Amazon’s takeover of Whole Foods sent the stock of competing grocery chains plummeting. To understand why, you need to know something much simpler than Amazon’s far-reaching ambitions or possible vision for transformation of the grocery industry: Amazon doesn’t make any money. 
 
 Competing with Amazon is terrifying for any incumbent business because the company’s executive team operates on a radical model whereby the company’s overall net income is nearly zero quarter after quarter. 
 
 That is by design, not because they can’t come up with any ways to make money. On the contrary, to the best of anyone’s knowledge many of Amazon’s specific lines of business — including, notably, Amazon Web Services — are perfectly profitable. But while Apple, Google, Microsoft, and Facebook hire lawyers and accountants to amass vast stockpiles of cash legally held in overseas tax haven subsidiaries, Amazon simply chooses to barely accumulate any cash at all. 
 
 That’s an enormous problem for every grocery chain in America, which already operate on razor-thin margins. Nobody thinks Amazon bought Whole Foods in order to siphon off Whole Foods’ operating profits in order to subsidize something else. A Whole Foods under Amazon’s stewardship will almost certainly accept lower profit margins than it does as an independent chain — and that spells trouble for everyone else in the grocery business. 
 
 Whole Foods tries to make money like a normal company 
 
 Compared to other major American grocery store chains, Whole Foods is both a relatively young company and a relatively small one. But it’s not a “startup” in terms of its corporate approach or corporate organization. 
 
 It delivers healthy profit margins and in its most recent quarterly earnings report the CEO boasts about the company’s “increased dividend and new share repurchase authorization” as part of “our accelerated path to enhanced value creation.” 
 
 In other words, the company’s operating assets function as a kind of piggy bank whose purpose is to extract profits that are then flushed out to shareholders. This is the sad fate of essentially all mature businesses under the conditions of American financial capitalism and, indeed, Whole Foods’ executive team — led by its founder John Mackey — has been under intense pressure recently from an activist hedge fund that bought shares and has been agitating for cost cutting and more payouts. 
 
 Critically, this is how Whole Foods’ competitors also operate. Walmart raised its dividend in February. Target’s per share dividends have doubled in the past five years. 
 
 These companies’ owners aren’t averse to growth, of course — more growth means more cash. But fundamentally they expect to see profits and they expect to see those profits get paid out. If margins get squeezed, the whole basic rationale of the enterprise is called into question. 
 
 Amazon is the world’s biggest startup 
 
 Startups don’t operate like that. They don’t pay dividends, they don’t buy back shares, and they don’t always make a profit. A startup’s goal is to make money for its shareholders by becoming a much larger (and therefore more valuable) company, not by directly generating cash. 
 
 Amazon is too old (and too publicly traded) to be truly considered a startup. But it operates like a startup. Quarterly profits are invariably small relative to Amazon’s enormous size, every once in a while it loses money, and cash is never flushed out to shareholders. 
 
 Instead, the company’s cash flow is all pumped into new things. They launched the Echo smart speaker a couple of years back, and now this year they are launching two new Echo products — one with a touchscreen and one with a camera. They’ve started producing original television shows and earlier this year that attained Bezos’s goal of winning an Oscar. They’ve started up a number of in-house clothing brands, and are opening up brick and mortar bookstores in several major cities. They have a slightly wacky idea to revolutionize the convenience store. They’re trying to break into the grocery delivery business. And, of course, on the core online retail function, they are working to make more and more items available for next day or even same day delivery. 
 
 They have a ton of big ideas, and most important of all for now Bezos has the faith of Wall Street that his radical notion of growing his business rather than cutting checks to rentiers is a strategy worth pursuing. 
 
 Imagine “Half Paycheck” 
 
 Applying this philosophy to Whole Foods could be a very big deal. 
 
 Right now, after all, pretty much everyone already agrees that Whole Foods is a nice place to shop. The issue is that it’s expensive — saddled with the nickname “Whole Paycheck.” But if you decided you didn’t really care about profits, it would be simple to address this complaint by just making things cheaper. People would like the lower prices and the increased demand they would stimulate would justify opening up more locations. 
 
