When Whole Foods completely subverted and shuffled its board last month, little did anyone know that it would act as a mere precursor to an even greater change: Amazon's purchase of the upscale grocery chain in a $13.4 billion dollar deal.

This Friday, Amazon confirmed that it had bought Whole Foods, effectively establishing the digital behemoth's entry into the traditional brick-and-mortar retail market.

Amazon's acceptance of the deal may be motivated by its readiness to take big-box grocery retailers like Walmart head on, which is wise since Walmart is one of the only companies to possess the scale, capital and experience to compete with Amazon successfully. By perforating Walmart's space before the supermarket has a chance to enter the online world, Amazon not only one-ups Walmart leaving it a step behind in the rat race, but also makes an example of itself for the whole industry and asserts its position in this competitive arena.

For instance, the deal caused shares of traditional retailers like Walmart, Target, Costco and Kroger to drop by as much as 13% as investors tried to process the implications of an Amazon-backed grocery chain. The selloff in stocks was motivated primarily by investors' underlying fear that Amazon would bring its low-cost expertise and technology dexterity to stand with Whole Foods, exerting further pressure on prices in the already hyper-competitive, $611-billion U.S. grocery industry.

Conversely, Whole Foods' (WFM  ) stock has risen by as much as 30% since the deal's announcement while Amazon's (AMZN  ) has increased by 3.7%, clearly indicating where investors' support and faith lies.

While Walmart has also purchased the online apparel vendor Bonobos for $310 million, the impact has not nearly been as great or significant as Amazon's end of the deal has.

Recently, Walmart been targeting Amazon's Prime business by launching free, two-day shipping on millions of items without needing an annual membership. Amazon has retaliated by making it easier for lower-income consumers to pay with cash on its site. It even discounted Prime for those on government assistance, arguing that a Prime membership is not a luxury, but a need.

Amazon needs to capture the Walmart shopper as it has saturated the middle to high-end of the market with Prime memberships; approximately 60% of U.S. households now have Prime, with lower-income households the only place it can still grow Prime stateside. Moreover, while AmazonFresh (Amazon's Grocery Delivery service) does exist, it still has enormous logistical issues that can be ameliorated by knowledge and expertise that can be gleaned from Whole Foods.

© SEASTOCK / Shutterstock.com

Amazon's reach into physical retail is not limited to groceries; recently, it has also been setting up bookstores around the U.S. which function also as gadget showcases and methods by which to conduct market research about consumer behavior. It's also testing a new smart convenience store format with its cashier-free "Go" convenience stores, which could give it another USP into the grocery business.

It's no wonder that Whole Foods so readily agreed to this deal, as now it has a chance to evade public pressure to produce short-term profits and increase its sluggish stock price.