Amazon to Acquire Whole Foods for $13.7B | Hacker News Reader

Amazon to Acquire Whole Foods for $13.7B

bloomberg.com

1,687 pointswhatok824 comments

Oof. I wonder what this means for Whole Foods culture and employees.

If you don't know, John Mackey, the CEO / founder, is a major believer in conscious capitalism and of empowering his employees.

Whole Food employees get paid pretty darn well with some crazy good benefits for their industry and line-of-work (UNION FREE most of the time too!).

WF banks on them being true believers and motivators of the cause - including dedicating a fair amount of paid time to trainings. I've heard mix stories about how Amazon treats employees. I wonder how that will mesh.

So I guess I'm asking:

* What is going to happen with employee culture?

* What is going to happen with all the "Fair Trade" deals WF has in place that might not be the most economical decision now?

* Here comes store automation and hefty lay-offs?

Source: Worked at WF for 3 years

It's nice to see non-union employees treated well and paid well, not because of any negative feelings toward unions or unionization, but because I think it shows that you can be a successful capitalist without trying to suck every ounce of productivity and profit out of your lowest-paid employees.

While I fully agree that it's great to see employees treated well, Whole Foods is not an example that you can be a successful capitalist this way. They worked well for a while but the reason they got bought now is because they struggled over the past years. Probably unrelated to their treatment of employees (US groceries is very competitive at the moment) but AMZN didn't buy a hugely successful company.

The day I sell a company for $13Bn I will declare myself successful. Not everything is going to be a a half a trillion dollar company.

I think what they might be talking about is that Whole Foods has had a rocky few quarters and might be forced to sell, where they wouldn't have sold in a different circumstance.

Not if you bought it for $20bn. Wholefoods is publicly owned and the price that Amazon pays is below their price a few years back. It's not about size, $13bn is a lot of money. But Wholefoods needed a strategy or buyer, otherwise they would've faced serious problems in a few years.

If I had $20bn to buy it in the first place, or be in the position where I could even raise that kind of capital, I would already be successful (in my mind at least).

OK, but WF stock is held mostly by ordinary people (or by pension funds acting on behalf of ordinary people) and the argument being made above is that there are signs that the reason WF ended up being owned by a company without WF's reputation for good treatment of employees is that selling the company was the only way for WF's management to meet their fiduciary responsibility to those ordinary people who hold WF stock.

Whole Foods doesn't have one owner. It's a publicly traded company.

How much have they paid in dividends since they cost $20bn?

This is a great question. Are there any open and fee apis where one can look up a publicly traded stock and get out dividends paid out over a time period? Surely that's at least as interesting as the rise and fall of the stock price.

It's a $13 billion sale. I struggle to see the scenario under which that is considered a failure. Most start-ups that get $120k from YC are considered a success here. Someone selling their struggling CRUD app to Amazon for $13 million would probably be considered a success here.

But the $13 billion sale of a public company is a bunch of hemming and hawing about what the stock was worth a few years ago.

I'm not saying it couldn't have been more successful. I'm not saying Amazon won't completely destroy the culture (they may, they may just let it continue as is and use it as Amazon Fresh logistics hubs as some have speculated).

But I don't see how this isn't a great example of how you can treat your employees well - better than almost anyone else at the same level - and make a lot of money while doing it.

> I struggle to see the scenario under which that is considered a failure.

Wasn't Whole Foods valued at over $20 billion a few years ago? If you bought Whole Foods stock at that point (either as an outside investor or an employee) it might feel like Amazon is buying it for $13 billion because Whole Foods has been having trouble staying competitive in the market.

Of course, if you actually started the company $13 billion may be a very big success if your goal was to sell.

Maybe, but the fact that they were just acquired by a company notorious for abusing its low-level employees shows the limitations of this model (as did the pressure they began to face from investors to tighten up on that front when they started to become less profitable).

Treating them above market or not, Amazon acquired the company for billions and not because Whole Foods was doing badly.

It says right in this article (and in others that have been published recently) that they were under pressure from investors.

Good old investors, so short sighted, they only care about the next 3 months. Whole Foods probably would have been better off as private company, especially with the culture they were trying to create.

> Good old investors, so short sighted, they only care about the next 3 months.

Yeah, darn those investors. How dare people with pensions, 401k's, IRAs, and other investments expect some kind of return on their investment? It's disgraceful. /s

EDIT: The sentiment against investors is rather ironic considering the amount of equity collectively held by HN readers.

short-term boosterism is the cause of more than a few problems in our economic system

There is always a need to balance both the short term and the long term. I rather doubt anyone who has retired and is drawing on their retirement investments will be thinking long term since, to be morbid, they simply aren't going to be around in the long term.

Somebody who is currently living off of their investments should probably have moved most of them out of volatile investments like stock anyway.

I don't think you can really equate "activist investors" with workaday people with IRAs.

Take a look at how much of a company's stock is owned by institutional investors. A lot of that money comes from people's pensions, 401Ks, IRAs, etc.

I'm not disputing that; what I am disputing is that such investors are basically the same as Carl Icahn.

The idea that I can't criticize pathological behaviors by investors because I myself invest in things makes about as much sense as saying I can't criticize bad US policies because I live in the US.

Love it or leave it! /s

'Every nation, in every region, now has a decision to make. Either you are with us, or you are with the terrorists.' Bush.

You are the investor causing the pathological behavior. A very large part of wall street is investors like you that just have a little bit in their retirement accounts.

Do you vote the proxy for all the funds in your 401k? Do you understand how your vote affects the above - it all does.

Wrong. I am not telling any company to treat their employees like crap to squeeze an extra penny of profit out of them.

But you are because you own the fund that in turns owns the company.

It might not be your intent, and you might not have enough of a vote to stop it, but you are still doing it. (sort of like Americans opposed to the current foreign policy are still at fault for it)

No. I reject your idea in its entirety.

How am I at fault for a foreign policy if I voted for its antithesis (or, perhaps more likely, nobody with that position stood for election)?

there's a way to be an ethical investor - pick a 401(k) fund that invests in ethical businesses (according to whatever ethical standard you hold).

This might not be an option for everyone, of course.

who the fuck has a 401K and is interested in short term returns?

You know at some point the 401k is supposed to be paying your bills, yes? That's its raison d'être. When you have investments paying your bills, you might understandably be focused on those investments yielding some immediate returns. Maybe to pay for that leaky roof, or broken down AC...

Any short term returns from the market should be remarkably small per individual managed by a firm. It's the long term growth that you're banking on when you prepare for retirement years in advance.

Why in the world would you have more than a token amount of assets in stock if you are nearing or in the middle of retirement?

The fund managers for the funds in that 401k.

Your comment rests on the implicit premise that investors were getting no return worth talking about. There's a big space between not getting and adequate return and squeezing out every last bit of profit.

I think your comment is a non-sequitur. I am highly invested in my 401K and IRA but I would much rather have returns over the next 10 years than the next 3 months.

If your retirement is 3 months away, then sure you should be thinking short term, which actually means you should be moving away from stocks entirely. Investors that are really that short term should be in bonds or cash.

They had their chance, the culture did not help keep the company above water.

Noted by a friend who used to work there:

- They treat each store (and each department within each store) like its own separate business, which is great for teaching individual managers about waste, efficiency, profit/loss. However they can't bother to get together on a corporate level and combine purchasing power on most things. Every store has to work on making a deal on their own merchandise, separately.

- In a show of solidarity, all employees, whether floor workers or corporate IT, must work holidays and instead have floating holidays for time off. Then predictably there is a seniority effect where the long-term workers get to have their holidays and the recent hires have to come in on a completely useless day and stay till 3 or 4 when the management "lets" them leave.

Also I recently shopped at their 365 store and it's a great store with better prices, but their website sucks and my name comes up as "firstname lastname" on their computers. If Amazon can knock some sense into their IT, that would be a huge win.

A lot of time when companies like that get acquired, someone is hoping to profit on the difference between the purchase price, and the value of the company when the management culture switches to wringing every last bit of productivity out of employees. Amazon might have a more strategic goal, but the above strategy is a common one.

Well Amazon is not sitting on hordes of cash, just looking to diversify. This is a strategic move for them. I'd say the odds are greater than 50% that WF culture, and in turn the store experience, gets worse. I mean, Amazon had the choice to not turn their website into a flea market, and we know how that went.

Not sure, but hearing about how Amazon is running into trouble with their grocery stores, they might want to learn something from Whole Foods (similar to Zappos).

There was also an article that talked about the brilliance of Amazon biz organization. Business units are set up like API interfaces, ones that serve both internal needs as well as external customers. The author's claim is that it helps trim the fat, with what was normally internal services being exposed to market forces. It makes me also wonder about WF's fate from that perspective.

WF most likely will fail under Amazon (if WF must adapt to Amazon's business methods), opening the market for local competitors and similar national chains to absorb that market share. Great opportunity for Aldi on the low end and Trader Joe's on the high end.

Groceries are not APIs.

I don't know. WF does have a very loyal base of users. Unless Amazon fucks with them majorly, I don't see it changing very much. In fact, with less pressure from activist investors to cut back on expenses, they might actually get more resources to experiment with new concepts.

If money weren't a matter, I would love to shop at whole foods: shopping for groceries seems more of an experience there than at other places. Maybe using Amazon's superior operations management would let them lower prices even further attracting more regular customers.

Depends on the place. In Sedona, when Whole Foods bought the local alt grocer, people got upset at WF's corruption of the grocer's values.

When I airbnb'd in someone's Portland home once, The host worked for another local alr grocer chain, proudly telling me it is like WF but better.

Just a tangent: the downtown Seattle WF has a fantastic eatery ... and in the months before I moved, it turned into a major Amazon employer hangout, after the Amazon HQ moved there. Now I marvel at the irony it is effectively an externalized company cafeteria.

I don't really see TJ as a WF competitor beyond the earthy crunchy vibe. TJ is mostly pretty weak in the produce, meat, cheese, and fish sections which are exactly the areas where WF is often worth the premium. I suppose they compete in the frozenprepared food that pretends to be Artisanal.

TJ is a good deal for some things but it only somewhat overlaps.

Can confirm, lived in place where TJ's and WF were almost in sight of one another and shopped at both, often in the same outing.

I don't see Amazon doing much as far as cultural changes. Twitch was largely left untouched and continues to operate as before. This was a strategic purchase so Amazon. They want you to go to Amazon for everything and a popular nation-wide grocery chain is exactly what they needed.

What you will see is a relationship between Amazon Prime and WF. But, as with the case with Twitch, it will be Amazon that deals with that and WF will likely continue to do its thing while Amazon generates MORE customer loyalty and a new customer base.

> Aldi on the low end and Trader Joe's on the high end

Trader Joe's has limited selection and is mostly on the cheap side, often even cheaper than Ralph's in SoCal. Its the place I go for cheap produce that just happens to be organic/natural/etc... (though I don't really care about the latter).

If WF were to fail under Amazon's tutelage, maybe we shouldn't be looking at nationwide competitors but at local stores for replacement?

Here in the Bay Area I'm really happy with Draeger's. Haven't really been back to WF much since I started going there. Unlike Trader Joe's it does have a reasonably complete selection of meats (and for specialty cuts there are local butchers).

I wasn't talking about making groceries into APIs. It's that, because of the way Amazon is structured, changing out things like logistics is easier:

https://techcrunch.com/2017/05/14/why-amazon-is-eating-the-w...

Flip side is that, according to this: http://www.bizjournals.com/seattle/news/2017/03/27/amazon-go...

There are a lot of troubles with the logistics around distributing produce. The models Amazon has for managing non-perishable goods is not working well for things like bananas. It would be stupid of Amazon not to try to learn from logistics experts from Whole Foods, and Amazon has a good track record for not being stupid.

Side note: just yesterday, my wife and I went to our local Fry's for our normal shopping. They are testing hand-held devices to scan items while you shop and then just settle at the self-checkout line; this was fairly new. We gave it a try just to see what the experience is like (and likely, by the time my step-daughter comes to age, something like this will be normal). I remarked to my wife that Fry's isn't sitting still, waiting for Amazon to take over grocery shopping with Amazon Go, either.

"Strategic goal" like grocery delivery? This sounds like a move to strengthen their food delivery programs

Exactly my thought.

We had WF delivery for a couple of years. It was great for us. But, you could tell they were trying (unsuccessfully) to monetize it. When they curtailed it they offered a pickup service as replacement: Instacart is the app for placing orders. On the whole, the pickup service works pretty well except you don't get sale prices.

I can see delivery coming back now that Amazon is in the picture. I can also see a bigger push to sell prepared foods for delivery. Prepared foods are the real money makers.

Yeah, now they can offer "healthy"/organic/fresh etc foods for delivery with Whole Food's brand (more trusted than Amazon Fresh). Prepared foods - absolutely. Packaged meals, granolas, sandwiches. Good point.

How many of those billions will the average employee get to see?

-$1,000's, most likely. Unless they have good contracts (which they probably don't).

Is there any reason they would get a different amount per share than other shareholders? I'd assume it would only depend on how much stock they have obtained either by purchasing it from the market, using the stock purchase plan (where they can buy it for 85% of market price if they agreed to keep it for 2 years), or the stock-grants that were given to employees.

Well, for one, the employees are a huge part of why those shareholders get any returns in the first place.

And the shareholders are [usually/pretty much] the entire reason there is a company there for them to work at and potentially hold some shares in. There are two sides to that.

I disagree with that statement.

And the employee's get a paycheck in return...

And the ones who bought stock (including those that did so at the 85% discount) will get the value of their stock. However, shareholders aren't guaranteed any returns. If they bought their stock in 2013 they lost money. Employees who bought stock with the 85% discount won't be quite as bad off as non-employee shareholders.

Imagine suggesting that any employee who was hired when the stock price was higher than the selling price now had to pay money to those who were hired when the stock price was lower. Fortunately, employees are not held liable for the valuation of the company at which they work. If they WANT to participate in that risk and reward they can buy stock--sometimes at a discount like Whole Foods offered.

I reject that notion entirely. The employees are the reason why the store was able to do so well. They should get the bulk of the reward for that.

I flat out reject this idea that people should get the bulk of reward simply for already having money.

You keep referring to the 'moneyed' as an alien entity when in reality it is a lot of index funds, pension funds, 401ks and what not.

Are you saying there should be less/no return for investing your money? If so, how do you suppose we incentivize investments?

I didn't say there should be no return. Suggesting that is quite dishonest on your part.

I merely stated that the bulk of reward should go to those who actually DO something, not those who's only contribution is already having money. Of course they should get a return on that money. It just shouldn't be the bulk of the reward.

Boy aren't you looking to get offended :). I said less OR no return, since it wasn't explicit in your comments. Picking only parts that suit you is ginormously dishonest if my logical OR seems 'quite dishonest' to you :)

But investors are actually doing something as well - they are putting their hard earned money towards a venture. And as it stands today, we have more need for capital than 'actual work'. So it gets rewarded more. In simplistic terms, If you want an investor to put his money into a business you are starting instead of buying up rare resources or hoarding his cash, you give up equity. And hence their reward are relative to the money they put in.

I was just trying to see if you have any alternative plans to encourage such investment. This is back to basics economics as I know, but I don't know much there. Hence my query.

The top 5% own >70% of all stock, so no it mostly isn't grandma's 401k or grandpa's pension. Half of all Americans don't own a single share of anything in any form.

You have to admit, whether or not this was ever anyone's intent, from a social control perspective, tying your retirement to the health of the market is a real masterstroke.

Whole Foods stock has been down for years. Their year-to-year same store sales fell last year. The entire grocery industry is in a slump:

https://www.google.com/search?q=whole+foods+stock&oq=whole+f...

http://www.chron.com/business/article/Kroger-s-darkening-out...

Amazon buying WF will likely have two results:

1) As long as Mackey can run the company WF employees will stay. Once he leaves (likely soon), they will leave. This is an opportunity for some other investor with Mackey's same principles to buy up WF's human capital. For example, Starbucks will benefit b/c former WF employees make good baristas.

2) Amazon will be left with the infrastructure of WF, primarily the real estate, warehouses, storefronts and whatever slice of humanity Amazon hires to replace former WF employees. So maybe Amazon wants WF primarily for the locations, the real estate and the warehousing capacity. They're getting a good price by buying while WF is at a low.

Amazon is simply too much - time for the monopoly-busters to break them apart.

Amazon is simply too much - time for the monopoly-busters to break them apart.

What exactly does Amazon have a monopoly on?

Selling books? Nope, Barnes & Noble and Walmart and others compete there.

Cloud computing? Nope, check Google, Microsoft, IBM, Racksapce, Linode, etc.

Selling other random stuff on the net? No, Target, Walmart and a bazillion specialty sites also do that.

Groceries? Obviously not.

The idea behind anti-trust / monopoly law is generally to prevent a company from leveraging a monopoly in one area to gain excessive control in another area. I don't see how anyone can argue that Amazon are doing anything like that.

Being big and successful is not, in and of itself, wrong.

> Maybe, but the fact that they were just acquired by a company notorious for abusing its low-level employees shows the limitations of this model (as did the pressure they began to face from investors to tighten up on that front when they started to become less profitable).

...or monomania of "the [stock] market," and the myopia of those who look to it to determine what "works."

Yeah, but isn't part and parcel of the "conscious capitalist" ethos that we don't have to mess with any of that?

Maybe. But how have some of Amazon's other acquisitions gone? I believe Audible and Zappos were largely left alone after they were bought, but I could be wrong.

Well, Amazon doesn't have any low level employees. They all work for Integrity Staffing.

well, he was pressured by his board to sell, so, not the most successful.