 What good would a medium-sized chain of unprofitable upscale supermarkets do for Amazon? Well, optimistically it would supercharge their grocery delivery ambitions. 
 
 But critically, even if that strategy doesn’t work out, Whole Foods could deliver value to Amazon without necessarily delivering profits. The stores would create a useful additional channel for selling Kindles, Echoes, Fire TV boxes and other Amazon hardware. And by linking discounts to Amazon Prime membership, it could drive sales of those. More subtly but perhaps more importantly, encouraging Whole Foods shoppers to in some sense “log in” with their Prime accounts would generate tons of new user data that could feed the larger Amazon beast. 
 
 And of course lots of stuff that Whole Foods sells is canned, packaged, or dried — i.e., perfectly suited to Amazon’s longstanding and very successful e-commerce business. Acquiring Whole Foods’ brands and supplier networks could be very useful enhancements there. 
 
 The bottom line is there are lots of ways that a cheaper, but fundamentally similar, version of Whole Foods could contribute to the Amazon gestalt even while run as a zero-margin business. 
 
 Amazon, destroyer of worlds 
 
 Of course the nightmare scenario for the supermarket industry is that acquiring Whole Foods does allow Amazon to fundamentally crack the grocery home-delivery game in a way that leads Kroger to go the way of Borders. 
 
 But the reason the takeover is such a disaster for the industry is that the financial implications are bleak even if Amazon doesn’t succeed in bringing incredible game-changing innovation to the sector. Introducing a player into the market that doesn’t care about profit margins is going to be devastating to competitors who have to. 
 
 They won’t necessarily be put out of business, but they will be forced to respond to lower prices and lower margins with lower prices and lower margins of their own — making the current round of dividend hikes extremely difficult to maintain. From the standpoint of an executive at a conventional business it must seem extraordinarily unfair. How is anyone supposed to compete and make money in an industry that features a major player who doesn’t actually try to make money? So far, history hasn’t shown us many examples of companies who’ve been able to pull it off. ||||| Whole Foods Inc. Chief Executive John Mackey said Amazon.com Inc.’s AMZN 2.08% pursuit of the health food chain began with “a blind date” more than six weeks ago, a whirlwind courtship that culminated in Amazon’s largest acquisition by far. 
 
 In a town hall meeting at Whole Foods’ Austin, Texas, headquarters on Friday, the day the deal was announced, Mr. Mackey and other executives applauded the “historical moment” for Whole Foods, saying that the two companies hit it off right away, according to a security filing transcript. 
 
 “We just fell in love,” Mr. Mackey said, according to the transcript. “It was truly love at first sight,” 
 
 New details emerged Monday regarding the timeline of events leading up to the $13.7 billion deal, showing that it was a somewhat spontaneous decision. The deal came together so rapidly—the companies signed a confidentiality agreement April 27—that Amazon’s strategy for the acquisition is still largely in the air, according to people familiar with the matter. 
 
 Even so, Mr. Mackey said at the town hall that, as part of Amazon, other store formats might emerge under a different name that don’t necessarily meet the brand’s high standards for natural and organic foods. 
 
 The acquisition is “gonna change our culture. I mean, it’s the truth. It’s inevitable. But it doesn’t necessarily mean it’s a bad thing,” he said. 
 
 Amazon has shed little light on its plans for the chain of stores since it announced the deal. “We admire the quality standards of Whole Foods. And I think it would be crazy to change them,” said Jeff Wilke, chief executive of world-wide consumer at Amazon, at the Whole Foods town hall. 
 
 An Amazon spokesman declined to comment on the town hall. Whole Foods also declined to comment. 
 
 Mr. Mackey told his employees Friday that a year and a half ago he had a vision about the deal. “I dreamed that we merged with Amazon,” he said. “I woke up. I told my wife about it. And she said, ’That’s crazy.’” 
 
 In reality, Amazon informally looked at acquiring Whole Foods last year, according to people familiar with the matter. At the time, Amazon wasn’t certain Whole Foods had enough stores to move groceries on the scale the e-commerce giant wanted. 
 
