides Amazon with a (primarily leased) 460 retail store footprint across 42 US states, serving as distribution points and pick-up locations. Online grocery remains at around 2 percent in the US despite 20 years of investment. In our view, this acquisition is not about access to product. Amazon has partnered with retailers such as Morrisons to solve range issues in the past.”

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