:format(webp)/cdn.vox-cdn.com/uploads/chorus_image/image/56348067/696617858.0.jpg)
Amazon is wasting no time putting its stamp on Whole Foods.
The e-commerce giant said on Thursday that it would start lowering prices on popular Whole Foods grocery items starting Monday — the day its $13.7 billion acquisition closes — and eventually introduce special discounts and benefits at the grocery chain specifically for Amazon Prime members.
Amazon also said that it would start placing Amazon Lockers in select Whole Foods stores so customers could pick up and return Amazon orders at the grocer.
“To get started, we’re going to lower prices beginning Monday on a selection of best-selling grocery staples, including Whole Trade organic bananas, responsibly-farmed salmon, organic large brown eggs, animal-welfare-rated 85% lean ground beef, and more,” Jeff Wilke, CEO of Amazon Worldwide Consumer, said in a statement. “And this is just the beginning — we will make Amazon Prime the customer rewards program at Whole Foods Market and continuously lower prices as we invent together. There is significant work and opportunity ahead, and we’re thrilled to get started.”
The price reductions were a widely-expected outcome of the deal since Amazon operates on razor-thin margins, but the speed of implementation is still surprising. (Amazon’s operating margin is about 2 percent compared to Whole Foods’ operating margin of 5 percent.)
The price moves are aimed at allowing Whole Foods to compete for a more mainstream shopper and combat the encroachment by lower-priced grocers into the organic and natural foods categories. The companies did not say how steep the reductions would be.
Either way, the announcements bring the major fears of grocery competitors to fruition: that Amazon would not only lower Whole Foods prices, but also integrate the popular Prime loyalty program into the chain while using Whole Foods goods to beef up the grocery offerings on Amazon.com.
Kroger’s stock price dropped 7 percent on the news, while Supervalu’s dropped 4 percent. Walmart and Target stock prices fell more than 2 percent and 3 percent, respectively.
Additionally, Amazon said it plans to sell Whole Foods’ private-label brands — like 365 Everyday Value and Whole Foods Market — on Amazon and through the Prime Pantry, Prime Fresh and Prime Now delivery programs. Recode previously reported that it seemed likely Amazon would use Whole Foods’ 400-plus stores to bolster its same-day delivery programs.
It’s unclear if these delivery deals may violate the multi-year agreement Whole Foods has with Instacart for same-day delivery of its goods. I’ve asked Whole Foods for clarification.
This article originally appeared on Recode.net.