 Albertsons Companies Inc., the nation’s No. 2 grocery-chain behind Kroger Co. , began talking to Whole Foods earlier this year, after activist investor Jana Partners LLC began a campaign in February urging Whole Foods to sell. Mr. Mackey, though, wasn’t interested in selling. Albertsons declined to comment. 
 
 About a month and a half ago, a consultant connected Amazon Chief Executive Jeff Bezos and Mr. Mackey, after the two companies had started talking about a potential deal, according to people familiar with the matter. 
 
 The deal came together after Mr. Mackey flew to Seattle with a group of Whole Foods executives. “We talked for 2½ hours. I think we could have talked for 10 hours,” Mr. Mackey said at the town hall. 
 
 Mr. Mackey appeared to jab at the investor pressure Whole Foods has been facing from activist investors including Jana. 
 
 Amazon has “had the courage...to resist the drumbeat of short-term, quarterly earnings that have had us trapped here for a couple of years, as our same-store sales came down,” he said. 
 
 Mr. Mackey likened Friday’s deal announcement to an engagement, and “like an old traditional marriage, where there are all kinds of rules and chaperones, we can’t consummate the marriage, until we’re actually officially hooked up.” 
 
 “This is not a Tinder relationship,” he clarified. “I got a feeling I’m off script. But I do wanna communicate…I am, like, super excited.” 
 
 Write to Laura Stevens at laura.stevens@wsj.com, Annie Gasparro at annie.gasparro@wsj.com and Heather Haddon at heather.haddon@wsj.com ||||| Amazon CEO Jeff Bezos has changed the way the retail world operates. He may be about to exert a similar level of pressure on the economy and expectations for future price trends at the supermarket. 
 
 At a time when central banks are starting to gird against an expected rise in inflation ahead, Bezos' move to acquire Whole Foods looks to be a significant counterweight. 
 
 Analysts expect Amazon to rein in the famously high prices of the upscale grocery chain — "Whole Paycheck," as it is often called — which then could have a ripple effect through the industry. 
 
 "Now Amazon is going to reshape the entire food retailing industry and it is highly deflationary — and this is an $800 billion grocery market we're talking about," David Rosenberg, senior economist and strategist at Gluskin Sheff, said in his daily note Monday. 
 
 Rosenberg sees "a supermarket war of historic proportions" that will have a significant effect on an industry "that had already been confronted with escalating competitive pressures from the Web as well as foreign entrants." 
 
 While some economists disagree that the merger's ramifications will be that dire, it certainly raises questions about how truly disruptive Amazon can be. Should the move put pressure on other chains, Wal-Mart and Target in particular, to lower their prices, it's hard to say where it all could end. 
 
 If nothing else, it certainly adds a new wrinkle to the policy debate faced by the Fed and Washington lawmakers. 
 
 "We doubt it means much for commodities in the near term, but underscores the changing landscape for how consumers purchase food," David Maloni, president of the American Restaurant Association, said in a note. "Of course, we don't know Jeff Bezos' plans here, but it's highly likely he sees something in food sales that can be disrupted on a massive scale. We live in remarkable times, for sure." 
 
 This particular time is seeing the biggest marriage yet between the retail online and brick-and-mortar models. 
 
 Bezos already has broken through the barrier somewhat with pop-up stores and its Seattle bookstore. An active partnership with Whole Foods knocks down that wall completely and already is being touted as a new day for the industry. 
 
 However, the immediate implications could be less far-reaching. ||||| "Your margin is my opportunity." This aphorism favored by Amazon founder and CEO Jeff Bezos is the lens through which we should evaluate Amazon's intention to buy Whole Foods. After the announcement on Friday, investors were harsh on grocery stores and big box retailers -- but it's not their margins in which Amazon sees an opportunity. This modern conglomerate is not primarily going after the stores, but the products on the shelves. 
 