>I think it shows that you can be a successful capitalist without trying to suck every ounce of productivity and profit out of your lowest-paid employees.

Another example of this is Wegmans -

http://www.cbsnews.com/news/could-this-be-the-best-company-i...

https://www.washingtonpost.com/news/wonk/wp/2015/05/13/why-w...

http://www.adweek.com/brand-marketing/why-do-so-many-people-...

http://m.csmonitor.com/Business/The-Bite/2016/0225/Why-is-We...

“Our employees are our number one asset, period,” Kevin Stickles, the company’s vice president for human resources, told Reuters in 2012. “The first question you ask is: ‘Is this the best thing for the employee?’ That’s a totally different model.”

"Alec Baldwin spoke on David Letterman about his mother's refusal to leave upstate New York because there are no Wegmans stores in Los Angeles."

Ha, I think that's one of the most ringing endorsements of a business I've ever read.

Having moved from an area with Wegmans to one without, I can sympathize. They're in Massachusetts, New Jersey, and New York, but Connecticut is a sad dead spot in the middle.

Wegmans is also privately owned so there aren't "activist" shareholders that want hockey-stick growth.

Same with Trader Joe's, thankfully

And Costco.

Which also has a reputation of excellent treatment of employees

In the 1880s Bismarck increased the modern welfare state (it was called State Socialism https://en.wikipedia.org/wiki/State_Socialism_(Germany) ). The idea was that, if the poor people can get some form of social welfare from the existing state, they're less likely to support a proper socialist/communist revolution. Sounds like that. People won't unionise when they don't think they need to.

Interesting comparison. In this case, people aren't unionizing for essentially the opposite reason. Rather than state provided social welfare, their needs are satisfied through this capitalistic solution. Employees are empowered and rewarded through their work.

I'm not sure if you can call this capitalistic, though. WF as a commune could likely share many of the benefits or exceed them even without requiring shareholders to satisfy. Instead, a devotion to profits will ensure they are given the minimum to execute their job well.

It'll be interesting to see what bezos does with it for sure.

name a single commune as successful or operating at the scale of Whole Foods or Amazon. in history.

Whole foods is vastly larger than the majority of organizations world wide. Remember the world GDP is only ~80,000 billion so there is a rather small number of Organizations with 10 billion per year in Revenue.

But, if your just mean billion plus dollar orgs then something like : https://en.wikipedia.org/wiki/United_Farmers_of_Alberta is an interesting comparison. Further, measuring the success of such organizations is hard especially when they are not trying to make a profit. I mean how do you measure something like the US Democratic and Republican parties?

In the U.K. both the Co-op (a consumer owned co-operative) and John Lewis/Waitrose (a worker owned partnership) have similar revenue figures to Whole Foods.

The funniest thing is that John Lewis/Waitrose is an upmarket supermarket.

Mondragon corporation has existed in spain since the 1950s as a worker-owned cooperative and employs about 75,000 people. Whole foods employs about 91,000 but I'd say that puts them in the same ballpark. You could argue in addition that Mondragon has been limited by a) Spain having been a dictatorship until the 1980s, b) the relative youth of the EU single market vs that of the US leading to a more regional business culture and c) the additional language barriers in Europe that make business expansion a bit slower than in the US.

https://en.wikipedia.org/wiki/Mondragon_Corporation

Not exactly a commune, but interesting nonetheless and on the same scale as Whole Foods (12 bln Euro turnover):

https://en.wikipedia.org/wiki/Mondragon_Corporation

Oneida is (was) the closest US analogy I can think of, though much smaller.

There are some very successful Kibbutzim spinoffs in Israel, into 100s of millions US$ (I don't know how ownership was structured).

Could you expand on the Israeli firms?

Are they essentially large family-run houses of commerce much like tradesmen guilds of the past?

I also immediately thought of kibbutzim, just as a counterexample for debate. (Full disclosure: ex-volunteer)

From Agriculture To High-Tech: Meet Five Kibbutzim That Became Global Powerhouses http://nocamels.com/2016/03/successful-israeli-kibbutzim-ind...

Well, Publix is employee owned, does that count?

Comparing the wikipedia sidebar shows Publix with more stores, revenue, and over twice the number of employees.

https://en.wikipedia.org/wiki/Publix https://en.wikipedia.org/wiki/Whole_Foods_Market

I'm not going near Amazon, though.

Fun fact: Publix is the largest employee-owned grocery chain in the US.

Employee-owned means the owners retired by selling the company through an employee stock purchase plan. Publix, Woodman's etc. are good places to work but they aren't communes or cooperatives.

Switzerland's 2 largest supermarket chains Migros[1] and Coop[2] are structured as cooperatives, generating yearly revenues of ~28 billion CHF, each.

[1] https://en.wikipedia.org/wiki/Migros [2] https://en.wikipedia.org/wiki/Coop_(Switzerland)

Why? What's your point? Just sayig you can't possibly pin the benefits on capitalism—you know very well whole foods would avoid hiring anyone if they didn't have to. That is capitalism: minimize loss of money.

Whole foods is a good employer IN SPITE of being capitalist.

There is a competitive advantage in having real loyalty from employees. Treating people well makes them want to be loyal.

Even Walmart has started realizing this. It turns out that when you hire unmotivated people, pay them as little as possible, screw them on medical benefits, pay them too little to get their own apartment and in general work them harder than everyone else in that job sector that you get people who don't do a good job. In the past several years, Walmart has instituted new wage plans, better medical benefits, productivity goals from corporate that are still unreasonable but not insane and they think it is worth the money.

I don't know if Amazon has learned this expensive lesson, but a business can run with high employee turnover and dissatisfaction for a long time before it catches up to them. Once it becomes apparent it is often too late to fix without losing heavily in the marketplace.

There may be competitive advantages to happy employees, but there's always a cost, and capitalism is about minimizing those costs. Again, if a business could get away with it, they would simply not hire anyone to keep costs down.

Simply put, human welfare is directly in contest with maximization of profits. This occasionally can result in being paid well—it's cheaper than hiring two people at a lower rate.

Seems like the idea was "Whole Foods as a commune" i.e. viewed as a commune. In other words a conceptual lens through which you could view any organization. Amazon itself is a commune in some ways, and so is Whole Foods; therefore my two examples. in history. are Amazon and Whole Foods. So much for that.

And looky there, other commenters supplied a bunch more (actual) examples. I'll throw in: The Catholic Church. The nation of Yugoslavia. What the heck: the Hell's Angels. Far outstripping Amazon's "scale" in terms of heads smacked with wooden fenceposts, that's for sure, or maybe not.

Which is my next point - adjust the "scale" appropriately (and unfortunately you left no indication RE: scale of what, whether it be dollars in sales, people involved, people served, ham sandwiches set aflame, heads smacked, or dogs painted blue) in proportion to the amount of money/wealth existing in the world at that time. in history. or to the number of people alive at that time. in history. and that'll probably turn up a bunch more examples.

There's also the question of "successful at what"? At providing for its employees/members? At serving its customers? At enriching its shareholders? At painting dogs blue?

Also we should really make passing mention of the waxing and waning support for capitalistic enterprises vs. other types of communes in various places and times. in history. Is it a valid comparison between a company like Amazon, operating in one of the most capitalism-friendly sociopolitical environments (post-Reagan America) seen in some time, vs. another type of organization operating in the same environment that doesn't support that organization or even actively suppresses it?

Your comment reflects an overabundance of confidence in things that are by no means simple or certain.

Italian Coop: https://en.m.wikipedia.org/wiki/Coop_(Italy) About the same as whole foods revenue. At this point you have quite a few communes operating at this scale.

What's not capitalistic about it? A company can be setup with any number of metrics that determine success besides just pure profit. That most don't is a matter of who is running them, not that capitalism doesn't allow it to take place!

Look at airlines--exec bonuses used to include metrics such as "customer satisfaction" and today those metrics are gone and only profits count. Nothing changed with capitalism, though. It's the asshole MBAs that changed.

I mean if you think about it, Unions act as a protection mechanism. If your workplace is already labor friendly you feel less of a need for Unions, which cost money and time.

It is important to note that the antagonism between union and management is especially bad in the U.S. Germany demonstrates one arrangement that generally works to align the interests of the two.

Just calling this out to try to counter the tendency of U.S. folks to assume that there is only one, unchanging form of capitalism. In fact, ours is increasingly a weird outlier.

What is that arrangement? How are their interests aligned?

Unions have a board seat in larger SME's as well as much greater clarity on internal plans and finances.

Makes hard decisions easier since the union and employees can see why decisions are made.

Organized labor is treated as stakeholders in the enterprise vs a counter-party in the US.

If a certain amount of workers agree they can form a workers council which is a legally protected union within the company. And they have much stronger legal rights, seats on the board of directors, legal requirements to see certain documents, strong protection against being fired.

Lest you think this makes the country uncompetitive, Germany still makes cars, and the UK (which doesn't have this legal system) has vastly de-industrialised and doesn't make cars.

Exactly the reason why there aren't any Software Developer Unions these days.

You're kidding, right? Programmers are decently paid but should strike for a 40-hour work week.

no thanks. look at what collective/forced/politicized bickering over hours has done to the job market everywhere its been tried. look at the corruption. i enjoy my freedom to negotiate my terms as I, as an individual, and my employer see fit.

Sure you do...now. You might find yourself in very different circumstances in the future.

I lived and worked in Iceland for five years, and they have a virtually 100% unionization rate. It's handled at the industry level rather than individual companies, but when you start a job, you are pretty much automatically enrolled in the union relevant for your work. A little money comes out of your paycheck, and the union is there in case you have problems.

The unions also provide other benefits. For example, most of them own summer houses that any member can reserve to go spend a weekend away. You rarely hear the average Icelander on either side of the worker/manager divide complain about them at all. Everyone more or less views them as beneficial.

Once or twice a year they make headlines when one group of workers or another feels aggrieved and it escalates to a brief strike in some small sector of the economy, but on the whole, I don't think many Icelanders would trade their system of employment for ours.

Like so many other areas, I think the problem is that we in the US are just so very much worse at running our society and country than most other comparable countries. Look at health care. No one liked the ACA; no will will like the AHCA or whatever the Republicans pass. The problem isn't that it's impossible to do a decent job at a health care system. The problem is that we specifically suck. Put us in charge of anything, and we'll turn it into something awful that doesn't work, but provides some brief period of outsized shareholder value.

The population of the US is 100x more than Iceland. There are a lot of well run small cities in the US. Iceland's policies would never scale up.

Why not?

"It wouldn't scale up" is common conservative response to progressive or liberal comparisons that involve suggestions of doing it (anything) some other way.

So while the EU plugs away making incremental improvements each year we keep jumping around in fits and spurts forward and backward. There is still a strong belief of American Exceptionalism even in fields where we are clearly inferior. Look at Healthcare Europe figured something out that we didn't and their is cheaper and better.

Well, there could be legitimate reason that it couldn't scale up, but... "necessity is the mother of invention" and I don't feel it should be left at that. (Particularly on HN, where people seem to take inordinate pride in their ability to find ways of scaling things up.)

Right. If someone is going to make that argument, they should be expected to at least explain why something won't scale up.

Iceland is demographically homogenous (over 90% Icelandic), and 64% of their population lives in one city. It is fairly easy for that kind of grouping of people to reach agreement on things because they have a lot of common interests, and a shared history and culture.

As you "scale up" in diversity, population, and geographic distribution the set of things people can agree on falls off dramatically.

I love how people like to explain things to me as though a wikipedia article presents something over actual knowledge and experience.

Iceland has a very divisive political system at the moment. The ruling government has been a coalition of the Progressive and Independence parties, roughly the european versions of the social conservative and pro-business factions of the Republican party respectively. Though it should be said that no one in Iceland really touches quite how regressive American social conservatives are. And, of course, being (sort-of) Scandinavian, there's a massively strong Social Democrat/Pirate/Left-green contingent in the Reykjavik area that can't stand the agenda of the main ruling parties.

Iceland doesn't function because they manage to get people to agree more than Americans do. There are something like 13 political parties in an average election, and they stand in bitter opposition to one another across a huge variety of issues. Iceland functions because they make their government function anyway. Nothing about being small makes it easier for two opposing parties to somehow figure out a way to get the damned bills paid. You could replace the entire American republic with Donald Trump and Barack Obama, and we'd get no more done than we do today, because the government isn't trying to solve problems. They're trying to preserve whatever problem is most plausibly the fault of the other party.

"German autobahn system would never work in US, it has 2x population and 25x area". - Someone in 1955, shortly before Federal Aid Highway Act of 1956

> The population of the US is 100x more than Iceland.

Actually, it's 1000x.

Oops. Thanks for the correction.

Comparing the US to Iceland is an extremely unfair comparison.

The US political system is inherently divisive, its no surprise we struggle with social cohesion required for a mature stable capitalist democracy.

We need new political platforms focused on consensus-based policies. Not distinguishing our groups from "the other"

I'm always skeptical whenever someone parades a Scandinavian country as an example of anything. The nature of their economies (Norway's massive oil wealth, for example) and the size of their populations means that lessons from these countries are rarely applicable to the US, China, India or other large countries.

You are mixing up blue collar and white collar unions.

Go look at the film industry, and the Writers / Directors / Screen Actors Guilds. The WGA doesn't stop screenwriters from negotiating their own terms. Do you think someone like JJ Abrams is getting paid the WGA set fees? That Tom Cruise works SAG and Equity rates? Of course not.

The point of the guilds in these industries is to set minimum standards for pay and benefits. It is designed to stop studios from exploiting people desperate to work in the industry. I majored in film and many of my classmates have gone on to work in Hollywood - I don't know anyone of them who would say their unions aren't a good thing.

>It is designed to stop studios from exploiting people desperate to work in the industry.

Would you say that it works?

My understanding is that these unions make it more difficult for new people "desperate to work in the industry" to actually break into the industry.

What do you think "protecting them from exploitation" means?

You are never going to be able to negotiate for yourself on an equal footing with a corporation, but unions can achieve a close approximation.

When I was hired I became the best paid person I knew. I think it would be pretty hard to unionize, but damn if I ain't pissed that that wage fixing scandal wasn't a bigger deal. I work at one of the guilty companies, and I would be happier if I felt like most workers even knew it happened. (even though this was not wage fixing for the average engineer, but for certain high profile roles.)

That's something a worker's organization would help with, even if I don't feel like I need them in wage negotiation.

To this day, I'm still puzzled by the fact that the wage fixing incident didn't blow up in the press. Amazing..

"Some massively rich companies colluded to keep their 5%-er employees from making even more..."

Not that I disagree that it was a huge deal, it's hard to gather greater sympathy/empathy from people that tend to make less than half of those aggrieved.

Exactly. If you're making $35k a year, all that story meant to you was "a bunch of billionaires colluded so someone making 5x what I make couldn't make 5.5x what I make."

It gets worse when you think about how often those "screwed" people that make 5x the median income of an area, make software that replaces 10,000 jobs. This software often comes in an app store and is given away for free with an ad at the bottom.

no it depressed the entire industry's wages

I agree... however, the reason it wasn't reported in the news, is because it wouldn't get a good response for the news agency, and likely piss more people off about the victims of that oppression. I'm not saying they weren't in the wrong, only pointing out why it wasn't more reported in mainstream news.

It would be worthwhile to simply have an organization so that when shitty things happen, you don't have to try and form one while simultaneously dealing with shitty things. A union is like insurance in that way. You get it when you're healthy so that it'll be there for you when you're not.

I work 40 hours a week. Sometimes I work 45, and I usually offset it by cutting it shorter the next week. I have no need (or desire) to "strike" just because some businesses/orgs/teams are garbage.

No competent programmer I know has to work 40 hours a week to have their needs met. The best ones charge rates would allow them to have their needs met working <10 hours a week.

First of all, what does that have to do with ANYTHING being discussed in this thread? Second, any "programmer" working 10 hours a week and charging enough to live comfortably on that isn't a programmer, they are a consultant.

I am a consultant that writes software, does that mean I am not a programmer.

If wasn't supporting a whole raft of people who aren't my kids I could get by on 10 hours a week. Most of these people will be self sufficient in the fall. Then we will see I can get fewer hours.

Charge hourly, produce good work(actually work those hours you charge) and spend enough time learning to stay proficient in your niche of the craft. This recipe won't make you a millionaire quickly, and it won't get you a house in the bay area, but it has given me great financial freedom in the Midwest.

It has this to do with this thread: programmers who say they don't need to unionize because "their needs are being met" in return for "40 hours a week" don't understand the basic economics of their craft of what being compensated fairly means, and that's something a union could help them with. I've heard more than one case of a big company saying "thanks for that optimization that will save us >$15M/yr for at least a decade, here's a ~$10k bonus!".

The few engineers who care to engage in the negotiations which yield their true market value end up making several times that of the average. Yes, some of them are exceptional engineers, but some are not, and the only real distinction is being able to find and negotiate optimal market rates for their work.

That's true..but IMO, if you want to reach that level of expertise, you have to spend a whole lot of time every day/week learning new stuff/technologies. At least that's the case for me as a software developer.

I work 35-40 hours per week and am quite competent and senior engineer in London. You need to find a company which isn't trying to make employees work unpaid overtime. Lots of companies out there are fine with 40 hours per week and pay market rate salaries for senior people.

If I can work 10 hours to have my needs met, I'd rather work 40 hours so I can travel 4 times more and have 4 times more cool stuff.

Travel can be extremely cheap nowadays, e.g. budget airlines on weekdays, last minute deals from the big tour operators. Working one 10 hour day a week will allow for way more travel than 4x the money on a 4 or 5 days work week.

