$13.7 billion might be cheap if every other supermarket goes out of business.
That anecdote might help us understand why Amazon has just purchased Whole Foods Market for $13.7 billion. The Woot founder explained that Amazon employees were desperate for data on how Woot, a site that famously sold a "bag of crap," was successful. If true, then it's likely that Amazon will send an army of employees to Whole Foods to examine every part of its business.
Of course, the company has assured people that Whole Foods will "continue to operate" under its own brand. In addition, nothing will change (for now) about how the grocery store operates, sourcing food from "from trusted vendors and partners around the world." But behind the scenes, you can imagine individual outlets becoming laboratories for an enormous, constant experiment in grocery retail.
Give it a year or two and Amazon will know everything about running a brick-and-mortar business selling fresh produce. That data, mixed with the information it's gleaning from its checkout-free Go outlets, will give it enormous insights on building the perfect store. The biggest changes, however, are likely to be behind the scenes. Amazon's fresh grocery efforts are small fry compared with a national chain with 431 physical stores across the country.
Amazon has also spent the past few years sucking up every piece of information about customer purchasing habits it can. Retailers can make decisions based on macro trends of what people are buying, and when, but Amazon knows exactly what each of its users buys, and when. After all, between the Dash Button and Dash Wand, it can track how frequently people consume and reorder nonperishables like toilet paper and soap. Imagine if Whole Foods stocks only precisely what Amazon's algorithms tell it to, potentially saving millions in unsold inventory.