 Grocery stores are a notoriously low-profit-margin business. Kroger, which had $115 billion in revenue in its most recent fiscal year, showed a net profit of just under $2 billion, for a profit margin of under 2 percent. Costco, with its lucrative membership revenue stream, earned just $2.35 billion on revenue of $118.7 billion, also a profit margin around 2 percent. There's a reason e-commerce has had a difficult time disrupting this business. 
 
 And location matters in the grocery business. Households don't want to drive 30 minutes to get a gallon of milk and a dozen eggs. As a result, grocers fight for prime locations and are loath to surrender them. As an extreme example of this, consider my neighborhood. Nearby, there used to be a Harris Teeter. When Harris Teeter exited the Atlanta market, Kroger bought its lease. Kroger eventually closed the store to focus on other locations, but has continued to pay the lease, which expires next year, in order to prevent other grocers from coming in to compete. If geography matters in grocery, and everything we know about the business suggests it does, then for Amazon to gain significant share in this industry Whole Foods will be only the first of many large grocery store purchases. 
 
 Some may be collateral damage, but it's not the mass grocers that have the most to worry from Amazon buying Whole Foods. It's the higher-profit-margin consumer packaged-goods companies. In its most recent fiscal year, Procter & Gamble earned a juicy $10.5 billion on $65.3 billion in revenue. Colgate-Palmolive earned $2.4 billion on $15.2 billion in revenue. There were already questions about how robust the "moats" of these companies were -- the barriers to entry for potential competitors -- and the Amazon-Whole Foods merger would show at least one barbarian can make it over the gate. 
 
 The entrenched consumer packaged-goods companies have large market shares based on an economic and distribution model that is breaking down. Until now, if you sold the most product you could benefit the most from economies of scale, allowing you to lower prices or expand profit margins. And if you earned the most money you could spend the most on mass marketing and buy up all the shelf space at grocery and big box stores. Upstarts would have to overcome three daunting challenges: higher production cost per unit, low brand recognition and difficulty getting shelf space. 
 
 But that's changing, in part because of Amazon. With its Amazon Basics brand, Amazon is already gaining significant market share in diapers and batteries. They could extend the Amazon Basics brand to other categories, and push that out to Whole Foods stores. In food, Whole Foods has already created the “365” private-label brand. That’s another vehicle for Amazon to attack high-margin major brands. 
 
 An Amazon-Whole Foods marriage would merge some of the aspects of e-commerce and brick-and-mortar retail. Using its sales data, Amazon can curate the products it sells in Whole Foods stores, where shelf space is a constraint. Maybe that means Procter & Gamble products, maybe that means low-margin Amazon Basics brands, or maybe it means emerging brands that are more popular and/or cheaper than some of the current market leaders. Other grocers like Kroger, Safeway and Wal-Mart might have real estate that Amazon-Whole Foods doesn't, but they're going to be watching every decision by Amazon-Whole Foods, just to stay competitive. 
 
 We don't yet know which brands or product categories are safe from disruption by emerging distribution models. Alex Rubalcava of Stage Venture Partners speculated this month that it depends in part on how quickly we consume products and whether that consumption involves a sensory experience. For instance, Coca-Cola's market share position in soft drinks has been more robust than Energizer's in batteries. Amazon is likely to push hard in all categories to see what makes the most sense for consumers and its business. 
 
 If Amazon and Whole Foods disrupt the grocery business, it won't be because of their market share, which combined is under 2 percent. Instead, it'll be because of their as-yet-unknown effect on consumer products -- dictating what we buy, and how much we pay. 
 
 This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. 
 
 To contact the author of this story: 
 
 Conor Sen at csen9@bloomberg.net 
 
 To contact the editor responsible for this story: 
 
 Philip Gray at philipgray@bloomberg.net ||||| Founder and CEO of Amazon Jeff Bezos' personal wealth increased by nearly $2 billion after Amazon's purchase of Whole Foods. File Photo by Jim Ruymen/UPI | License Photo 
 
 June 19 (UPI) -- Amazon founder and CEO Jeff Bezos is about $5 billion away from becoming the world's richest man after his company purchased Whole Foods last week. 
 
