Tag Archives: amazon

Whole Foods stock rockets 28% on $13.7 billion Amazon takeover deal

Shares of Whole Foods Market rocketed 28 percent on Friday after Amazon said it plans to acquire the grocery store chain for $42 a share, in a deal valued at $13.7 billion.

Amazon’s offer represents a 27 percent premium to Whole Foods’ closing price on Thursday. With Whole Foods shares trading around Amazon’s offer price, investors appear to be speculating that another suitor could make a play for the grocery chain.

Whole Foods has been under pressure from activist investor Jana Partners and money manager Neuberger Berman, which have called on Whole Foods to sell itself. The investors have criticized Whole Foods for its poor performance, and have suggested the chain could be merged with another grocer.

“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,” John Mackey, Whole Foods’ CEO, said in a statement.

Mackey will remain CEO of the grocery store chain after the deal closes, and the store will continue to operate under the Whole Foods brand.

Amazon has long been pushing to expand its online grocery business, seeing it as an emerging opportunity. Currently, very few people purchase their groceries online even as more shoppers switch to buying other goods that way.

Some analysts had seen Wal-Mart being best positioned to compete in the next phase of growth in online shopping because it was going to be able to use its vast footprint of stores to help distribute products ordered online. Also, Wal-Mart has been successful with its so-called click-and-collect model, where shoppers order online but stop by the store to pickup their orders.

Meanwhile, Whole Foods has been seen as a laggard in the online shift. Their stores tend to be in urban markets where there was an overlap with Amazon Fresh and Prime Now.

News that the e-commerce giants buying grocery store Whole Foods sent grocery stocks reeling on Friday.

Kroger sank nearly 16 percent before the bell. Supervalu dropped 11.5 percent while Costco dropped 6.5 percent. Sprouts Farmers sank 9.2 percent.

“This is an earthquake rattling through the grocery sector as well as the retail world,” Mark Hamrick, senior economic analyst at Bankrate.com, told CNBC in an email. “We can only imagine the technological innovation that Amazon will bring to the purchasing experience for the consumer. Now, we can see in hindsight that its recent dithering around the brick-and-mortar experience, as an experiment, was only a rumbling of the seismic event in the offing.”

Shares of Amazon were up about 3 percent following the news. The deal is expected to close in the second half year.

Jana Partners did not immediately respond to CNBC’s request for comment.

Story by Sarah Whitten at Cnbc.com

Wal-Mart Asks Employees to Deliver Packages on Their Way Home

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Wal-Mart Stores Inc. is testing a program that sends store employees to deliver online orders at the end of their shifts, a new push by the world’s biggest retailer to use its large physical footprint to match Amazon.com Inc.’s convenient options for web purchases.

Workers can opt in to earn extra money by making deliveries using their own cars. They’re assigned packages based on where they live so the route aligns with their commute home, the company said June 1 in a blog post. Wal-Mart didn’t specify how the employees will be compensated. The test began at three locations in Arkansas and New Jersey.

Wal-Mart ranks No. 3 on the Transport Topics Top 100 list of the largest private carriers in North America.

Wal-Mart is tapping into its 4,700 U.S. stores and more than a million retail employees as it seeks to redefine itself in an age of e-commerce dominated by Amazon, which offers delivery of some products in as little as an hour in some cities. Online spending will increase by 16% this year — more than four times the pace of overall retail — to reach $462 billion, according to EMarketer Inc.

About 90% of the U.S. population lives within 10 miles of a Wal-Mart, and the company is using those locations as shipping hubs to compete with Amazon on the last mile of delivery — the most expensive part of getting goods to customers. By using existing workers in their own cars, Wal-Mart could create a vast network with little upfront cost, similar to how Uber Technologies Inc. created a ride-hailing service without owning any cars.

“Imagine all the routes our associates drive to and from work and the houses they pass along the way,” said Marc Lore, who took over Wal-Mart’s e-commerce operation last year after the retailer purchased his startup, Jet.com, for $3.3 billion. “This test could be a game-changer.”

Many online orders in tests have been delivered overnight using store employees, Lore said, showing how the initiative could also be used to narrow delivery times.

The lines between internet and brick-and-mortar commerce are blurring as retailers — including Amazon — try to accommodate a variety of shopping preferences. Bentonville, Arkansas-based Wal-Mart offers free two-day delivery on millions of items to compete with Amazon’s standard delivery time. It also lets customers buy groceries online and pick them up at stores and offers discounts to online shoppers who pick up items at stores rather than having them delivered.

Amazon, meanwhile, has stepped up its experimentation with physical locations. It’s slowly opening physical bookstores in big cities around the U.S., which double as showrooms for Amazon gadgets such as its Kindle readers and Echo voice-activated speakers. The company opened two drive-in grocery pickup kiosks in its hometown of Seattle earlier this month, its first attempt to match the click-and-collect options rolled out by Wal-Mart and other big-box competitors.

By Spencer Soper @ Bloomberg News in association with Transport Topics

Amazon asks FAA for go-ahead to test its delivery drones

Amazon is asking regulators to allow the company to test its delivery drones a little bit closer to home.amazon

The online retail giant sent a letter Wednesday asking the Federal Aviation Administration to ease its restrictions on drone-testing in the U.S. in order to allow Amazon to experiment with its unmanned aircraft outdoors near the company’s Seattle headquarters instead of one of the six FAA-approved sites elsewhere in the country.

Amazon’s developmental efforts are part of its plan to one day launch a drone delivery program, called Amazon Prime Air, to carry packages as heavy as five pounds to customers’ homes with drones that can fly as fast as 50 miles per hour. The company’s announcement of the idea gained quite a bit of attention last year, despite an uncertain timeframe for implementation.

The FAA has maintained that unmanned aerial vehicles are only to be used for recreational purposes, and not for commercial reasons, until it is able to come up with rules by which it can regulate the industry. The agency also said last year that it will sanction six outdoor drone-testing sites in the U.S., located in Alaska, Nevada, New York, North Dakota, Texas and Virginia.

But, Amazon AMZN 3.96% wants to move its testing out of its indoor facilities in order to accelerate the development of its aerial fleet and the company is trying to sell the FAA on the idea that its research would ultimately benefit consumers by offering “enormous consumer benefits by delivering packages to customers in 30 minutes or less.”

“One day, seeing Amazon Prime Air will be as normal as seeing mail trucks on the road today, resulting in enormous benefits for consumers across the nation,” the company says in its letter. “We respectfully submit this petition for exemption so that Prime Air can be ready to launch commercial operations as soon as eventually permitted by subsequent FAA action.”