Last year I had a consulting gig in a Europe based company, with offices next to a big airport. As summer was slow anyway I'd work 30h weeks (invoicing four 7.5 hour work days) Tuesday - Thursday, and spend the other 4 days at a beach in Ibiza, Bulgaria or Cape Verde (with occasional remote login to take care of emergencies).

Ah, sounds like no family, no kids and no house then?

I do have two houses. They are in cheap places and the total mortgage payments are what I make in 3 - 4 days.

Maybe because you define a competent programmer as someone who works more that 40h week?

And their wants?

Why would I strike for that? I'm salaried and typically work about 30-35 hours a week. I sit right next to my boss and he has no complaints about my hours or my work so I would be crazy to ask to work more hours. I'm actually shocked at how much they pay me for such enjoyable work.

The 40 hour work week is arbitrary. It was made for railroad workers who had high workplace accident rates and worked 6-7 days a week. Many died because pre-implementation they worked at night w/o sufficient electric lighting as it was not widespread yet. After the war; WWI iirc, the framework was applied to other industries.

So if you don't want to work 40 hours, don't. I have much less sympathy for a software engineer who has better leverage than a kid who works at McDonalds and couldn't earn a living wage working 60 hours.

The fact that you could strike and not really sacrifice much; and if it failed find another job, puts you in a great position. Unions are good for protecting those that can't afford to protect themselves and are at a disatvantage. SE is not IMO a vocation that needs to organize.

"SE is not IMO a vocation that needs to organize."

The games industry disproves your theory.

I think game dev is the way it is because so many romanticize game development. A ton of grads fresh out of college want to get in and are competing for a the limited (but large) amount of work it takes to make a game. The big a-hole studios realize this and charge sub-prime wages because after they burn a dev out there will be another to replace them still starry-eyed from a childhood playing games.

I have read several stories of people leaving game deve for a nice boring job writing insurance software for more money and fewer hours. Many could be doing it the other way around, write software for a lame, but lucrative, insurance company, then make a small lifestyle business writing indie games with a few friends.

Also, I think it is hard to get product market fit. You pretty much have to release a whole game before you know if it's successful. Unless you are established it is much harder to bootstrap. You can release a level and optimize but games are super hard.

I agree there is the romantic factor in play as well. You have a lot of supply of devs and a random walk of success stories.

Making a game, is hard to fit the market???

Most people who are super excited to make games are gamers themselves, and it seems to me that most gamers are pretty open minded. In my own research it seems to me that most indie titles that "don't suck" turn at least a modest profit. Don't suck needs to be defined objectively, but not being riddled with bugs (unless that's the point [Goat simulator, Desert Bus]), having a consistent even if primitive art style and being fun to at least some gamers is a reasonable definition.

The breakaway successes like Minecraft and Super Meat Boy should not be examples. Better example are Rovio's 50 games before Angry Birds. They made enough money to live on and make the next title while having a decent but not affluent lifestyle.

> The big a-hole studios realize this and charge sub-prime wages

First of all, "sub-prime wages" is not a thing I've ever heard of. Absolutely nothing on Google so I'm assuming you mean below market wages, which game industry wages are by definition not.

Secondly, and perhaps most importantly, paying people what they are willing to earn does not make game studios assholes. Everyone developing software for game studios knows they could make more writing software for a bank or some YC CRUD app.

> I have read several stories of people leaving game deve for a nice boring job writing insurance software for more money and fewer hours.

With the right skills, you can leave any industry and go to any other industry and make more money. Not sure what your point is here.

Your argument boils down to, "If they agree to it, there's absolutely nothing wrong," which is an argument that I've never accepted before. A person in a position of power, which the studios are, taking advantage of young people to pay them below market wages (which these are, despite whatever you try to argue) and work them insane hours, is wrong, full stop. There is absolutely zero reason why game wages should be below regular development wages.

Well I don't work 40 hours a week, however sadly that's how long I'm expected to be in the office.

Intelligent people capable of negotiating their pay in a market such as that for software development would only be encumbered by unions. Are there warts? Sure there are. Nothing is perfect.

But software devs don't have a professional structure either, as doctors, lawyers, and engineers do, and arguably the industry is the worse for it.

Are there warts? Sure there are. Nothing is perfect.

Isn't that equally true for collective undertakings?

Maybe have a look at the list here: https://www.tuc.org.uk/britains-unions

* Association of Educational Psychologists

* British Air Line Pilots’ Association

* FDA ("The union for senior public sector managers and professionals")

* Hospital Consultants and Specialists Association

* Prospect, the professionals' union

There are a lot more listed here: https://www.gov.uk/government/publications/public-list-of-ac...

And Norman Tebbit was the president of BALPA and for non UK the FDA is th union for V senior Civil Servants including MI6

That's an incredibly insulting and dismissive framing of the issue.

Unions are important in many industries, including software development. You and your employer may have a good method of negotiating your pay, but that doesn't make it universal

Belittling the presumed intelligence is completely unnecessary

Oh, come on. It has not been that long since we found out that major tech companies were colluding to suppress SWE salaries. Have you already forgotten?

Ya, that EA spouse thing totally didn't happen: http://ea-spouse.livejournal.com/274.html

The plural of anecdote is not data.

Yes it is.

When did witness testimony become inadmissible evidence?

I don't think any union has come out after that?

This is US-specific, in some European countries at least you're automatically part of some union by law if you're a software developer. They don't tend to do collective bargaining, but they're there.

There are plenty of unions that represent it/dev workers I.A.T.S.E and the CWA in the USA spring to mind Prospect in the Uk and IG Medien in Germany

This is a great discussion of company culture, treatment of employees, worker cooperatives, etc., but I hoped HN would go deeper into the business and technology implications.

What is the strategic logic behind this move?

NYT, WaPo, WSJ, Bloomberg all take the same line: this is about Amazon's expansion into brick-and-mortar retail. They need a physical footprint, knock out Instacart for delivery, accelerate Amazon Go, and so on.

But is this really Amazon's play here? Seems to me this is just the superficial and obvious rationale, and these analysts completely missed the bigger implications.

Since Amazon said they're not renaming the stores, how can this be about Amazon's brick-and-mortar expansion?

Seems more likely that Amazon's strategy is actually the opposite of this.

Instead, maybe the bigger opportunity is to "Amazonify" a good brand, good people, good merchandising and thousands of relationships with good suppliers.

Customers already trust Whole Foods and they like the assortment, but (1) only a small percentage of the population has access to a store, and (2) an even smaller percentage of the population can afford it.

What if this is about taking the Whole Foods concept online in a big way ... make it dramatically more efficient, aggressively lower prices, and deliver all this goodness to a far larger percentage of the population?

Whole Foods market share is less than 2%. Amazon could turn this $13 billion business into a $130 billion business by plugging WF into Amazon's existing apparatus for merchandising, pricing, inventory control, online sales, logistics, and direct-to-consumer delivery.

Taking WF market share up from 2% to 20% is a much bigger opportunity than going the other direction, and just using WF stores to sell Amazon's grocery assortment.

It's worth pointing out that the purchase, as based on today's price action, was effectively "free".

Amazon market cap went up 3.5% as of the current tick, roughly $15.5B. The market effectively rewarded AMZN for the transaction far beyond the actual $13.7B tender offer!

That is a great observation. Something like that is unimaginable to me.

You've got to be able to understand it, though, to make sense of market capitalism. Basically if the stock went up the price of that acquisition plus two billion dollars, that is a very powerful price signaling and a difficult command to disobey.

It means there's an opportunity cost: all other things being equal, it would cost Amazon two billion dollars in market capitalization to NOT do whatever the hell Wall Street THINKS they're going to do with Whole Foods.

Maybe the market thinks they're going to use them as bases for grocery distribution: reward, the cost of acquisition plus a bonus two billion. Maybe the market thinks they're going to gut the company, fire everybody, and then there's one less competitor for what Amazon means to do with groceries! Maybe the market thinks they'll take the existing Amazon grocery stuff and rebrand it Whole Foods and the rabble will buy into that for a time.

The point is that this money really isn't free: it's conditional on whether Amazon does what the investors think they're gonna do, with the acquisition. If Amazon fails to do that, the market capitalization can evaporate.

My own hunch is that the market thinks Amazon is super efficient and acquisitive, and that Whole Foods is weak and inefficient and misguided. As such, the expectation of greedy and amoral investors is that Amazon will take over and whip Whole Foods into shape, maybe even fire everybody and replace 'em with Amazonians, and that will make Whole Foods 'better' and justify the exercise. They certainly aren't buying into Whole Foods' 'enlightened' memes: that has no place on Wall Street.

So I'm guessing it's BECAUSE Whole Foods has been 'enlightened' that the prospect of wrecking that so motivates investors. They figure that the Amazon way is clearly the winning way, and they figure there will be a BIG difference in how things are done, and it's a difference they characterize as 'good for capital', so there's a synergistic effect that makes it 'free' for Amazon plus a bonus. And then Amazon is obligated to do what's expected of them, which I think is probably kinda predictable.

No, they are paying in cash, not stock. The company sold the stock a long time ago, so whatever the stock does has no impact on the company. The stockholders, however, benefited 3.5%, assuming they sell now.

This is not accurate. Companies hold back some stock during their IPO for various reasons. Amazon held back 23 million shares. It also has repurchased a fair number of shares it holds as "treasury stock" on its balance sheet that appears to have netted them a few billion in appreciation.

This of course pales in comparison to the 478 million outstanding shares, so, you are correct: their shares don't appreciate nearly enough from the $15 billion surge in market cap to pay for the $13.7 billion purchase. However, to say "whatever the stock does has no impact on the company" is also inaccurate.

Sure, but they aren't taking advantage of this rise unless they sell more stock, right.

Stock price is fungible (with good management) - the increased value can have effect elsewhere.

The cash itself is owned by the shareholders.

No, the cash is owned by the corporation. The shareholders own the right to participate in corporate governance in the degree appropriate to the particular shares they own, and own the right to take ownership of a particular share of the net assets if and when the corporation should be dissolved.

They do not, either in theory or in practice, own the assets of the corporation while it exists.

This is synergy. The market thinks that WFM + AMZN together as one is worth more than the sum of their parts. I should hope so.

"effectively free" is a strange label to give this.

Thanks

> Customers already trust Whole Foods and they like the assortment, but (1) only a small percentage of the population has access to a store, and (2) an even smaller percentage of the population can afford it.

> What if this is about taking the Whole Foods concept online in a big way ... make it dramatically more efficient, aggressively lower prices, and deliver all this goodness to a far larger percentage of the population?

Efficiency and cheapness would go against the Whole Foods brand.

Only if you erode their core customer values and degrade the products. I find it easy to imagine a more streamlined business with more affordable prices in Whole Foods. Why not?

> Efficiency and cheapness would go against the Whole Foods brand.

For their existing customers, yes, but WF has become an aspirational brand.

What if the play is to gain a large number of less affluent customers by WF-labeling lots of inexpensive things?

Search Amazon for some commodity like corn meal, or rolled oats. There's a huge price difference between Quaker brand and Bob's Red Mill. Amazon could insert Whole Foods brand right in the middle and skim customers from both ends while maintaining handsome margins.

> Efficiency and cheapness would go against the Whole Foods brand.

I don't know what this means. The WF experience has nothing to do with these things. The price (cheap or less-than-expensive) and efficiency (I think you mean availability?) aren't really important, other than they are successful in the same way Trader Joes is successful, in fewer locations.

What if you increase efficiency and cheapness in non visible areas that customers don't get to see?

To me I fail to see the value because Aldi is here and expanding and now Lidi is following. while they may be on the opposite end of the market from Whole foods I do think they are where the market will truly end up. The middle to higher end grocery stores are going to face a tough time with the discounters and we have yet to see if the European model of grocery can covert a large number of shoppers.

with regards to the purchase I can imagine cobranding or in store only advertising. perhaps they can use it let people pick up orders themselves? Online grocery ordering but only where a Whole Foods store is available.

The value is that Aldi is nowhere near here, and Lidi is completely un-heard-of.

The only reason I know about Aldi is that I spent a couple of years working in Chicago (and living further out), and even there I had to drive a long ways out of my way to find an Aldi. I think I went once in the 2 years I was there.

Whole Foods is everywhere.

Well, I'm wrong. There are ~430 WF locations worldwide; there are 1,600 Aldis in the US. it's just that aside from southern California, they don't seem to have a lot of locations in the West. My closest Aldi is ~550 miles away; my closest Whole Foods is a lot closer.

FYI Aldi also owns Trader Joe's.

EDIT: apparently I was effectively wrong, different Aldis:

https://news.ycombinator.com/item?id=14569051

No. There is no Whole Foods within 100 miles of me, and I am in the continental US.

Agreed. My first thought was: "Sweet, now prices will come down, WF stores will probably have come out with some innovations we didn't even know we needed but then won't imaging living without and overall customer experience will be awesome." They're going to figure out how to take WF to the next level.

I don't think anyone thought that Amazon would rebrand the stores. I think what you wrote is the obvious thing to most observers.

> Since Amazon said they're not renaming the stores, how can this be about Amazon's brick-and-mortar expansion?

Sure they say that now...

Prussia was also a highly militaristic state, so it had the side benefit of keeping the young men fit and hearty enough to get conscripted for the next time they needed to bloody France's nose. It would also have the young women fit enough to bear many much young men that they could conscript into future wars.

The logic of trench warfare era militarism is even more depressing than the normal logic of war. It's mind-boggling to think leaders figured it was appropriate to just throw demographically significant numbers of 16-20 year old boys into a meat-grinder just to keep the machinery of colonialist industry well greased.

Very good points. To be a bit pedantic (this is HN after all), trench warfare didn't start until after Bismarck. Truly depressing logic though.

No, trench warfare predated Bismarck, although it didn't peak until after he died. Vicksburg and Petersburg are good examples from the U.S. Civil War.

I agree. I just heard this [1] podcast about the Oneida company. It was one of the first companies to show that paying and treating the lowest-paid employees very well and being very profitable are not mutually exclusive.

[1] http://www.npr.org/sections/money/2017/06/09/532303452/episo...

Of course it's not--you just have to have leaders who don't want 100X what the average employee makes! It's about greed, it's always been about greed.

And it's so much worse than that, really. A lot of public companies are being strip-mined of their true wealth by the insiders. Pump the stock, gut the company, screw the investors.

Maybe sucking every ounce of productivity is by treating your employees well and paying them well?

I think many over estimate how much better off people are with unions in grocery level employment and similar. while unions can be beneficial in some areas of employment it is not a miracle worker or guarantee of better outcome.

This is exactly what came to my mind. I hope Amazon keeps the Whole Foods culture alive and let it run independently.

If Amazon acquisition of Zappos shoes is an indicator, Jeff Bezos let Tony Hsieh (CEO) continue to keep the culture. Hsieh said in past interviews that Bezos if fairly hands off. There was still some business "synergy" in the acquisition because Zappos logistics got integrated into the Amazon warehouse in Kentucky.

Whether Bezos treats Whole Foods the same probably depends on whether he has confidence in existing management. It's also possible he has ambitions to totally remake WF into something else. In that case, it doesn't matter what managers are there because Bezos wanted the Whole Foods market presence and not the management team.

Zappos CS, front office, creative staff (etc.) got to keep their culture. Zappos warehouse workers got shafted.

Blame Hsieh. He is given carte blanche over Zappos as long as he meets his revenue targets. Full stop.

Would it be possible to expound on this comment with a decent source (first party is totally okay!)?

I ask not as a personal attack on your credibility, this comment just seems a bit inconsistent with the Holacracy movement that he championed a couple of years back.

https://pando.com/2012/06/06/zappos-hands-over-warehousing-t... - as you can see, the warehouse isn't included in any of the good stuff, it was just unceremoniously handed over to Amazon to be run as Amazon warehouses are run.

I agree that this is inconcsistent with the Holacracy movement (even if the move preceded the movement officially, clearly these workers were never fully Zappos employees in Tony's eyes, which is sad).

Thanks for sharing, and I agree that it is always sad to see upper management marginalize the contributions of certain groups of employees.

Not sure how well that Holacracy movement is doing for them

http://fortune.com/zappos-tony-hsieh-holacracy/

https://qz.com/849980/zappos-is-struggling-with-holacracy-be...

https://www.theatlantic.com/business/archive/2016/01/zappos-...

I think Zappos is a probably a pretty good proxy. They too had a very different culture to Amazon at the time of acquisition, but I believe it has largely remained intact many years post-acquisition.

Amazon as a company has many flaws in its culture (if we are to believe the reports), but they seem to do acquisitions pretty well and know when to leave things alone and let them do their thing.

I think something similar happened with IMDB and Twitch.

I think this is a different beast. I personally loved shopping at Whole Foods because the food is high quality and their employees are treated well. These tenets are totally incompatible with Amazon's culture. Sure, now they say they will run it independently, but if Amazon were to struggle with Whole Foods, the first thing they do will be to lower labor costs and food costs.

Unions to protect workers are now more important than ever in this new age of monopolies.

And what would Whole Foods do if things were turning bad? IMO the exact same thing.

Or, Amazon + Whole Foods can afford to run less profitably than Whole Foods alone... in WF's core in-store grocery business.

Because Amazon can better monetize WF: backing with Amazon's logistics chain, expanding grocery delivery, cross-marketing with customer's existing Amazon purchases, and using WF's real estate for warehousing stock closer to affluent customers for one hour deliveries.

I absolutely agree they'll be tempted to squeeze costs, but I think there's a viable financial option to run WF as-is and still accrue benefits to the greater-Amazon.

