Amazon-Whole Foods tie-up could speed grocery transformation

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And Amazon's same-day online grocery service, AmazonFresh, is only available in a few markets, even in the U.S.

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We don't know the answer to these questions just yet, but any real information about interest from another firm would be the first sign of trouble for Jeff Bezos and his acquisition team. Whole Foods has a reputation for high quality products and one of its stores is a short distance away from most people. The Whole Foods deal and the roughly 460 stores that come with it prove physical stores are not an "insurmountable moat" against now pure-play e-commerce companies - at least not against Amazon. "The reaction of shareholders suggests that Amazon has left themselves lots of room to pay more for this strategic asset".

Mackey has been facing investors' ire because of his strategies that were thought to have resulted in Whole Foods' poor performance.

"Every grocery store out there now is having a conversation about how much they can afford to spend to keep Amazon out of the space", said Brian Culpepper, a portfolio manager at James Advantage funds.

Online grocery delivery can be notoriously hard, especially when it comes to the timely delivery of perishable goods, so here are five ways the purchase of Whole Foods will give Amazon an edge in this fight.

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Wal-Mart Stores Inc could have sufficiently deep pockets to make a counter bid and other grocery rivals such as Kroger or Albertsons Cos Inc would have the motivation, he said.

Whole Foods (WFM) executives met with Amazon (AMZN) executives just six weeks ago before tying the $13.7 billion knot on a deal that will "change the world", according to Whole Foods CEO John Mackey.

Whole Foods becomes a convenient place for Amazon customers to pick up items they ordered so they do not have to wait for delivery. But Amazon has been in the grocery business for seven or eight years (Amazon Fresh or Amazon Go), but they had to buy a grocer to make an impact.

View Whole Foods Market Store Locations in a full screen map. Amazon spokesman Drew Herdener says the company has no plans to use such sensors to automate the cashier jobs at Whole Foods. According to insiders, about 10% of Instacart's business now comes from Whole Foods orders, but that seems likely to change. Prime membership for groceries cements a relationship with a grocery store, and it encourages members who have not shopped there to shop in Whole Foods.

The deal will be seen as a further encroachment by Amazon on the United Kingdom grocery sector's turf after its delivery service Amazon Fresh, covering postcodes across London, Surrey and parts of Hampshire, was launched a year ago in a tie-up with Morrisons. It is also a shrewd move from Amazon to acquire a well-respected grocer with a strong physical presence and loyalty base already, as it means they will already have a strong customer following, but it'll be interesting to see how they move the brand forward into the digital age.

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