The Amazon Versus Walmart Showdown Just Got More Interesting

Online shopping behemoth Amazon has announced the acquisition of upscale grocery chain Whole Foods Market for $42 per share in an all-cash transaction valued at approximately $13.7 billion.

The acquisition is being seen as an unequivocal signal by the world's largest online retailer that it plans to expand massively into the brick and mortar model of grocery retailing and sets it on a collision course with Walmart, which is aggressively attempting to reshape itself into an online shopping outlet.

“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 Amazon founder and CEO Jeff Bezos. “It has been satisfying, delighting and nourishing customers for nearly four decades – they’re doing an amazing job and we want that to continue.”

“This partnership presents an opportunity to maximize value for Whole Foods Market’s shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers,” said Whole Foods Market co-founder and CEO John Mackey.

The entrenched habit of retailing in person for food items was proving to be a nearly insurmountable challenge for Amazon in its foray to sell grocery items through its famed online model. Currently Amazon delivers fresh fruit and meat in parts of New York, Pennsylvania, Connecticut, California, Washington and Maryland. Its other online delivery channels include Amazon.com and its Prime Now programme.

As a new entrant to the brick-and-mortar retail model, Amazon faces a formidable challenge from Walmart, which currently has outlets within 10 miles for 90 per cent of American shoppers.