Amazon is a tech and logistics company. I doubt very much that their strategy is "buy random company, lower pay of employees, profit". This was a very strategic move for them and I am sure they intend to use their tech and distribution platform to increase the profit, rather than slice and dice the store experience and quality at the local level. This is what differentiated WF from many other grocery stores that I'm sure Amazon could have bid on, why would they want to ruin the one thing it had going for it?

" Online delivery of groceries so far has been tough for any company to pull off because of customers' concerns about the quality of meat and produce, Wedbush Securities analyst Michael Pachter said. But if customers know that what they are getting is the same as what they'd get at the local store, they are more likely to try it out.

Pure speculation but I'm guessing their strategy here has a few elements: - they need to get to meaningful scale on the buy side of the grocery business which they weren't able to do on their own - Whole Foods is already a "tech friendly" grocery brand (Instacart, Apple Pay) - Whole Foods has a lot of premium/value add and non-grocery products (prepared food and organic underpants and such) that offer more profit margin than just groceries

It probably also doesn't hurt that Whole Foods is the only grocery store within walking distance of Amazon HQ and about 1000 employees eat lunch there every day.

Interesting

> Amazon were to struggle with Whole Foods, the first thing they do will be to lower labor costs and food costs.

They'd do what any company that doesn't want to end up bankrupt to do. Attack the easy parts first (overly expensive infrastructure, etc) then hit the two major cost centers: labor and food costs.

If it comes down to two options: lower wages/quality of food or a company that no longer exists, the former is probably the better alternative, no?

There's also Woot.com - a company who's culture was a strange counterpoint.

Amazon thought they understood it, messed it all around and now it's a sad parody of the former site.

https://www.dmagazine.com/publications/d-magazine/2014/july/...

That particular bit about Bezos and the octopus sells it - You'll be fine if Amazon "gets" your company and it's culture. If not, well...

It looks like the original Woot folks want to try again:

https://meh.com/forum/topics/faq#q-whats-the-story-here-53a3...

I was going to mention Meh. Their stuff is hilarious. And yep, it's the original Woot staff, long after they sold their baby to Amazon.

It's pretty well known internally to Amazon that the woot acquisition was handled terribly and that the food was strangled. It's held up as a what not to do now. Source I know some of the og woot folks and I work for a recently acquired subsidiary in the "strangle don't strangle" department. We're very cognizant of keeping what's good about our subsidiary and using what's good about super mega co and they let us. We're very much on the don't strangle side. It'll be interesting to see how this aquisition "GOes"

I remember Woot's founder, Matt Ruttledge, mentioning how he didn't get along with Bezos at all.

Thats what I heard.

Twitch.TV is the same way, after it got acquired. They just leave them alone and let them do their own thing.

As an aside, the creation of both Zappos and WF was told on NPR's How I Built This. Very interesting podcast if you like company culture and how it's designed/maintained.

http://www.npr.org/podcasts/510313/how-i-built-this

On the other hand, Kiva Systems which is now Amazon Robotics is apparently now a terrible place to work. :(

The value of Zappos is integrating the procurement and warehousing with the Amazon operation. The front end can remain distinct. The same applies to the WF distribution network. That is the hardest thing to get right in the supermarket business.

Considering Amazon has been developing technology for walk in, and walk out checkout, and owns a robotics company, there might be a lot less of them.

Indeed, I think this is precisely the point.

As a loyal Whole Foods shopper I am EXTREMELY excited by this development. The worst part about grocery shopping anywhere is waiting in line. There are a ton of jobs at Whole Foods that have nothing to do with running the cash register, and as long as Amazon keeps those jobs intact I am all for the automation revolution.

I have never worked as a cashier, but I can't imagine it's a very fun job. Automating out those jobs seems like a win-win, as long as the former cashiers can find a job doing something else.

Edit: For anyone wondering where my perspective is coming from, see this: http://www.businessinsider.com/amazon-go-grocery-store-futur...

>> I have never worked as a cashier, but I can't imagine it's a very fun job. Automating out those jobs seems like a win-win, as long as the former cashiers can find a job doing something else.

Stacking the shelves isn't anymore fun that working the checkout. As someone who has done both I'd say checkout is the preferred role as it's much less physical (stacking shelves gets tiring after 8 hours) and you get chat to customers.

Having done both, I prefer stocking. But that comes with a caveat that I've never worked more than a four hour shift. I can imagine that an eight hour shift of stocking would be brutal.

Coming back after mid-shift break for another 4 hours was always pretty hard. With stocking there was always something to do as well (staves off bordedom but also tiring). Checkouts often have peak times so you often get long periods where you're really just chilling with your co-workers.

Good point. I'm an introvert so talking to people for 8 hours wouldn't be my favorite thing in the world, but sometimes I forget not everyone is like me.

When I was talking about the other jobs at WF I was thinking about like.. the ice cream scooper, and the smoothie maker, and the customer service rep at the front for when people want to return items. That's not to mention all the the chefs that make the food for the hot bar, or the bread and cookies for the bakery department, or the sushi. All of those jobs could have a social element to them.

Never been to a WF (we don't have many here) so didn't know those other jobs existed. Seems like they do have a lot of work to go around then instead of just stock work/checkout work.

Time flies in the cash registers (unless the store is dead). Stacking shelves and organizing them is so boring that your four hour shift will feel like eight.

As far as lines go, one of the things I love about Whole Foods is that they always seem to have enough capacity at the registers so that there's one with no line. Worst case, one person in front of me. And the average cart is small there, so it's quick.

Contrast that to other grocery stores (Shaws and Wegmans, for instance) that seem to calculate exactly how many cashiers they need such that no line is more than 3 people deep, but none of them are idle, ever. And the average cart is full-to-the-brim, so there's always a wait. It can be 9pm at night with 3 customers in the store, but there will still be a wait.

Having done both, and having once been an otherwise unemployable 15 year old, I'm saddened by this development. I learned some valuable skills at that job. I'm not sure there are many other entry points to the job market for young people that want to or need to work.

Honestly, I'd be thrilled if they simply added an Amazon Locker at each WF location. I'm in the north Dallas/Ft Worth area, and occasionally buy pricy stuff from Amazon that I'd rather not have sitting on my front porch with all of the package thefts that happen nationwide. A nearby locker would be great. Example: I'm near McKinney. The nearest Amazon Locker is either at a 7-11 in Garland, or way out at a QuikTrip gas station in Greenville. (Yes, Greenville!)

A locker would get me into Whole Foods more often for sure.

I'm sure the point isn't just to get the technology into Whole Foods, but rather to use Whole Foods to advertise the technology to every other retailer.

It's like how Mark Zuckerberg launched Facebook, except for if he had just bought Harvard.

> Here comes store automation and hefty lay-offs?

... or just expand and move people to new stores. Seriously, what's the yearly turnover for front-line positions?

At least in my experience, a lot of employees at the store live and die for the company. Tons of growth / mobility. Lots of 5+ year long employees...

Sure, but I can't imagine every clerk who signs up for the job stays there forever. Even a 15%-25% attrition rate would allow the company to invest in automation without having to resort to layoffs.

I worked for Palo Alto Whole Foods from 2008-2011, and I think one thing that really hurt the company was that they aggressively overexpanded.

Does Santa Cruz need two stores (Capitola is practically Santa Cruz)? A Blossom Hill store? Competing with Los Gatos and Campbell?

At the time (I was s cashier) WF culture was dead set against self checkout stands, because they really wanted someone to be there to help customers.

They have also over expanded in Berkeley/Oakland. Three WF between Lake Merritt and Albany is too many, and they are opening a 4th. They should open more in other parts of the East Bay, such as San Lorenzo, Freemont, other parts of Oakland, etc.

Only the 27th street WF is as good as the many, many other natural/whole/organic foods stores there.

They finally opened in Fremont a few years ago. A decent choice (though it cannibalizes some customers from PA)

> At the time (I was s cashier) WF culture was dead set against self checkout stands, because they really wanted someone to be there to help customers.

As opposed to having longer checkout lines? How about investing in a non-shitty self checkout stand?

Disclaimer: I work for AWS, but my opinions are my own.

I don't think you have much to worry about if you're a WF employee. Amazon actually treats their employees very well. In my experience here, I've never seen any of the things the NY times article talked about, either on my team or any other team I've interacted with. People have a healthy work/life balance (40-50 hours a week), get paid very well (definitely above average, and probably in the top 25% of industry), and in general they are concerned with long-term employee sustainability, rather than letting employees burn out and quit.

I know that there are some stories about bad experiences in the fulfillment centers, but keep in mind that those positions are temporary seasonal work by unskilled labor. That's a completely different environment than full time employees work in.

I mean to be fair, most of the jobs at WF stores ARE unskilled labor though.

Not true. I know several people that have good careers at WF and would be offended by the fact that you think they are unskilled.

Seasonal workers in the FCs literally get only 4 hours of training and are then filling orders. That's the pure definition of unskilled, and a far cry from a pastry chef at WF.

That's not what unskilled means in this context. It just means that they are easily replaceable and not specialized. You can have respect for people as individuals while recognizing that the job they do could be done by just about anybody (the definition of unskilled)

A pastry chef is unskilled?

How many employees at WF are pastry chefs and how many are in stocking, orders, cleaning, and manning the register?

I feel like at least half of the average grocery store staff I see are skilled: butchers, fishmongers, cheese and wine managers, and pasty or bakers. Proportion varies with class of grocery: BiLo obviously having fewer than WF.

There's the checkout counter and stock in the back, but I feel like the employed-during-the-day crew definitely has career opportunities.

Thank you for saying this. WF needs a half dozen unskilled workers to stock shelves, and about 6 dozen skilled laborers in the trades you mentioned. Do you think a 21-day dry-aged steak can be made by someone that just showed up during a high school job fair with zero training? Would you eat it?

A pastry chef is to WF what an AWS engineer is to Amazon.

It's not that pastry chef's are unskilled, but they are very easily replaceable. It's really difficult for culinary school grads to find work because of the influx.

Not true. It's very hard for restaurants to find skilled cooks nowadays because the salaries they are willing to pay are not high enough. When an artisanal pastry chef can open their own business, setup a Stripe account, and make six figure income, you know a restaurant only willing to pay $45K for a skilled chef is going to have a problem...

What I mean is you don't necessarily need a college education to work in any of their departments. Not trying to be offensive

So the people stocking the shelves and operating the registers are all highly skilled labor?

IIRC the definition of unskilled labor is one requiring less than a year of training.

Oh well, you know a dozen people working at Whole Foods that have good careers, guess the literal thousands of people working in the stores, filling the shelves, being cashiers, etc., usually being the first ones to be thrown away, overworked and overpressured don't exist then. Only white collar jobs matter after all.

Enjoying your ivory tower I hope?

Our proclivity to treat all “unskilled labor” as if the people doing them are trained monkeys is one of the reasons customer service in large retail stores is so often horrible.

If you treat your people like valuable members of society/your organization they will develop and improve on the actual skills that an unskilled job needs, like anticipating problems, knowing when an how to escalate issues, being warm to customers, being knowledgeable about the business and your products, and hustling when needed.

If your treat your people like disposable chattel then they’ll show up to punch a clock, check the boxes, and get out as soon as possible.

When comparing price to customer service, price wins every time.

We can say all we please that we want great customer service, but we vote with our wallets, and our wallets say "Save $5 per trip to interact with the trained monkeys."

Thus, we have Walmart.

>When comparing price to customer service, price wins every time.

This is very much a cultural problem that stems from treating service workers as subhuman and undeserving of a decent wage.

And the price difference is hardly as high as $5 per trip. Even places with really high minimum wages don't get that bad. It's more like a few extra cents, barely noticeable. Where the savings on payroll at the bottom are going is usually payroll further up the chain.

Some stores have much better customer service than others, like Whole Foods and Costco (just to cover both sides of the pricing models), and they seem to be doing all right.

> I know that there are some stories about bad experiences in the fulfillment centers, but keep in mind that those positions are temporary seasonal work by unskilled labor. That's a completely different environment than full time employees work in.

But probably more similar to most jobs in a grocery store than a software engineering position.

I mean keeping an ambulance outside the doors to a warehouse because its cheaper than cooling it is a tad inhumane.

source?

It took literally two seconds to find:

https://www.google.com/#q=amazon+ambulance+warehouse

https://bits.blogs.nytimes.com/2011/09/19/inside-amazons-ver...

> In a lengthy and heavily reported article, The Call said a warehouse employee contacted the Occupational Safety and Health Administration on June 2 to report that the heat index in the warehouse had reached 102 degrees, and that 15 workers had collapsed. The employee also said workers who were sent home because of the heat received disciplinary points.

> Eight days later, the paper said, an emergency room doctor at a local hospital saw enough Amazon employees suffering from heat-related injuries to call OSHA and report “an unsafe environment.”

> So many ambulances responded to medical assistance calls at the warehouse during a heat wave in May, the paper said, that the retailer paid Cetronia Ambulance Corps to have paramedics and ambulances stationed outside the warehouse during several days of excess heat over the summer. About 15 people were taken to hospitals, while 20 or 30 more were treated right there, the ambulance chief told The Call.

I suspect keeping ambulance at standby was more of a hotfix for a bug, than a feature. Yes Amazon is frugal, but I think it is a bit of a stretch to assume there was malicious intent in not cooling their FCs.

In a giant warehouse managed by a company with > 100k employees, things are not changed that quickly...

They're not malicious, so much as indifferent.

Maliciousness probably costs money, and Amazon's looking to spend as little as possible on these warehouse resources.

Regardless of indifference or malicious, its still breathtakingly inhumane.

Keep in mind this is from 2011...A lot has changed at Amazon since then.

I did a contract at Amazon here in the Dallas/Ft Worth area, and in my experience between the warehouses (I think that there are now 8 in the DFW area alone) these stories were the exception, not the norm.

I wasn't a contract product picker either, I'm a Paramedic that helped staff the on-site medical clinic, which exists mostly for workers comp paperwork and the occasional emergency. (in 6 months, I responded to 2 actual medical emergencies.)

The warehouses were not overheating even in the Texas sun, we didn't have an ambulance sitting outside, and people weren't passing out. I'm not sure what was up with the one in the story but it definitely sounds like more of an exception than the rule. But that story of that warehouse just keeps coming up.

http://www.seattletimes.com/business/workers-complain-about-...

> I mean keeping an ambulance outside the doors to a warehouse because its cheaper than cooling it is a tad inhumane.

Just a tad, but the financial analysis told us inhumanity was the right direction to move in. /s

I believe HQ staff was very unhappy about that situation and that (some of?) the warehouses in hotter places have A/C now. (Source: live in Seattle, know a number of Amzn employees.)

I haven't seen any articles about the working conditions at warehouses in years, have you? In the mean time, they've opened dozens more warehouses.

(The latest was the NYT article which was about office jobs and which is a whole discussion in its own right.

Yes, but fulfillment center employees are likely much more comparable to whole foods employees than software developers, in terms of education, job responsibilities, ease of replacement, etc. So that's probably who we should be looking at anyway

There's one key difference that the retail employees are interacting with customers whereas the distribution center employees are hidden away in the factory. Not sure how important this difference will be, but it could definitely influence the company's behavior.

I think working in a grocery store is more similar to working in a distribution centre than at AWS. Highly paid engineers are usually treated well, unskilled/low-skill labour often not (not implying that this is the job OP does, but many in WF will be low-skilled).

> People have a healthy work/life balance (40-50 hours a week)

40-50 hours of work a week isn't healthy.

Why not? The important part is commute. 50hr work week in a job you like with a reasonable commute is no problem for your health. 30hr/week in a job you don't like with 2.5hr in traffic each day is much less healthy.

Says what research?

Unless all 50 hours are compensated, 10 of them at 1.5-2x base pay, the person working them is getting ripped off.

Every one of my friends in engineering (actual engineering, e.g. civil, aerospace, etc.) positions get at least 1.5x for any hour over 40 they work in a week. In fact "unpaid overtime" is something I hadn't heard of for an engineering position prior to working in software. It's almost like workers in this industry are competing to see how much they can let themselves be exploited.

In the US, software developers are exempted from the law requiring 1.5x pay for overtime. Not sure it matters if they're salaried instead of hourly to begin with though.

This is in the US and they're all salaried. Their overtime is computed as a function of the equivalent hourly rate, biweekly pay, etc.

That is a set of regulations that vary state by state. I work in mass and I have never received a dime for overtime

It has nothing to do with regulations, actually. These companies they work at aren't normally obliged to pay overtime by any regulation or contractual obligation. The engineers there are "exempt" employees, classified identically to what a software engineer would be.

In some cases these employers' contracts require them to pay overtime to employees that work on the contract project, but generally that isn't the case. They pay overtime because of the historical evolution of the industry and the expectations and dynamics of the employer/employee relationships.

Interesting, my undergrad is actual engineer, Electrical, worked in VLSI design (GPUs) for 4 years after college, and nobody I ever heard doing EE every got paid overtime.

You have to negotiate your salary based on these assumptions. Or get paid hourly (as a consultant or contractor). I'm not currently hourly, but I am also not getting exploited, either. Most places I have worked didn't give a damn about their employees. They would just use them up and get new ones when people eventually got fed up and quit (or got sick and quit, in a few cases). When you bill hourly, projects are far more honest in terms of not shifting costs onto the staff.

I'm guessing you don't live in the US, or your friends are underpaid, or they work for a firm that chooses, but does not have to, provide overtime. Actual engineering should generally be considered exempt from overtime.

1. If nothing else, engineers are considered a learned professional.

2. They probably make over $100,000 per year.

3. They may hit the executive exemption.

https://www.dol.gov/whd/overtime/fs17a_overview.pdf

Their firms choose to provide overtime. I live in the US, and so do they. They are underpaid, but so are software engineers (even adjusting for overtime or lack thereof).

