How will Amazon transform Whole Foods? (The 3:59, Ep. 242)

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Online shopping has been taking over the retail sector for some time, but the recent announcement that online shopping giant Amazon has bought United States specialty grocery store Whole Foods still came as a shock. We also discuss why Joan still plays the game. Amazon may change the inventory at Whole Foods as part of broad effort to lower prices.

Stock prices for grocery sellers like Costco, Target, and Kroger have tanked since word broke of Amazon's acquisition, and some Whole Foods loyalists have bashed the deal as a sellout that could destroy a retail brand they love. Grubhub shares traded at about $45.14 midday on Monday, up more than 4 percent compared to the previous close.

Amazon has made a big push into apparel in recent years, with department stores in its crosshairs.

Amazon is known for driving sales at the expense of profits, Stifel analyst Mark S. Astrachan noted, saying the company will likely maintain that approach as it looks to build market share in groceries.

But Amazon's $13.7-billion deal might not be the last word on the merger itself., Inc. (NASDAQ: AMZN) isn't the biggest retailer, Wal-Mart Stores Inc (NYSE: WMT) is.

An Amazon spokesman denied that job cuts are in the works for Whole Foods.

With its acquisition of Whole Foods, Amazon acquires a portfolio of a dozen stores in New York City, including one at the Time Warner Center and another on the way at Manhattan West, as well as the grocer's distribution-supply chain.

The deal came together after Mr. Mackey flew to Seattle with a group of Whole Foods executives. Mergermarket's Lim says the first challenge for Amazon is how to successfully run a physical supermarket chain.

However, Amazon has been signaling its interest to enter the food industry. But based on Mackey's stirring testimony, it would take an very bad lot to make star-crossed lovers out of Amazon and Whole Foods.

The rules for dealing with and doing business with Amazon are going to be rewritten. Investors looking into the crystal ball now see more and more of the home delivery or the pickup version of food swinging to Amazon more quickly than anyone thought it would before this deal. With the financial backing of Amazon behind it, it could further delve into this market and support local foods in a real way. The question is how it will fare having to fend off not only the world's largest brick-and-mortar chain but also the undisputed king of internet retailing.

At Whole Foods, technology would enable people to pay using their smartphone, instead of seeing a cashier, or even using a kiosk, a source told Bloomberg.