The company unveiled plans on Friday to buy upmarket United States grocer Whole Foods Market in a massive $13.7 billion (€12.24 billion) deal. 'Those grocers will respond by cutting prices and that will cut profits for the distributors'.
More hubs means quicker and fresher delivery, which will bolster Amazon's existing grocery delivery service, AmazonFresh.
"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.
Stock rates of supermarkets, food producers, processing companies, retailers, and shopping malls lost over U.S.$35 billion nearly immediately after the news was released, indicating the potential effect this could have on the various industries.
Amazon's peer Walmart saw its share price down more than 6% within an hour of the news, while stock in grocery chain Kroger was off more than 15%. Amazon's stock, which recently traded over $1,000 for the first time, rose $23.54, or 2.4 percent, to close at $987.71.
Consumers could also see more Whole Foods stores thanks to Amazon's financial might.
Whole Foods customer Bethany Capels, 34, of Mendenhall, Miss., loads her Whole Foods Market purchases in her vehicle in Jackson, Miss., Friday, June 16, 2017.
Amazon has been looking at shop layouts that could allow traditional in-store purchase, online ordering with on-site pickup, and home delivery, using store warehouse space as a distribution point, Ladd said.
Amazon and Whole Foods expect to close the deal during the second half of 2017.
"Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy", Amazon founder and CEO Jeff Bezos said in a statement.
Both companies said there will be no layoffs, but they did not respond to other questions about Amazon's plans for Whole Foods.
The deal is for $13.4 billion in cash and the remainder in debt.
Grocery stores are under more pressure to compete based on convenience, especially as more retailers and startups introduce food options such as meal kits, low-priced snacks and organic groceries, according to a report released earlier this year by Jones Lang LaSalle, a commercial real estate firm.
One of the world's biggest online consumer goods companies is getting even bigger. It has expanded from a book seller into a merchant of almost all consumer products, as well as producing videos.
Whole Foods becomes a convenient place for Amazon customers to pick up items they ordered so they do not have to wait for delivery.
For now, though, Whole Foods cashiers and other employees can take a sigh of relief. Her daughter Bethany Capels agrees and says she likes Whole Foods for the organic fruits she can serve her kids.
"Amazon is known to drive down prices and make the shopping experience more efficient", Wu said.
According to a filing, Goldman Sachs and Bank of America Merrill Lynch provided a 364-day senior unsecured bridge term loan facility of up to US$13.7bn to help fund the acquisition.