I guess you are speaking about juniors/graduates? Senior engineers in my experience in two different European countries have always contracts with unpaid overtime exactly as management contracts.

No. Three of them have very senior positions (e.g. principal or chief engineer). They've always had paid overtime at every stage of their career.

Agreed, although I imagine it's probably the norm unfortunately.

> keep in mind that those positions are temporary seasonal work by unskilled labor

What do you think most Whole Foods employees are?

okay, so its fine to treat unskilled labor and temp workers poorly?

Gotcha.

I know that there are some stories about bad experiences in the fulfillment centers, but keep in mind that those positions are temporary seasonal work by unskilled labor.

The tone of your writing suggests that you are OK with treating these people badly. If a company treats some set of its workers badly, what stops them from treating other employees the same way? In this case, they may treat SW engineers well because there is a lot of demand for engineers, and they have to be treated well to retain good folks. That is not comparable to the good culture that OP claims WF has.

Have you ever worked a minimum wage food service or warehouse job before? I have, and believe me, it's hell. I spent my high school years working as a cook at KFC. Hot summer days spent making $3.35 an hour standing over pressure cookers full of 400 degree hot oil and lifting 50 pound baskets of deep fried chicken out of them. You get a 15 minute paid break every 4 hours, and a mandatory 30 minute unpaid break for lunch.

I'm not saying its ok to be inhumane or break laws and treat your workers like cattle. I'm just saying that if you've never worked at a minimum wage unskilled job before, you probably don't realize how much it can be hell, just due to the nature of the work. The same thing can be said for lots of labor like farming, construction work, mining, etc.

> Disclaimer: I work for AWS, but my opinions are my own.

> I don't think you have much to worry about if you're a WF employee. Amazon actually treats their employees very well.

Normally when people say Amazon abuses their employees, they aren't talking about AWS.

>I know that there are some stories about bad experiences in the fulfillment centers, but keep in mind that those positions are temporary seasonal work by unskilled labor

But keep in mind poor non-tech people are trash and you can treat them like it!

>but keep in mind that those positions are temporary seasonal work by unskilled labor. That's a completely different environment than full time employees work in.

Some positions are temporary seasonal labor, but Amazon employs people full time in their fulfillment centers as well, and they work hard trying to convert the former into the latter.

Where I am (near Austin, TX), Amazon is running a campaign to recruit UT students with the promise of "tuition assistance." The way they treat their FC employees has nothing at all to do with their relative skill level, educational background or expected tenure. They've also been pushing 60 hour mandatory overtime for over a month for some shifts and they pay well under the cost of living for the area in which they operate, and I expect that represents the general treatment of the majority of Amazon employees, because there are far more of them at the bottom of the pyramid than the top.

I don't doubt the engineers are doing well, though. They probably get chairs to sit in and everything.

> I know that there are some stories about bad experiences in the fulfillment centers, but keep in mind that those positions are temporary seasonal work by unskilled labor.

This might be one of the more tone deaf things I've read on HN in recent memory.

Please see my other comment. I've worked a $3.35/hr. minimum wage food service job before and it's hell. If you took 1,000 average citizens and threw them into minimum wage food service, factory, or warehouse work, I would completely expect a good percentage of them to burn out and quit within a couple days. Unskilled jobs are just too hard and require too much effort for too little salary to make them acceptable to a lot of people. This doesn't mean they are inhumane; it means we've grown accustomed to easy, white-collar jobs and are fairly divorced from the reality of hard, physical labor these days.

Any job that would cause a good percentage of people to 'burn out and quit within a couple days', would fall into the category of inhumane for me.

Fair enough, but keep in mind that in the 1800s, parents often made their young children work 16 hour days in the sun farming for them. Child labor, under harsh conditions. We've grown accustomed to a much easier life now, but it was not always like this.

Is there a point you are trying to make that's relevant to this discussion? I have read a few of your comments on this thread and I just can't for the life in me figure out what point you're trying to make.

Honestly, forget it. The point I'm trying to make is that nobody owes you a handout or an easy job. The fact that I've worked brutal fast food jobs for $3.35 an hour, yet you don't see KFC, McDonalds, Taco Bell, etc, being trashed here for terrible working conditions, while AMZN is, speaks volumes.

Today has taught me that HN has a pretty fierce anti AMZN bias, and it shows. I have 4K+ karma, and am sharing my honest opinion and experiences working for AMZN for the last year. Next time, I just won't participate. This community has gone downhill pretty seriously in the last few years... No big loss.

> The fact that I've worked brutal fast food jobs for $3.35 an hour, yet you don't see KFC, McDonalds, Taco Bell, etc, being trashed here for terrible working conditions, while AMZN is, speaks volumes.

If it speaks volumes, those volumes are more about this being a tech-industry biased forum than anything else. We don't really talk about the fast food industry and it's working ccondition nearly as much (though, even so, the whole industry is often used as a shorthand for terrible working conditions even when discussing other things.)

Your idea that the fact that HN talks about Amazon more than the fast food industry is anti-Amazon bias and not tech-industry focus is interesting, but not particularly plausible. (Especially given that plenty of that talk is positive.)

Please don't let me comments prevent you from participating in good discourse. I just don't understand why you are so hell bent on defending Amazon at the expense of all the "seasonal unskilled laborers". They are humans like you and me and they are not secondary citizens. It seems to me like we should be trying to make other people's lives better. I will trash whatever place that mistreats its employees. But this is Hacker news and the topic is about whole food and amazon. Why you keep bringing the fact that you worked for $3.50 an hour at McDonald's is beyond me. Damn man, just because you suffered from having to do fast food doesn't mean everyone else should too?

I appreciate your honest opinion and I am only providing my own honest response. This thread is about AMZN, you talked about how some workers are treated at AMZN so that's what we are talking about. I actually happen to love AMZN as a whole and own stock in the company which has done extremely well for me. My company buys almost all of our equipment off AMZN. That doesn't mean I can't criticize them when I disagree with one of their practices.

I don't think this is completely true. I was with AWS for 3 years as SW engineer and was working around 12 hours until I decided to switch. AWS has pretty messed up softwar services with lot of technical debt. Rather than fixing these, AWS relies on oncall (pager duty) to mitigate production issues. My team use to get 200 pages a week.

I've heard similar stories from several AWS engineers who were looking to leave or recently left. I can believe that pieces of AWS have good culture, because AWS is a large set of services and it's inevitable that it's not 100% consistent across the entire organization. But I also fully believe that parts of AWS are "duct taped together and on fire" because I've heard it from multiple sources.

I've never had anyone in person tell me that Amazon was a good place to work unless they were trying to recruit me.

I've worked here for a year and have never seen that. I'm sure there are a few bad managers, as there would be in any company with 350K+ employees, but Amazon really tries to take a data driven approach to employee retention. If you think they don't know this causes burnout and aren't trying to optimize for long-term employee sustainability, you're underestimating their management talent.

I'm sure this is true but you sound exactly like Uber employees who come on here and say they've never seen any of the issues.

It's interesting to hear these stories, because when I was looking for a job, naturally I talked to all my friends that had worked at Amazon at one point. Out of maybe 6 people, 4 had some pretty negative things to say. These are all career SDEs/SW/SDETs, but on very different teams and divisions.

I once had a coworker that walked into the building, and said that morale was so low people would start crying when they were paged. Gave back his signing bonus and resigned immediately.

Completely anecdotal stories obviously. Not saying you're wrong, but you may be the outlier?

> Amazon actually treats their employees very well.

Do you mean the software developers who work on Lake Union or the many lower skilled people who work in Amazon's fulfillment centers...like people who would work in a grocery store...

People who work at Wholefoods aren't software developers making top bucks.

I surely hope you are correct for the sake of the workers of WF, but...

If you work for AWS, you are either software engineer or linux/network admin. And that means you bring high value to Amazon. So yes, Amazon would treat you well.

But as you go further down the value chain, your treatment will get exponentially worse. And I can't imagine cashiers and stockers being viewed as high value makers by Amazon.

40-50 hours a week is NOT a healthy work/life balance. Nice try buddy.

50 hours per week really isn't that bad if you're getting paid well for it

John Mackey http://www.nytimes.com/2007/07/12/business/12foods.html

It should be noted that amazon employees also "get paid pretty darn well with some crazy good benefits" and the whole IT at amazon is union free.

I feel like this is a great fit, with whole foods being a progressive company in US grocery space.

No one is arguing that the people who work on Whole Food's website are going to suffer a significant drop in the quality of their work experience.

It's a fair supposition, however, that Whole Food's front line staff (who map to the warehouse employees that Amazon absolutely treats like garbage) probably will.

> It's a fair supposition

Why? Reviewing any of Amazon's acquisitions shows that they have revenue targets that, when met, means they just don't get involved. Why suppose they are suddenly going to do the opposite now?

When you have a documented record of mistreating you're employees, both white and blue collar, the onus is on you to rectify the situation and demonstrate that you'll behave better in the future. Amazon has done neither of these things.

It's entirely "fair" to posit that a company with a documented record of abusive workplace practices might extend that same umbrella of mistreatment over an acquisition. Even more so given that the acquisition involves a large number of employees of the category that Amazon has always treated as disposable.

> When you have a documented record of mistreating you're employees, both white

Yes, the infamous NYT story. It's funny, because I've yet to see all the ugly that story implied was wide-spread across the company. AWS can be notoriously difficult (particularly the not-so-fun S3 on-calls).

But there's an enormous difference between a wide-spread problem, and a problem that seems to be focused, very narrowly, on a few teams.

> Amazon has done neither of these things.

You say that with authority. Do you have ANY familiarity with Amazon's internal policies/changes that have gone into affect regarding these news stories?

Here's my problem: A company of some 300,000 people had documented cases of mistreatment. You've, in turn, determined that not only is this problem so wide-spread that we can define Amazon as a "bad employer" but, apparently, they need to take the time to personally inform you of any changes that have been made as a result of said problems.

> might extend that same umbrella of mistreatment over an acquisition.

And yet, of Amazon's acquisitions every single one of them have been left to their own devices.

You seem to have an agenda, which is fine, but let's not pretend your summary is in any way based in fact, but rather, exclusively on a few articles in newspapers.

If I seem to "have an agenda" based on widespread media reports that are far beyond that one NY Times piece, how exactly would you categorize your own stance? What's your relationship to Amazon? I'm only one of their occasional customers.

Anyway, here's reporting about how their warehouses used Neo-Nazis to intimidate immigrant laborers and worked a temp to death. If you have evidence of the drastic measures that would need to be taken to prevent this kind of behavior, I'm happy to hear about it.

http://highline.huffingtonpost.com/articles/en/life-and-deat...

https://www.independent.co.uk/news/world/europe/amazon-used-...

The first article is about a temp worker dying. One guy. The second article is about Amazon Germany, specifically that the security company they hired, allegedly hired neo-nazis.

You don't seem to have an agenda, you absolutely have one. What happened to that temp is tragic, but you can't get more isolated than 1.

> Anyway, here's reporting about how their warehouses used Neo-Nazis

You mean the company they hired that then hired some shitty people? I don't get why Amazon is now responsible for that.

Different people have different thresholds for what's "water under the bridge." That's fine. I've been a long time occasional customer of there's, but have become increasingly leery of their business and employment practices, both from media reports and people I know who've worked with them. I wouldn't want to be treated that way or see anyone I know treated that way either. That's what informs my views and comments. If you see it as an agenda, that's okay too.

But I only used the term "seem" because your framing is to position yourself as somehow more impartial and knowledgeable, while refusing to clarify your own relationship with Amazon and what informs your (in my view) similar stridency.

One guy is far too many. There is absolutely ZERO excuse for that happening.

I would recommend anyone wanting to learn more about John Mackey, and how he built Whole Foods, to listen to a recent episode of the How I Built This podcast featuring him: http://one.npr.org/?sharedMediaId=527979061:528000104

> If you don't know, John Mackey, the CEO / founder, is a major believer in conscious capitalism and of empowering his employees.

http://www.huffingtonpost.com/2013/01/16/whole-foods-ceo-oba...

> “It’s more like fascism,” Mackey recently told NPR. “In fascism, the government doesn’t own the means of production, but they do control it — and that’s what’s happening with our health care programs and these reforms.”

> Mackey, a libertarian, compared Obamacare to “socialism” in a Wall Street Journal op-ed he penned in 2009. Obamacare would “move us much closer to a government takeover of our health-care system,” he proclaimed.

So he believes in empowering his employees, and is principled.

Obamacare is obviously closer to socialism, I think that was one of the main goals. His full article adds more context: http://www.wholefoodsmarket.com/blog/john-mackeys-blog/healt...

I disagree with almost every word of it, but I don't think it contradicts the idea of "conscious capitalism" or treating your employees well.

He also sort of regrets his "fascism" comment:

> "Well, I think that was a bad choice of words on my part ... that word has an association with of course dictatorships in the 20th century like Germany and Spain, and Italy. What I know is that we no longer have free enterprise capitalism in health care, it's not a system any longer where people are able to innovate, it's not based on voluntary exchange. The government is directing it. So we need a new word for it. I don't know what they right word is," Mackey says.

- http://www.npr.org/sections/thesalt/2013/01/16/169413848/who...

Although, fascism doesn't just have "an association" with dictatorships, that's literally what it means. Government controlling industry is basically a side effect.

Sounds like he's demonstrating what being 'consciously capitalist' gets you: bought out, and your lifework cannibalized to please bottom-line hungry investors. Also known as 'you can't have nice things'.

So basically, leave out the 'conscious' as it is disposable. Good to know.

I'm happy that he's willing to give those kinds of benefits to his employees when he doesn't have to. But I cannot have respect for someone that doesn't believe that everyone should have that.

Probably best to look at Zappos, Woot and other past acquisitions.

How did that work out for the employees?

The problem with 'conscientious capitalism' is that a competitor will take the idea and run with it, save for the 'conscientious' elements, and push out the original from the market.

> The problem with 'conscientious capitalism' is that a competitor will take the idea and run with it, save for the 'conscientious' elements, and push out the original from the market.

That's not a problem with 'conscientious capitalism' itself, it's a problem with the monomania of the market and the loss of compensatory factors that could hold that monomania in check.

I don't know about this. I think it's been over-done to such a degree that actually good customer service is a rare gem to find at this point, and is a better discriminator than price in most products. The price difference is rarely worth the hassle or tension of dealing with bureaucracy or unpleasant people. Or bad websites.. I really can't stand vendors who can't build an easily navigatable, fast website.

I've stuck with my cell vendor because of the customer service, even when the price / coverage wasn't as good as I perceived others would be. I've also left my cable company for a poorer competitor because of the difference in customer service. I've got thousands of miles on United that I never intend to use now.

The trouble there is under certain circumstances, good will is a commodity. It can be accumulated through a pattern of behavior, and then spent (converted to capital) to turn a short-term profit.

So there's a legit strategy that makes sense to a Wall Street firm, where you specifically go after stuff with good will so you can convert that to capital and then flush what's left. It's not dissimilar to how real estate is a form of storing capital, best used without actual people living in the real estate to mess it up: the wipe-and-flush strategy is about intentionally converting these 'rare gems' into raw capital through using the goodwill up.

As long as that is more profitable than not doing it, good customer service (or 'enlightened' capitalistic activity) is something you can't have, or can only have until it's seized and squeezed. Market forces make the wipe-and-flush phase inevitable: the longer you hold out, the bigger a prize that goodwill is, provided the thing is publically held and subject to this dynamic.

I don't know about that. A good part of Amazon's initial advantage was in their goodwill. Their reviews were (for a long time) pretty fair and would mark bad products as bad. Their customer service was always quite attentive.

I think in growth industries, the potential future of goodwill outweighs the value of expending that goodwill right now. Unless you've already lost the market -- but I don't think that'll be to prices as much as competitors offering more/better products.

Totally, 100% agree. That's the status quo.

Would it be possible to modify society to prevent such a competitor?

If all of that stuff goes away from WF, it becomes any other supermarket. I think Amazon is smart enough to know that WF is fundamentally different from Amazon.com - the former is purposely niche, while the latter is purposely mass market.

I'd think Amazon would have bought another grocery chain if they fundamentally didn't want the WF business model. We'll see, though.

I'm a long time WF stock holder and fan of "alternative" grocers. Since it was Wild Oats. There are some big investors that have been unhappy and applying pressure. WF is fundamentally a regional thing that they made multi regional. It doesn't work everywhere with everybody.

I'm just guessing, but I'd think WF would tighten up the philosophy a little, probably focus on whole and natural foods more than some of the other philosophies as that can scale. That would mean maybe leading a little less with local, FT, and only organic in favor of whole and natural food. Perhaps some more brand name stuff on the shelves. It provides a great way to roll out Go with a customer base that is probably receptive to it. THen I'd expect more technology stuff, curb side pickup, maybe even free delivery from amazon to WF stores for pickup, maybe.

You cant change WF too much or it just breaks and people like it for what it is. I think it would be easier to start a generic grocer from scatch than turn WF in to a safe-way.

Wild Oats was bought by WF, but that purchase was later reversed.[1] I used to be a Wild Oats shopper myself.

1. https://en.wikipedia.org/wiki/Wild_Oats_Markets

Yes Whole Foods started in Austin around 1981 as one small Coop named Whole Foods.

Hopefully it is mostly a strategy for Amazon to cover another type of business amd another type of selling point. Broadening their spectrum. Hopefully.

guess John Mackey probably worked these into the terms of the deal. The glass half full view is hopefully - the employees have more time and are more focused on interacting with customers and educating them about all their esoteric inventory!

