Online retailer Amazon surprised the tech world — and just about everyone — today with the announcement that it has reached an agreement to acquire the high-end grocery store chain Whole Foods Market for $13.7 billion in a cash and debt deal. The acquisition marks an enormous step for Amazon, moving the company from being a predominantly web-based retailer to one that operates physical stores too.
Amazon has experimented with the occasional pilot bookstore or grocery store in the past. But today’s development will bring it more than 430 retail locations across the country, a substantial base from which it can expand its empire into the physical realm.
The acquisition also represents the single largest deal Amazon has made to date. Its second largest was for the purchase of Twitch, the videogame streaming service, which it bought for a scant $970 million in 2014.
The company has demonstrated an interest in the retail grocery store space for some time. It had previously announced plans to open a 1,800-square-foot store called Amazon Go in Seattle, Washington. The store would have operated without cash registers for a “checkout-free” shopping experience. Customers would have needed an Amazon account and a smartphone running the Amazon Go app to shop there. The app would then have automatically charged whatever products they took out of the store with them to their Amazon account.
But the company had been forced to delay the store’s launch, which was originally scheduled to open earlier this year, after experiencing technical difficulties with the cash register-free system.
For Amazon, the Whole Foods acquisition does more than just leapfrog over the technical difficulties it has had in implementing its grocery plans. The addition of hundreds of physical retail locations could also represent a game-changer for the company’s ability…