Cheaper avocados are here: Amazon closes Whole Foods deal

The $13.7 billion acquisition, first announced in June, is expected to shake up the grocery industry.

Ben Fox Rubin
Ben Fox Rubin Former senior reporter
Ben Fox Rubin was a senior reporter for CNET News in Manhattan, reporting on Amazon, e-commerce and mobile payments. He previously worked as a reporter for The Wall Street Journal and got his start at newspapers in New York, Connecticut and Massachusetts.
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Whole Foods Reports 27 Percent Increase In Q2 Earnings

Now you can get your organic fruit and Amazon devices in one place.

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It's official, and there's now a display for Amazon Echo devices at Whole Foods stores to prove it.

Early Monday morning, Amazon said it closed its purchase of Whole Foods. The $13.7 billion deal -- by far Amazon's biggest acquisition -- marks the company's most significant move into both the $800 billion US grocery market and brick-and-mortar stores.

After first announcing the deal in June, Amazon said last week it expected to close the acquisition Monday. It gained a flood of positive news coverage in the process by announcing it will cut prices at the high-end grocer, starting with a selection of best-selling items, including organic avocados and organic brown eggs.

Checking prices at one Whole Foods in Manhattan, Bloomberg reported Monday that the price drops on those handful of items range from 7 percent to 43 percent. For instance, an organic rotisserie chicken at the store is now $9.99, down from $13.99, and crunchy almond butter is now $6.99, down from $7.99, the publication wrote. Amazon said last week it plans to make more price cuts.

These lower prices could help Amazon build up excitement for its new acquisition in the short term, but it will likely have to keep working on pricing if it hopes to turn around Whole Foods' flagging sales. Whole Foods already started cutting prices about two years ago to help it shed its "Whole Paycheck" reputation and to compete against traditional grocers moving into natural and organic foods.

Amazon said last week it also plans to turn its Prime membership program into the Whole Foods rewards program, offering "special savings and in-store benefits" for Prime members. There are an estimated 85 million Prime members in the US, a huge and mostly higher-income group that could help build up Whole Foods' sales.

The Amazon-Whole Foods deal has caused a selloff in a bunch of grocery stocks -- including Walmart, Kroger and Costco -- with Wall Street likely predicting a price war from Amazon to gain more customers.

Amazon said last week that Whole Foods' private label products -- including 365 Everyday Value, Whole Foods Market, Whole Paws and Whole Catch -- will be available through Amazon.com, AmazonFresh, Prime Pantry and Prime Now. Also, Amazon Lockers will be placed in some Whole Foods stores.

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