Amazon has officially thrown down the gauntlet in the supermarket wars with its $13.7 billion all-cash purchase of Whole Foods. But what does it really mean?

Whole Foods CEO John Mackey, who will stick around after the Amazon deal closes, told Bloomberg Businessweek in 2015 that AmazonFresh, the tech behemoth's foray into groceries, would be its "Waterloo." And now, as the Wall Street Journal points out, "[W]hile the company’s existing distribution footprint is immense, only about 3% of its 94.5 million square feet of distribution space is devoted to fresh-food delivery, according to Marc Wulfraat, president of supply-chain consultancy MWPVL."

Whole Foods reported 17.8 million gross square feet of space at the end of 2016, with another 4.1 million in development. It also has 11 distribution centers of its own, according to Mr. Wulfraat. So Amazon’s acquisition of the food seller significantly boosts its grocery capacity. And the average size of Whole Foods’ stores has crept up by 14% over the past five years, which theoretically gives Amazon more room to add other types of products or services, such as same-day pickup for goods sold online.

CNBC's Jim Cramer said

, "I know anyone in grocery was crushed by this today and that makes sense, at least initially. Yes, it's that much of a disruption to have the company that wanted to clothe and entertain you decide that that's not enough. Now wants to feed you, too."

Indeed: Kroger shares dropped 11% and WalMart shares fell 6% after the deal was announced. On Friday, WalMart announced its own e-commerce-related deal: It bought the clothing brand Bonobos for $300 million.

Whole Foods has been struggling for the past couple years as more grocery retailers have offered organic foods—at competitive prices. Also, the scandal where the NYC Department of Consumer Affairs found that Whole Foods was overcharging customers didn't help either.

Analyst Michael Pachter told Bloomberg Businessweek, "Amazon clearly wants to be in grocery, clearly believes a physical presence gives them an advantage. I assume the physical presence gives them the ability to distribute other products more locally. So theoretically you could get 5-minute delivery." Also, Amazon has been experimenting with pickup options for its AmazonFresh offering.

However, some think the deal could have been more of a "defensive" move. German supermarket brands Aldi and Lidl are looking to enter the U.S. market, with Lidl opening 10 stores on the East Coast. A consultant told the NY Times, that he "recently returned from a research trip to Britain, where he said Lidl had significantly 'slowed down' Amazon’s growth. 'Shoppers, vendors, people with whom we talked across the country said that Lidl literally transformed everybody’s standard of living, whether they shopped at Lidl or not,' he said. 'They either stopped shopping at Amazon, or they shopped a lot less.'"

Last month, NYU professor and brand strategist Scott Galloway predicted the deal in a podcast with Recode, "Everyone looks to Amazon for leadership and I’ve been predicting they were going to go into stores for five years. I can’t even really legitimately say I’m right, because they don’t have a lot of stores yet. They haven’t found a model that works for them yet... I still believe they’re going to buy a Macy’s, or a Carrefour or something like that. I can’t imagine why they wouldn’t buy Whole Foods, for example, just because of the urban locations. They could close them down and just turn them into warehouses and I think they could justify the price."

In this month's Texas Monthly, Mackey said of Whole Foods investors agitating for him to sell the business, "These people, they just want to sell Whole Foods Market and make hundreds of millions of dollars, and they have to know that I’m going to resist that. That’s my baby. I’m going to protect my kid, and they’ve got to knock Daddy out if they want to take it over"