Amazon usually is mostly hands off to acquisitions like these. Look at Zappos and Twitch. I think that what will occur is probably some kind of service that they will tie into Prime Membership. Maybe also integrate things from their prototype store. Usually Amazon enhances experience in this acquistion and they are free to do what they want. Nothing will happen to their employee culture.

In my view, the customer base is more important than the actual business, and so it may or may not retain its current form over time - my guess is that it will morph into Amazon's vision for retail. I bet 95% of WF shoppers are prime members already - ie. people with disposable income - and patronage and walletshare from that demographic is what Amazon values.

When they bought Zappos it seems like they pretty much left the culture alone but helped streamline their backend. Maybe they're planning something similar? I can't see Whole Foods becoming the Wal-Mart of organic produce without completely killing their brand.

Here comes store automation and hefty lay-offs?

If it's any consolation, this was just a matter of time. The next 30 years will be "interesting."

You don't spend $15B on something known for its strong culture and then gut the culture.

Amazon bought Zappos forever ago and their unique culture seems to have been preserved. Amazon doesn't necessarily fully assimilate their subsidiaries, especially when that subsidiary has a charismatic CEO who remains in place. If Mackey stays around, Whole Foods is probably still going to be Whole Foods for some time.

Having worked for a retail software company that was purchased by Oracle, I can assure you Grocery retail is the most difficult retail supply chain to execute well. The margins are razor-thin. The products have myriads of stubborn problems: short life checking, long life checking, mix of delivery types (direct, warehouse, corporate and 3rd party), very complex planograms, composite units of measure, challenging shrinkage problems, many more supply chain cas fortuit issues.

Amazon made its name by shipping consumer hard goods. It continues to do well with non-perishable items. But this nut is the Everest of retail. It will be a challenge to get it to fit into their model.

> margins are razor-thin

at any other grocery store, yes

The most you could say is WF's margins are "thin" instead of "razor thin". They're not writing US student loans here.

I think they have higher costs too. In the UK their sites are in High Street locations unlike most other grocery stores. They also have a lot more front of house staff and have very high quality standards for their products and displays. That all costs and eats away at the raw cost-of-goods margin.

And it's not just an idiosyncrasy to maintain that stuff either. If they don't maintain the perception of being a premium brand/neighborhood anchor people will stop shopping there.

Whole Foods gets higher margins because their customer base cares more about various intangibles beyond just the value-for-money. Take those intangibles away and suddenly you're competing on value-for-money alone and Walmart will eat your lunch while smaller, independent grocers go after your dinner.

> cares more about various intangibles beyond just the value-for-money

Very much, like many premium businesses part of what they are is to ensure everything will be lovely, easy, and just happen. That is the added value. Take that away and you're competing against ASDA etc. Premium brands need to keep that, it is a very valid market but must be looked after.

There are actually a number of items in WF that they sell at cost or below

>But this nut is the Everest of retail. It will be a challenge to get it to fit into their model.

Looking at it the other way: Amazon knows it's bad at this, so it's acquiring the expertise.

It's more than 1 year that Amazon fresh launched in uk, I guess it is even more time it launched in us. And I think is doing pretty well, I have been buying my weekly groceries always in Amazon for a while now.

Your point about grocery logistics being difficult is a good one. However, Amazon is not new to this.

- Amazon has been shipping tens of thousands of non-perishable grocery SKUs from their main site for about 10 years. They've had to deal with expiration dates, chocolate that can melt, bundling multiples, highly variable shipping cost vs margin, etc. That organic cereal you buy at WFM is available on Amazon too.

- They have relationships with all the large packaged-goods companies.

- They've been operating a small-scale local grocery business (Amazon Fresh) for about 10 years, now in 14 cities.

- A lot of this direct-to-consumer business is complementary to Whole Foods' experience.

Whole Foods is stable as a company and (afaict) has higher operating margin's than Amazon's retail business. So they could largely leave them alone but still gain a more-or-less national perishable foods supply chain that lets them open Amazon Fresh and Amazon Go in many more cities much faster than if they had to do it from scratch.

>It continues to do well with non-perishable items.

I've tried a bunch of different grocery delivery services (Seattle area) and Amazon Fresh is far and away the best of them. I stuck with Safeway for four months and literally every single time they delivered an order, there was a problem with the order. Every single week! There was always something missing (not even obscure stuff - once they claimed to be out of bananas, for example) and the packaging was terrible - just getting the bags from my front door to the kitchen often let to something falling out and breaking.

Amazon Fresh does things very, very well. They show up on time, almost never have a stocking issue and the packaging is very well designed - the frozen stuff is packed with dry ice, the cold stuff with an ice pack and the rest are packed into reinforced paper bags that are sealed to prevent stuff falling out en-route. It takes only moment to move everything into my kitchen and I've never had something break en-route.

Customer support is much better too - every time my order was missing an item, I'd have to call Safeway and often I simply couldn't reach someone (especially outside of 9-5).

Grocery stores need to up their game quickly or they will go the way of Sears and K-Mart.

Echoing this about Amazon Fresh. I have ordered 3 times (mainly meat and veggies) and it's been flawless. Their packaging is great, the quality of the food is great. It is a luxury purchase but although the prices are more than at my local store, they are less than what I would pay at WF. Most importantly, the delivery times are very flexible and easy to arrange...with the same great search engine amazon uses for everything else. I tried a few other grocery delivery services over the years and they couldn't promise any delivery window, their packaging was terrible, and you had to be there in person to get the groceries.

As an aside, the amazon fresh packaging is great as trash bags. The ice packages they send along are great to put in your freezer and use later on trips. They recently (at least to me) added a durable cloth-based cooler, which they say you can put on your porch and they will reuse. I may let them have it back or I might use it as a cooler for my normal grocery store trips.

It is slightly more expensive, but the bottom line is that in the middle of the week I am just too worn out to go to the store, so being able to have a mid or end week delivery means that I have stuff at home instead of having to order out.

I guess I qualify as an amazon fanboy ;-)

Relevance to this HN story, I think they can probably leverage this to help their Amazon Fresh business.

I don't know the Amazon executives...but I would give them the benefit of the doubt that they appreciate fundamental differences between a low cost retailer and a high end retailer. Amazon needs to cut costs and find efficiencies every where they can because that is the nature of a business built on low price...I would assume and hope they realize that whole foods is a different type of business that requires happy customers and happy employees to fetch premium prices...I would hope!

My roommate works at WF and gets paid minimum wage, gets crappy benefits, is never allowed to work 40 hours to avoid being labeled "full time", and her schedule is generated by a computer with no human input allowed.

The schedule thing sounds like a fair deal, if you allow human input the people with "people skills" will benefit at the expense of those that are socially awkward.

Bezos creates a boiler room. Bezos, to me, is the most Machiavellian man alive and the arms race he started is being emulated by the likes of Jack Ma. This will not lead to happier people. Spying, advertising, fake and low quality products and constant consumption and consumerism is the goal of scamazon. I do like whole foods, a bit expensive, I use co-ops when possible to source food, but Amazon will make sure to gut headcount and compromise on quality anywhere possible to make an extra penny. Bezos farms all this money simply to be the richest and to play with rockets in space while we all suffer from shrinking middle class, lower education standards for most, cancer and an energy crunch. Bezos is dangerously smart, possibly the smartest business man alive or ever, but he is just not a good man. Every one of his successes requires the original to be sacrificed at their hands. using their infrastructure - aws - guarantees that if you are successful there Bezos will steal your model and compete with you.

I knew whole foods was falling at the hands of Costco, organic for cheaper, but whole foods had great variety and did try harder than all the other big-chain food stores.

Every scamazon victory feels like a loss of the world.

Time to bust this trust. Time for regulators to start breaking scamazon up.

I doubt WF culture is even a fraction as extreme as also-owned-by-AMZN Zappos.

i don't think it'll change much. it's in Amazons best interest to keep whole foods the same. any changes to its culture would make them lose even more customers and whole foods has been on a decline the past few months.

Amazon didn't terribly Amazon-ize the culture at Zappo's, AFAIK; that's at least an existence proof that they don't always do that.

I don't think there's a significant incentive for Amazon to change Whole Foods. The real gains will be from automating the supply chain, including applying machine learning to quality control. Amazon already grades strawberries that way.

You added "UNION FREE" like it's a good thing. Funny.

why are you excited about union-free stuff

> Oof. I wonder what this means for Whole Foods culture and employees. > If you don't know, John Mackey, the CEO / founder, is a major believer in conscious capitalism and of empowering his employees. > Whole Food employees get paid pretty darn well with some crazy good benefits for their industry and line-of-work (UNION FREE most of the time too!).

You know, if they had unions than an acquisition wouldn't really have a negative effect on their benefits

I think you can draw a line between this and Zappos. Before being acquired by Amazon, it had a crazy amazing working culture and customer service reputation, and it still does: in fact, that's why Amazon bought it. They wanted to learn from that culture and bring it to Amazon.

I doubt WF is going to find themselves watering things down - I think they are going to be spending their time learning something from Amazon about logistics and data-driven growth, but they're going to spend a lot of time teaching Amazon about how running a store that has fans as much as it does customers, about how to make that work.

That means they will have to stay true to their cause: Fair Trade and organic deals are part of WF's core brand, and if they remove them, they will lose their fans. What Amazon will want to figure out is how to make that more economic by scaling it. It might be the best thing to happen for animal welfare in the food chain this generation.

Store automation is an interesting one. What Amazon have been trying to figure out is how to take away the pain points of stores (queueing), but that does not mean all staff are removed. Stock needs checking, shelves need stacking, and in my local supermarkets the checkout is already semi-automated, but I still have to queue. Amazon's plan is just to take that further. Does it mean you could have fewer staff? Yes, of course, but you could also decide instead of growing profits, grow the brand: redeploy those staff into genuine customer service roles.

It's an interesting move, I think. I don't think you need to be alarmed if you're at WF, you need to be alarmed if you're at Walmart, Tesco or any other major food retailer anywhere on the globe though.

https://twitter.com/dkberman/status/875701677504024576

"Amazon did not just buy Whole Foods grocery stores. It bought 431 upper-income, prime-location distribution nodes for everything it does."

I don't think that is right, Whole Foods stores are already full of...food. They don't have room for hundreds of additional products, never mind tens of thousands.

Yeah, and I can't imagine the kind of places Whole Foods is located making any kind of sense as a warehouse.

The products Amazon is trying to distribute with this deal are.... food products.

I feel like you are ignoring the context I replied to, where the person quoted a tweet saying Amazon would use the stores for everything they do.

Amazon could get rid of the big bullshit medicine section that Whole Foods has and replace it with useful products.

The bullshit medicine must be lucrative, though, or the section wouldn't be so big. (Not saying the medicine isn't bullshit, just that people apparently like to buy it anyway.)

Place an order by noon for groceries plus anything you want from Amazon. Amazon fills up truck(s) at whatehouse and drops off at local Whole Foods. Stop by on your way home from work and they bring your items to your car.

You get free same day delivery. Amazon just greatly saved on last mile delivery costs.

That's the value of those nodes without having to store all the inventory.

Hannafords has a place an order and pick it up model. Anecdotally, based on my local store, hardly anyone uses it. I suspect it's a narrow niche where people are happy to order on their computer but want to save a few $$ on delivery.

Amazon has it on trial already: https://www.amazon.com/afx/nc/aboutpickup

Not for me either, but not everyone wants or can have groceries and/or packages sitting on their porch all day.

Fair enough. Being able to swing by a store and pickup a pre picked order at a specific time probably has value for some. So likely does not having to drag kids around a store.

Mainers checking in?

I haven't used it yet, but I just went to their website. I picked the store that I pass on my way home from work. Next available pickup is tomorrow at noon. They gotta go same day if they want people to use it. That or it's popular at this particular store, who knows.

They're pretty common in Massachusetts as well. Agreed. Need to be able to place order at lunchtime and pick up on the way home.

Just wait for Market Basket to do it. Everyone will follow.

We got a Market Basket in Maine I think 2 years ago - in Biddeford. No joke, you'd think it were Six Flags with the traffic it gets on the weekends.

I mostly like Market Basket. Prices are good and around me they upgraded a couple stores that were smaller and the worse for wear. They carry things other stores don't. On the other hand bread and fish particularly tend to be weak.

We got a few Wegmans in Massachusetts, same thing. It's crazy on weekends.

Personally, I've tried many:

- Local supermarket (pickup and delivery)

- Amazon Fresh

- Services like BlueApron

BlueApron is a WAY better value, IMO. This is where I see the future being. It's fun, healthy (very), promotes sustainability, is fairly cost-effective (once you consider they deliver it as part of the cost) and is worry-free.

Shopping on Amazon still means I have to shop. Might as well take 5-10 minutes and go to the store :)

I'm closer to Whole Foods' nearest distribution center than an actual Whole Foods. The nearest Whole Foods is almost 40 miles away.

If this works out for Amazon, I wouldn't be surprised to see Walmart try and buy Trader Joe's. They own Aldi, which has made a big push to compete with Walmart's reach outside cities. The nearest Aldi is closer than Walmart, and that's already not far away.

You've got your Aldis mixed up. Aldi Nord owns Trader Joe's (not the other way around). Aldi stores in the US are Aldi Süd. The two are separate companies, Aldi Nord serves the North of Germany and Aldi Süd the South. Their international expansions are separate as well. Here's a handy map (Aldi Nord in blue): https://upload.wikimedia.org/wikipedia/commons/6/67/Aldi_wor...

The line dividing Germany into Aldi Nord and Aldi Süd territory — https://upload.wikimedia.org/wikipedia/commons/f/fc/Aldi_equ... — is called the "Aldi equator". We sometimes jokingly call it Germany's most important dividing line post-reunification :)

tl;dr Aldi and Trader Joe's are (theoretically) in competition, and neither owns the other. The other Aldi owns Trader Joe's.

Walmart has ~4500 (US) stores already. Aldi is expanding rapidly but has far fewer than that.

The two Aldi locations I drive past are both located less than a mile from the nearest Walmart locations (I expect they do a fair amount of piggybacking).

The purchase doesn't make a huge amount of sense to me. I guess the most sensible thing is that they see the stores being located by the best populations to start out doing food deliveries for (affluent, so they can charge higher prices while they figure out how to do it).

Walmart has a pickup service. They keep experimenting with rapid delivery but people don't really want to pay much for it.

The premium of rapid delivery was a sticking point going back to the dot bomb era. A lot of people want rapid delivery (though admittedly only a subset want to order groceries online). But it's a premium service and a whole lot fewer want to pay for it.

After a few initial hiccups, my wife is sold on Walmart's grocery pickup service. For short-range delivery, they are also experimenting with "terrestrial drones"[1] which I have seen around town once or twice.

1. http://www.chainstoreage.com/article/different-kind-drone-ro...

It's the other way around. Aldi owns Trader Joe's.

Trader Joe's is owned by Aldi Nord; Aldi US is owned by Aldi Süd. https://en.wikipedia.org/wiki/Aldi#Geographic_distribution

Both Aldi and Trader Joe's are private and can avoid these entanglements.

This deal was more about corporate politics and shareholder drama than anything else.

> You get free same day delivery. Amazon just greatly saved on last mile delivery costs.

I'm under the impression this is something they're really trying to optimize right now. Not sure if it's everywhere but where I live in Cincinnati, Amazon is now operating their own courier service for normal Prime deliveries piggybacking on top of Prime Now drivers.

When you place an order (on regular Amazon.com) you don't necessarily know whether it will come from UPS, FedEx, an Amazon courier, etc. The Amazon couriers don't seem to know that it's not a Prime Now order and that the delivery time isn't known in advance to the customer like it is with Prime Now, as they show up midday and call you (from an unknown number) anticipating you'd be at home and asking you to let them in the gate.

One unexpected problem that emerges here is that the standard delivery service courier for a route is regular and that one person can be given a gate key; much harder to solve that with dozens or hundreds of couriers.

I'm seeing this where I live too, near Boston. Many of my Amazon deliveries have been coming in white Amazon vans for a little while now. I still get things from UPS occasionally but it's increasingly those white Amazon vans.

I haven't seen official Amazon vans -- they're using normal people's cars here.

These Amazon warehouses would be full of commingled, melamine-based fake food[1] that no one wants.

I personally also strongly dislike going to the Whole Foods stores in my area.

[1] Plausible scenario based on dozens of comments on HN

Tesco use their supermarkets in the UK for collection of items ordered from their website, like home electronics.

I never used it, but I'm not really in Tesco's target market for non-food stuff.

https://www.tesco.com/direct/click-and-collect/

I've used it a couple of times (for School uniform for my kids, cheaper than Amazon), however Amazon have their pickup lockers closer to where I live, and with no (slow) human interaction (as at Tesco), it's normally a winner for me.

This was exactly my thought. In fact, why would a retailer like Amazon want to have upper-income distribution facilities? The cost of storage would be exceedingly high. And if that's the winning strategy, isn't Costco already pretty well positioned in that space?

It's all part of their incredible journey!

Amazon Fresh cannot keep stuff in stock. Whole Foods can. Even if they have people running around with shopping carts in the store, you'd probably achieve a better result than what Fresh is doing today in many areas.

$13.7B / 431 = $31.79m per store. I have zero experience with real estate prices for retail outlets, but it feels as if that's a bit on the high end?

They only own 18 of those stores, anyway.

  * distribution network
  * store stock
  * employees
  * high end real estate

Sounds like a great deal for Amazon

you can't really buy employees. They can choose to quit right after.

And they don't own the real estate so that point isn't valid either. Not sure about trucking but would be surprised if they own their whole distribution network.