 The Whole Foods buy increased his wealth by $1.8 billion, bringing his overall net worth to $84.6 billion, CNN reported. That's $5 billion less than Bill Gates, who currently holds the title for world's richest man. 
 
 Bezos, 53, is not much younger than Gates, 61. But they are at very different stages in their entrepreneurial careers with Bezos still making big deals -- like buying Whole Foods -- and expanding Amazon into the world's largest retailer. 
 
 Gates, meanwhile, left Microsoft in 2000 and has focused on philanthropy with the Bill and Melinda Gates Foundation. 
 
 That would indicate that Bezos' wealth will continue to climb. 
 
 But Bezos, who also owns The Washington Post, is planning on getting into the philanthropy game, too, and he recently asked the public via Twitter for ideas about where to donate his money. 
 
 "I'm thinking I want much of my philanthropic activity to be helping people in the here and now -- short term -- at the intersection of urgent need and lasting impact," he tweeted. "If you have ideas, just reply to this tweet." 
 
 RELATED Amazon to give Prime discount to those on food stamps 
 
 Suggestions included everything from helping to cure opioid addiction to criminal justice reform. But the most retweeted suggestion was directly related to Bezos' vast and growing wealth and the workers who have helped him attain it. 
 
 "Unionize Amazon," tweeted writer Hamilton Nolan. 
 
 Amazon has been criticized for combating union formations within the company's vast network of warehouses. The company also has been accused of firing employees for attempting to form unions. 
 
 "Guy who made $80b crushing local economies really wants 2 help people! Maybe pay ur employees a living wage & let them unionize," tweeted comedian Jimmy Dore. ||||| These crawls are part of an effort to archive pages as they are created and archive the pages that they refer to. That way, as the pages that are referenced are changed or taken from the web, a link to the version that was live when the page was written will be preserved.Then the Internet Archive hopes that references to these archived pages will be put in place of a link that would be otherwise be broken, or a companion link to allow people to see what was originally intended by a page's authors.The goal is to fix all broken links on the web . Crawls of supported "No More 404" sites.
– Not so fast, Amazon. The tech giant's $13.7 billion acquisition of Whole Foods made headlines last week, but the Los Angeles Times reports it may not be as done a deal as previously believed. Amazon agreed to pay $42 per share for the grocery chain, but those shares closed at more than $43 Monday. That means investors expect a higher bid to come in, with one expert calling it "highly likely." Potential bidders include Kroger, Albertsons, and Walmart. And while it's unlikely anyone could outbid Amazon, its competitors have an obvious interest in making Amazon's takeover of Whole Foods as financially painful for it as possible. Here's what else you need to know: Vox reports an Amazon-operated Whole Foods could be a nightmare for other grocery chains. That's because while grocery stores have tiny profit margins, Amazon intentionally has essentially no profit margins at all: Money that comes in is reinvested in new endeavors. Amazon could immediately cut prices at the notoriously expensive Whole Foods, undercutting competitors without worry for its own bottom line. Whole Foods CEO John Mackey says the Amazon takeover started with a "blind date" six weeks ago. “We just fell in love,” the Wall Street Journal quotes Mackey as saying. “It was truly love at first sight." One economist expects Amazon's acquisition of Whole Foods to start "a supermarket war of historic proportions," and CNBC reports that would lead to plummeting prices that could kill the expected rise in inflation the Fed was hoping for. Bloomberg argues it's not grocery stores that should be most worried, but the companies that make the packaged goods that line their shelves. Amazon is already making its own diapers and batteries and could decimate the profit margins of consumer-goods companies by expanding that program through Whole Foods. Amazon could hurt packaged food companies like Kellogg and Campbell Soup in another way, CNBC reports. Customers were already turning toward fresher food options, and the acquisition of Whole Foods could accelerate that process. Finally, the acquisition of Whole Foods would increase the net worth of Amazon CEO Jeff Bezos by approximately $1.8 billion, according to UPI. That would increase his wealth to $84.6 billion, bringing him within $5 billion of Bill Gates, the world's richest man.