But they do (in some cases anyway) own the liquor licenses.

    * High-end food brand to sell from

  * Customer goodwill
  * Company brand

It's not just per store, it should also include all the logistics infrastructure -- warehouses, truck fleet, etc.

Last I knew (a few years ago) whole foods outsourced most of their logistics. They do have distribution centers but don't own the trucks nor related tech. In general this is a good thing, you don't want to run/own trucks unless you really have to, it's a very thin margin game that is easy to lose your shirt playing.

There's a lot more than real estate involved in this deal.

Are they all even owned or are some leased?

That's an interesting way to view it. Apple's incredible revenue/profit per sq.ft. statistic comes to mind. This isn't a real estate investment. They're buying capital to increase profits. But it's Amazon, so don't hold your breath.

No they didn't.

They just bought a higher income grocery business, which they were aggressively seeking to dive deeper into. They'll use the locations for pick-up & delivery points plausibly and they'll bind it to Prime in various ways. They'll probably also leverage Whole Foods into smaller, smart / automated stores, micro whole foods stores in the image they've been experimenting with for self-shopping.

It would have cost them billions to build out the grocery distribution points they were planning to do anyway. They'll save a lot on that cost, and meanwhile the Whole Foods business is generating $500m per year in net income consistently, over ten years it'll plausibly nicely chop into that purchase price and or fund Amazon's experiments.

I'm not saying that renting is worthless, but it's worth noting that Whole Foods rents their property. Amazon is buying a network, not earth and bricks.

They also just bought a liquor license in like every U.S. state and high-income city.

There is no Whole Foods in West Virginia. I know you were generalizing but thought I would mention a counter-case.

My research suggests that 42 states contain at least one Whole Foods. The eight states excluded are (west to east) Alaska, Montana, Wyoming, North Dakota, South Dakota, West Virginia, Delaware, and Vermont. These are exactly the seven states with population less than one million in the last US Census ... and West Virginia. (Note, however, that the District of Columbia -- also with a population under one million -- has four stores.)

Although it's a strange thing to measure, approximately 7.5 million people (~2.3% of the US) live in a state without a Whole Foods.

delaware totally has a whole foods; there is one near wilmington iirc

You're welcome to look at https://www.wholefoodsmarket.com/stores/list yourself. The store you're remembering might be at 475 Wilmington West Chester Pike in Glen Mills, PA, which is plenty close to Wilmington (as the street name suggests) but is in fact ~2 miles outside of Delaware.

It's like bootstrapping a fleet of Apple Stores all at once.

Is it safe to assume Instacart will soon lose one of its strategic partners?

Yeah I'm pretty sure they're f*ed.

Meh.

This deal is about expansion, not about tapping into 431 measly location. Amazon knows they can set up satellite warehouses a lot faster and cheaper than they can create a store.

Let's be clear. Whole Foods is not a commodity food supplier. They enjoy high margins because they have cultivated quality and consciousness into their products. They did to food what Apple did to computers. They added the right mix of intangibles with a sense of mission and purpose that people can many buy into. Add on top of that, and Whole Foods adds an expertise procuring a catalog of high-end suppliers for both packages and fresh foods and the safe handling of those foods.

This deal should significantly improve Amazon's food delivery offerings. As a food snob and target demographic, I can say this will significantly improve my chances of using Amazon's food delivery service. I've used it in the past, but wasn't satisfied because I was disappointed with the quality and selection. It wasn't bad, it just wasn't great.

I suspect most people will not be willing to buy the high-end products, but that's not the point. The point is the high-end/high-margin products will be available so shoppers won't have to go out and do supplementary shopping to get the "good stuff". If online grocery shopping is going to become viable, they need to make sure they reduce the need for supplementary shopping as much as possible. Having a leg and data from a real grocery store will help them figure out what they need to do to improve.

That surely makes a lot of sense. But in theory at least, Amazon's fulfillment platform is supposed to be the solution for retailing the "long tail", and it had worked very well in regular e-commerce.

So why did it fail with food ?

I can't emphasize enough how food is a fundamentally different business in so many ways. First, to say the product is evaluated and experienced in a much more visceral way than most other industries is a huge understatement.

Our bodies, like most other animals, dedicate so many resources and features to the quality detection and digestion of food and our second largest concentration of nerve cells exists in our gut. Eons before we could comparison shop, we and our evolutionary ancestors were foraging, testing and evaluating what we can eat. How we evaluate this product is based on an innate system that been shaped over countless years.

When you eat something bad, that nervous system goes out of its way to tell your brain not to eat that thing again. You may try to ignore it, but the brain has some pretty coercive methods to make sure you never forget what made you sick. For me, it turned me off goat cheese for about 5 years, even though I knew I had come down with a stomach bug. It didn't matter. My brain didn't give a shit. All it knows is I felt like shit after I ate goat cheese, so it's going to tell me to stay away from fucking goat cheese. (Fortunately, I can now enjoy it again.)

Needless to say, food borne illness is a huge concern with the industry because a handful of incidents (Think Chipotle) can have a devastating effect. Want to prevent it? You have two options:

The first option, you can go the preservation route with additives and refrigeration. This is what we did in the 20th century. We basically created conditions to make it hard for bacteria and pathogens to eat our food before we ate it. Either this meant you kept it cold, or you made it inedible. For example, one reason bleached white bread lasts longer than old fashioned sour dough recipes is because you've effectively stripped all the nutrients out of it. Old fashioned bread is nutrient rich. You can live off it. The bleached bread was so nutrient poor that people started suffering from malnutrition diseases like rickets until some clever person realized you can fortify bread with flower.

Needless to say, most preservation systems take away something. It could be nutrients, texture, flavor, or a host of other things.

The second option is to source fresh ingredients, handle it well, and eat it as soon as you can. This is what Chipotle tried to do and what virtually no other fast food joint tries to do because it requires organizational and operational disciple. The stakes are high and people have long memories when it comes to making people sick. Even as adults, once you've associated doody with someone or something, that stuff sticks in your head. I'm pretty sure when people started inventing verbal language, one of the first words that was uttered was something equivalent to the word "yucky".

Now that we've got that illness and yuckiness are a huge part of this industry, you have to remember that food is also an artistic expression and part of people's sense of identity, way more than most things you might buy on Amazon. We have holidays that celebrate food bounties. We use it to commune with friends and family. Explorers set out expeditions and discovered entire fucking continents because they wanted better access to spices to make their food taste better.

Food is trendy, the customers are fickle and easy to scare and they have long memories. As a company, you can't just stumble into that industry and make it work robots and good operations procedures. It takes inside knowledge and expertise that is cultivated by an organization. This is why it was important for Amazon to buy a company that worked hard to try to figure out how to procure and provide fresh, health conscious, and sustainable foods. They're buying Whole Food's reputation and expertise because they know reputation and expertise is everything in the food business.

They are about as different as running an online book store is to running one of the largest clouds on earth.

I don't care to argue whether this is true or not, but I will highlight that the cloud business was nascent enough that Amazon had the opportunity to define it and they were able to bootstrap quickly because running a large data center was already part of their core competency.

Granted, building a global scale infrastructure was an amazing accomplishment, but you have to concede it's easier when you're starting with a team who already knows something about the business.

I think the stores could become a modern version of the Post Office, where you can pick up and/or return your Amazon packages.

They already have this with Amazon Lockers. I get a majority of my packages shipped to the locker that's in the grocery store next door.

Exactly. At minimum this is a lot of new locker locations.

But you can have so much more than lockers when you own the place.

Or to use the Apple analogy, Whole Foods is basically the Apple Store. Maybe they'll just call it the Amazon tore?

> Having a leg and data from a real grocery store will help them figure out what they need to do to improve.

This. I've worked for Whole Foods and my wife currently does. They find small, local companies that make natural products. They work with them to market their products and test them in their stores. They collect a lot of data on how customers respond to the products, improve them, and then distribute them nationally.

The reason Whole Foods has been suffering is because they're not big enough. Once these companies have a valuable product, they want to sell them at Walmart, Kroger, HEB, etc.

But Amazon is big enough that they could make deals with these companies. I believe Amazon wants Whole Foods so that it can generate new, popular, high-margin food products that can only be bought in a Whole Foods store or on Amazon.

Which is really nice if you want to roll out your own grocery store chain.

This. I have started using Prime Now a lot over the last few months because the prices for non-perishable groceries are cheaper than Target/Safeway consistently. The gap has been fresh food, and to fill this gap, Prime Now partners with local stores (Sprouts in Oakland, for example).

The acquisition makes WF an instant partner of Prime Now (unintended pun). The demographic that uses the app and wants groceries now has a reliable and recognized source for said needs. This will only increase the use of Prime Now, thereby making Prime a more entrenched and indispensable service for a certain demographic. Better yet, the benefits will be symbiotic: WF can benefit from Amazon's advanced logistics capabilities. These efficiencies might help the brand shake off its reputation for super high prices.

Strategically, this is a slam dunk for Amazon and certain segments of its customers.

this is a shot across the bow of instacart and even uber and walmart. amazon wants to own all consumer data so it can know what you want to buy before you do. it's a strategy that's hard to bootstrap, but they're already been at it for 20 years. whole foods fills a retail direct distribution hole in their product line that their own automated grocery stores are just not ready to do.

this is they type of acquisition that seems a little puzzling at first, but makes sense in the context of their overall strategy (unlike most acquisitions, which just remain puzzling since they're usually ego/prestige plays).

In addition to using Whole Foods stores as a locker location, Amazon can also ask Whole Foods employees to deliver packages on their their way home from work. Like Walmart - https://www.washingtonpost.com/news/business/wp/2017/06/01/w...

HUGE news in the grocery delivery space.

Groceries are one of the few large markets that require some proximity to customers due to costs and spoilage. Each grocery store is a type of mini-distribution center for grocery products.

Shipt and Instacart have succeeded to date because they use existing distribution channels and set up marketplaces for the "last-mile" of delivery. This is in contrast to Webvan in the early 2000's who tried to do grocery delivery by building their own distribution and failed spectacularly.

Amazon has become an expert in distribution and logistics. But it is clear that using their current model doesn't generally work with groceries (RIP Webvan, 1998-2001). Bananas need to be treated much differently than books.

So what does Amazon do? But Whole Foods!! A moderate sized grocery store with a significant national footprint and lots of higher income customers.

Now they instantly have a pre-built distribution channel that is already optimized for the grocery business (which again is much different than non-perishable consumer goods etc).

Things definitely just got interesting in this space!! I still believe that Instacart and Shipt can succeed, but they need to maintain a laser focus on making their shoppers and customers happy! And grow as fast as possible while Amazon digests Whole Foods!

[Note: I was the early CTO for Shipt responsible for building their grocery delivery platform and initial engineering team. Go Shipt!]

AmazonFresh has been delivering groceries for years training for precisely this moment. This move allows them to very quickly expand that program nationally.

Surprised I scrolled this far to see something about AmazonFresh... it seemed obvious to me when I heard!

I'm just sad that true disruption isn't happening in the grocery/food sectors; buying WF, or throwing tech at food isn't a solution that will reduce food costs or feed more people...

I'd rather see someone create a business that makes it so that anyone on minimum wage can support and healthily feed a family.

I hear you. And agree. But that is a different problem.

To eat healthy on a very low wage you need to live enough out of the city to be able plant a garden and grow your own vegetables. OR shop at a place like Aldi but make sure to buy fresh food instead of the packaged crap.

But Whole Paycheck is a different market.

It's my understanding that growing your own food was way more expensive than buying it, even from a premium market like Whole Foods.

No way. You can grow vegetables for almost nothing.

If you're dopey about it, you can easily spend $500 to grow $20 of tomatoes.

Seeds = cheap. Water = cheap. Dirt = free.

Hard to be that price! :-)

(this assumes the opportunity cost on your time is fairly low, because it would take time)

Growing your own food is expensive. Growing food for your neighbourhood is profitable if done right. Selling better food to the rich neighbourhood is even more profitable. Selling them prepared food, even more. Giving them the convenience of that delivered to their homes, much better. And finally, giving them the option of buying this online with set payment schedule and quicker deliveries. Thats Amazon + Whole Foods.

No one ever lost betting on people to be lazy.

There are people like myself working on that. Not an easy problem but one that deserves attention for sure.

> I still believe that Instacart and Shipt can succeed

Amazon could just buy Shipt and/or Instacart as well, barring FTC intervention.

I'm not sure what B2B partners Shipt has, but I know they have a mobile app. Joining the mobile app to Amazon would give Shipt a boost and Amazon a start, I'd imagine.

[I worked with one of Shipt's mobile developers at a previous position. Go Shipt!]

Why buy them when they can crush them?

Serious question: would it be beneficial for Amazon to buy out an existing grocery distribution company like Instacart when Amazon is already an expert at distribution?

They would be paying for customers and talent. Why spend time building your own network when you can buy someone else's for the right price?

Do you think this acquisition actually opens doors for Instacart/Shipt? Existing grocery chains are now going up against Amazon. Maybe they'll be more willing to partner with Instacart/Shipt to compete?

Hard to say if it opens doors or not, but it is not out of the realm of possibility.

Think about this: "The enemy of my enemy is my friend."

Who is Amazons BIGGEST enemy? Probably Walmart.

Getting a partnership with Walmart would be HUGE for Shipt. And honestly would be good for Walmart as they try to defend their turf.

Sarah Perez had a good article related to this: "Amazon wants to become Walmart before Walmart can become Amazon" (https://techcrunch.com/2017/06/16/amazon-wants-to-become-wal...)

Wow... all the articles I've been reading about Whole Foods lately deal with how they're hurting, and losing market share to more affordable competitors like Trader Joe's.

If this is about Amazon thinking they can turn things around for Whole Foods, then it will certainly mean drastic changes to price, selection, and employee structure.

If this is about Amazon using a brick-and-mortar chain as a tool to help Amazon's own ventures (e.g. grocery delivery, local storage for same-day deliveries, product return and support locations, etc), then it will certainly mean drastic changes what a Whole Foods store even is.

Either way, I can't imagine a course in which Whole Foods as we know it isn't basically over. Which doesn't necessarily bother me (I migrated to Trader Joe's and similar competitors long ago), but does seem like a big deal in the grand scheme of things. The grocery industry was heading in a Walmart-ish direction... and Whole Foods was almost single-handedly responsible for bringing a counterculture into the mainstream, and forcing all the other chains to reverse course and up their game.

> drastic changes to price, selection, and employee structure.

Yes I think we'll see more customer tracking (data of high-incomers) and more automated checkouts.

And eventually an "organic-lite" low-end brand.

These aren't even particular to Amazon, just competitive measures. WF has spawned a number of competitors in the last 5-10 years. Amazon is just brusque enough to do it.

Whole Foods culture is a goner, but Whole Foods culture as of yesterday was already drastically different from WF culture as of a decade ago. Increased competition, the Great Recession and some self inflicted wounds have already hurt WF.

I think this is more about amazon easily acquiring a ton of retail space for it's JIT order deliver business. I'm starting to think they're actually serious about this drone delivery stuff.

If this was the strategy, it would not require the complexity of an acquisition and a price tag of $13b.

-David

Yeah my thoughts did rev up to the drone delivery concept till I realized Elon Musk is building a tunnel underneath because thats more realistic than drone delivery.

Amazon is now (or more so now) like Evil Corp in the Mr. Robot kind of way. You can ship your Evil groceries via Evil Prime purchased via voice-command with your Evil assistant device paid for with your Evil credit-card. Evil.

Frankly I don't buy as much from WF anymore considering that what they carry is much more like "organic junk-food" than actual food.

If you really want to support the "cause", find yourself a local farmer or CSA to buy from and support them directly.

https://www.localharvest.org/csa/

They don't offer bank accounts yet. Only then Mr Robot could come and change the world by hacking them /s

They do offer credit cards through third parties. They also have the Amazon payment service that allows third parties to process transactions through Amazon.

Not quite on Samsung's level in Korea, yet.

Credit accounts + gift card balances is almost the same thing.

No, they don't really control the money. If all amazon balances were gone it would not be a significant event for the US. Evil corp is like a Bank of America or Wells Fargo. If they close, people can't pay rent, food, etc. For Amazon that's (luckily) not the case (yet).

You can now deposit cash into your Amazon account via bank transfer (one-way transactions) for a 2% rewards benefit.

https://www.geekwire.com/2017/amazon-gives-2-rewards-back-pr...

If Amazon could drop $13B on a national grocery retailer they could just as easily drop some number of billions to buy every podunk regional bank willing to sell and merge them into the Bank of Amazonia.

If Elon Musk doesn't do it first to enable easy financing for Elon Musk-fans' buying everything Elon Musk. Musk.

Where do I sign up?

I was thinking more like the megacorporations in Shadowrun...where you're a citizen of the corporation and they provide virtually everything in your life.

Given their location, I guess they're Telestrian? lol

Shipstone.

Gosh, I need to reread Friday. It's been ages.

Business is just too easy when you're big.

I think we need something like progressive economic barriers. Right now this seems inverted, with all the barriers at the "entry" level.

How about we just reduce barriers for early stage companies. Federal business healthcare plans, lower regulations and simply the tax code for companies l.

I don't think there are barriers at the "entry" level at all. You can't build something like Amazon or Walmart over-night, the sustain and focus in these corporations are only doing what the economic "fitness function" tells them to: Sell more stuff at a lower price with lower costs [and quality]! When these systems get so large and impersonal, fraud can only escalate--fake goods sold to invisible personas who can only write strongly worded letters that are immediately tossed into /dev/null, if they even knew what /dev/null was.

This will always come back to bite us all because you cannot legislate long-run self-destructive self-interest away. Consumers will almost always prefer the lowest price and wholesalers will prefer to move more units in fewer transactions to retailers--because that is less work for more money. Once you get big enough to influence the wholesaler/manufacturer price everyone is captured and if you introduce a "price freeze" in an attempt to make people more "equal" welcome to a world of shortages and more robust black market/System D environments.

This is a cultural/people problem--not a legal problem--that is not likely to go away any time soon short of a particularly bad pandemic that changes the focus away from price to authentic relationships between people. I've got no problem dropping $25 for a 5# pasture-raised chicken raised by wonderful people, but other people less fortunate must buy the $1.99# factory-fresh-concentration-camp-chicken from Walmart because they need to eat, you know?

> what they carry is much more like "organic junk-food" than actual food.

There is truth to that. But the same guideline for healthy shopping applies as much to Whole Foods as any grocer:

"Buy most of your food from the perimeter of the store, less from the aisles."

i.e. Buy fresh, not processed, when possible. Exceptions noted in advance.

Bezos: "Alexa, buy me something from whole foods"

Alexa: "Buying Whole Foods"

Bezos: "Shit"

Credit(?): https://twitter.com/ChicagoPhotoSho/status/87570898151116390...

Nice catch. Plagiarizing for upvotes is rather sad.

So is public shaming.

Sorry, my wife sent it to me, didn't realize there was a different source. Too late to edit now :(

Although the first reply there says the original source was https://mobile.twitter.com/JesalTV/status/875705460313255936 FWIW

You know the race for global trade dominance is heating up and playing out regionally when the same company tries to buy Slack and Whole Foods in the same week. While one is familiar with conglomerates holding a diverse array of businesses, it's fascinating and slightly unnerving (in terms of market power increasingly concentrated in fewer hands) to see it in motion.

Agreed. I love Amazon prime, and also love Slack. But I fear the day when all of the "good companies" end up being owned by one corporate overlord.

That's nothing new...

Media:

http://libreria.sourceforge.net/library/Free_Culture/images/...

Food:

http://2.bp.blogspot.com/-7KY4dEnHmnc/U9bkkriu8hI/AAAAAAAAD9...

A large share of media companies owned by a single conglomerate.

A large share of food companies owned by a single conglomerate.

A large share of retail, cloud hosting, and online messaging owned by a single conglomerate.

You're right that there's long been some serious consolidation in sectors, but those two examples seem a little different from Amazon grabbing up large portions of multiple sectors.

Also, I cannot think of a software technology that was created & shared by Amazon.

The dynamo white paper, for one.

Also: https://github.com/amzn

Which is not used by DynamoDB in any form or fashion.

Some quotes from a 3 month old article about Amazon and physical grocery[1]

“The whole premise [of online grocery] is that you’re saving people a trip to the store, but people actually like going to the store to buy groceries.”

“A bunch of smart people at Amazon have been thinking about re-imagining the next phase of physical retail. They want more share of the wallet, and habitual, frequent use of Amazon for groceries is the ultimate goal.”

"Long term, a stronger grocery business could position Amazon to become a wholesale food-distribution business serving supermarkets, convenience stores, restaurants, hotels, hospitals and schools. "

"A group of Amazon executives met late last year to discuss the disadvantage Amazon faced compared with grocery competitors such as Wal-Mart and Kroger because of its lack of physical stores and customer apprehension about buying fresh foods online. They decided they needed something more to jump-start Amazon’s grocery push beyond plans already under way for the Amazon Go convenience store, modeled for urban areas, and drive-in grocery pick-up stations suited for the suburbs."

[1] https://www.bloomberg.com/news/features/2017-03-20/inside-am...

I don't mean to be a naysayer, I don't really know what this means. But with all of the euphoria I'm hearing regarding Amazon and the doom-and-gloom regarding "traditional" grocers, I can't help but remind myself how horribly bad people are at predicting the future. Most of the people I'm hearing make predictions about what this means have been wrong about everything to this point.

Not saying it won't be a game-changer, but it is fascinating to watch people extrapolate this out to the extremes as soon as the news hits the ticker.

To put it another way- if it were that obvious that buying Whole Foods was going to make Amazon the dominant grocery seller, why weren't people predicting that they would do it all along and asking what they were waiting for? It isn't until Amazon acts that people say "Oh yeah, that was the right move."

Scott Galloway predicted AMZN buying WFM last month: http://www.businessinsider.com/scott-galloway-explains-exact...

I saw this and I give him credit although I think his idea that Amazon will be the only winner is pretty irrational. Less than 10% of purchases made today are online and even with that number growing, there are lots and lots of very smart companies with tremendous resources who can compete, not to mention lots of very smart people who can innovate in this space in ways Amazon won't think of and disrupt them. It happens virtually every time a newcomer is predicted to become monopolistic.

I agree, he also has a video where he posits that Amazon will kill brands, and make brands obsolete. I don't think we will ever live in a world where every product is manufactured and packaged by Amazon. Sure Amazon would love that outcome, but it goes against the consumers need for choice, and then there's also the fact that brands have the resources to compete like you mentioned.

https://www.youtube.com/watch?v=cA2-iMz479o

I watched this video a while ago about what Amazon Go is a precursor for. In summary, if AWS is renting out server infrastructure for people, then you can imagine that Amazon can make the infrastructure to lease out Amazon Go to other stores. They first integrate it with Whole Foods, then as customers expect no more checkout areas, they will only go to Whole Foods because it's faster and maybe cheaper. Then because customers want it everywhere, Amazon could force other stores like Walmart and Target to integrate Amazon Go infrastructure to their stores, without Amazon directly competing with these stores, and make a ton of money leasing it out without spending money on building whole new stores. Of course, the acquisition could also be like nodes for warehousing and delivery, but both avenues are not mutually exclusive.

bingo...

Implementation will be key. But I also agree in believing that this will be their strategy.

Counterpoint... is Amazon Go really that difficult to build? If given three years, do you not think a different software company can build a similar system as well? Is this type of system really a winner-take-all market?

Sure but scope is required in order to create the monopoly, which only Amazon has currently. They can distribute to a thousand stores at once, and a startup competitor will not be able to compete, especially because the switching cost is so high for a customer like Target since it's hardware instead of the traditional software model. If everyone is using Amazon Go, then the network effect is established and shoppers won't download a separate app for something else.

Same with AWS. First they were the only ones, now they seem to lose market share to Google and Microsoft.

Amazon doesn't have a monopoly in any of their businesses, they're just very successful in a lot of them.

I work for AWS but no relation to the go store, opinions are my own: but I'd argue it's non trivial to build this system. I don't think you could automate an entire store without a few million in funding and a couple of people. It's not a solo project and it's not a cheap one. Like self driving you can get to 95% really fast with relatively little effort. To go from 95% to 99.99%? That's where you spend your 3 years.

it's much much harder to license and distribute hardware than it is software.

Give me digital receipts so I can easily track my spending, food intake and waste and I'll be a happy camper. Everyone already tracks sales via loyalty programs.

I'm confused.

Amazon is known to work backward from an imagined future press release, and then do the actions necessary to make that press release. How does Amazon see the future in this case?

-Amazon already has PrimeNow and Amazon Fresh, which offer a great grocery delivery service. For those who have tried these services, it's easy to see how addicting they are vs going to a physical store.

-I can't see Amazon using existing retail stores as distribution centers. I would think you really only need one grocery distribution center for each city in America, and PrimeNow (and AmazonFresh) already has that! Or, has Amazon determined that picking/packing from a retail store is actually efficient? Retail as a DC seems tough to automate, items are in the wrong spot, suspiciously missing, etc. I don't get it.

-I would have guessed that online grocery from highly automated distribution centers is where the majority of the market would be within ~20 years. Does Amazon, the king of online, not think that!?

-Or does Amazon just believe that they can run Whole Foods better than it is currently run?

-Do they just want the purchasing, existing relationships, etc to also sell their customers through other channels?

One thought. People still like food and food things and being social, and the "farmers market" feeling. Even in a future which makes online grocery great for mundane shopping, people still need stuff to do.

Whole Foods already has bars, cafes, and restaurants. Maybe Whole Foods locations turn into places where people can hang out, try new things, and buy online grocery delivery (or pickup delivery as well)?

Who should be trembling in their sleep even more so with this news:

-Blue Apron, HelloFresh, Plated, etc

-Drizzly, alcohol delivery, etc (I think absolutely doomed)

-WalMart? (Maybe completely different customer sets)

-Target, Kroger, other grocery?

-Instacart (I think absolutely doomed)

Whole Foods is a large cafe/fast casual business. I assume competitors in that space aren't scared at all yet... but I would not necessarily sleep well if I were Starbucks or Chipotle. Amazon seems to play to win, and they usually win. Do they want to play is my main question.

Or maybe Amazon sees its new checkout technology (that knows which items you buy automatically) as so special that it's better to roll it out at stores it owns than sell to existing retailers?

Yeah, I wonder how this is going to affect Blue Apron's upcoming IPO. My guess is for the worse.

I really don't undertand how companies like Blue Apron and Plated ever expected to be in business very long. Do they get many repeat customers? Theoretically a subscriber would actually learn to cook over time and then Blue Apron would lose that customer... I just don't understand the long term goal.

Churn through customers and VC capital until aquihire?

The SV way.

Tried and... true?

I know many people that know how to cook (well) that use Blue Apron.

What they don't like to do is a) go to the store(s) all the time for fresh ingredients, and b) they like trying new things.

My wife is one of those people. Loves to cook, does it at a very high level, and hates the grocery store.

I was super skeptical about food delivery, but I've become a believer. We get more meals at home, with less stress and time wasted, for a small premium above shopping at the grocery store.

It's a very immature market today, in another 10 years I think it will be the typical approach for most home cooks that aren't on a tight budget.

Whole Foods is an instacart equity owner. I would be curious how this is being handled given the new conflict.

Probably factored into the final price, heavily discounted given Amazon's own plans for last-mile.

I think this is to bolster fresh and prime now. As far as I know Fresh is currently limited to very few areas. This might allow them to extend that. Prime Now in my areas has a very limited grocery selection from Amazon itself, but also delivers from a local chain that I see as a Whole Foods copy cat. This will allow them to drastically extend the groceries they make available themselves and get way more control over what's available.

Reposting my other comment:

https://www.youtube.com/watch?v=cA2-iMz479o

Amazon Fresh isn't in all markets, and - as other commenters have noted - Whole Foods is a convenient "last-mile distribution center" for food. That, along with the automatic check-out stores that Amazon has been demoing dovetail pretty nicely with their goals.

Amazon has been piloting its Uber Eats competitor (at least in Chicago) as well. I think they call it Amazon Restaurants. This indicates willingness to use small businesses as distribution centers in limited capacity.

Maybe it's not about grocery per se but rather about meal delivery?

AmazonFresh has never been about delivering groceries--it has been about learning last mile logistics in cities.

With this move they can a) accelerate that and b) kill Instacart.

The press release they are working backwards from is:

"Amazon today announced today they will deliver their own packages in most major cities in America, reducing their reliance on Fedex, UPS and USPS by up to 70%"

This enables them to very quickly scale out AmazonFresh, which to date is only in about a dozen areas, to every single area that WholeFoods is in.

If you have not used AmazonFresh its pretty clearly a competitor for the same income level people as a Whole Foods customer and already offers a ton of organic/fair trade/etc stuff at Whole Foods level prices.

They can also leverage the WholeFoods brand for items, bringing additional customer trust to the quality.

Further, this makes PrimeNow delivery cheaper for them. Again, if you have used AmazonFresh you know that you can add PrimeNow-style Amazon stuff to your purchase for the delivery slot. This brings that capability to every WholeFoods location and expands the reach of people buying PrimeNow items (e.g. people will add things to their grocery delivery at a lower threshold than they will pay $5 and reorder on PrimeNow the same thing).

I think the story is partially the decline of retail in general, malls are in big trouble, as people realize they get little joy from driving 30 mins to get a pretzel and a new pair of shoes. Some people are using the term food-ification of everything, coffeeshops popping up everywhere (target, etc), and the last man standing is the grocery store which is generally a pleasant experience and you might bump into your neighbors there (unlike the empty suburban sidewalks of our car infrastructure) so I think the acquisition makes since in an urbanism / decline of retail context as well as the other contexts presented

Looks to me like the ultimate war between grocery stores in the US will be fought out between Amazon/WFM (premium, delivery) and ALDI/Lidl (discount, no-frills).

As a German I'm amazed by the "food haul" videos on YouTube and the positive feedback for ALDI US (belongs to ALDI Süd), Trader Joe's (ALDI Nord) and Lidl (part of Schwarz Gruppe, they just started in the US yesterday).

Trader Joe's could also play a role. Basically also Aldi, just the other part (Aldi North whereas Aldi stores in the US are run by Aldi South). They have the money and motivation to really fight back and know how to achieve the same cost level as Aldi/Lidl.

ALDI Nord and Süd have some family issues and probably won't combine their US ventures. I see the Schwarz Gruppe (Lidl, Kaufland) as the biggest contender in the US. Kroger is probably gonna have a very bad time.

I didn't mean that they'd combine volumes, but both could fight for share. So you have 3 contenders, 2x Aldi and Lidl. Lidl probably has most money to spend but the US market is huge, they can all grow at their limits without threatening each other too much.

Aldi/Lidl have really taken over in the UK in the last 10 years. I'm not really sure how they manage it - more, smaller stores?

Small stores, mostly own labels and fewer employees. They buy only packages that don't need unpacking, saving a lot of time getting products on the shelf. Employees work all positions in the store so that shelves are filled when it's less busy and everyone is at the checkout when needed. That way no employee is idle, saving salaries.

In the UK they also profit from their European footprint. If you go somewhere else in Europe, you'll find that most products (nearly everything except for some food items) are the same as in the UK. They can buy in much bigger amounts than even Sainsbury's or Tesco as they operate in most European countries.

They also have barcodes on just about every side of the packaging. The cashiers don't have to figure out which side is the one with the barcode, they can just slide it across the scanner in whichever orientation it's on the belt. This makes checkout super efficient.

They also have very speedy checkouts, where the bagging is done by the customer at another table. This means one employee and checkout lane can do the work of three.

Also, I've heard they pay their staff the most out of UK grocery stores.

UK: I wonder about Waitrose and how WF was like it. Waitrose is owned and run as a cooperative, which I imagine is both unique and less easy for Amazon to buy.

This is only possible because they make their own products too. If you are Coke and need to compete with Pepsi you need to use the surface of your product to help with branding. If you are the only game in town you can have a white can covered in bar codes that says beer on the side.

Due to the intense competition in Germany, companies such as ALDI and Lidl are far more efficient than grocery stores in other countries, particularly the UK and US. Walmart tried to enter the German market years ago and was sent packing shortly after. The reason why the German stores are expanding is because there is very little profit to be made in Germany, whereas in other countries margins are much higher in supermarkets.

Also all three (Lidl/Schwarz Gruppe, Aldi Nord, Aldi Süd) are private companies and somewhat obfuscated. No shareholders demanding high dividend yield or quarterly forecasts. They operate in secrecy, even when the ALDI founders died, the most recent photos available to the public of both were made 30 years ago.

Don't count out Kroger, the largest supermarket chain in the US. According to Wikipedia in 2015 it trailed only Walmart and Costo in worldwide revenue, and had 20% more revenue than Amazon.

https://en.wikipedia.org/wiki/Retail#Global_top_ten_retailer...

Yep. I grew up in a grocery store, and the chain eventually merged with Fred Meyer and then was bought by Kroger. Kroger allows every subsidiary to operate relatively independently. I wish we had more Kroger stores in the Bay Area actually, they are much better than Safeway.

Kroger has some weak points: Only US, expensive store concept, many products. ALDI and Lidl are famous for their highly efficient lean store concept.

Amazon will capture the premium/delivery segment. ALDI and Lidl will capture the discount segment.

Kroger is right in between, a very, very tough position to hold.

Except for the majority of middle class people like somewhere in between. They can't afford premium, but want a little more assistance than ALDI.

Basically, there's three market segments, not two.

Going forward, I would bet on the middle market shrinking.

I wouldn't underestimate the number of people whose buying strategy is "cheap, but not the bottom".

ALDI and Lidl are not the bottom. In Germany they outperform traditional super markes in many quality tests. The key is the lean store/logistics scheme to reduce costs, not to sell crappy products. This combination is almost unbeatable, especially when carried out in a responsible manner: Only the right locations, own the property, no man in the middle (think of all the US high yielding retail mall REITs), only selective use of advertisement.

I agree. How could a store that has a full range of products, with many organic options, at reasonable prices not succeed as well.

Whole Foods is too pricy for me for a full grocery shop but I can afford and like to eat better than discount stores.

I doubt there will be a segment in between in the future.

In Germany even millionaire households shop at Lidl or ALDI because nobody needs 50 types of ketchup or milk. People don't like wasting lifetime when shopping and don't like to select one type of milk out of 20 different types in a wide price range that almost taste like the same. There is no USP for many different products except for their label/branding/image.

This transition took quite some time but the high turnover volume at hard discounters usually also means fresher vegetables and fruits.

ALDI and Lidl stores usually get supplies multiple times per day and have almost no local stock besides what's in the stores.

Yes, I agree. In the UK they had a bad reputation at first for being low end. Now a lot of the middle classes shop at the stores, the parking lot is often full of Audi's and other high end cars.

The quality of the food in general is very good, often better than the competitors, plus it's cheaper.

Keep in mind Aldi/Lidl have went from 0% marketshare in the UK to >12% in about 20 years - very impressive growth.

The Kroger-based store where I live just botched a floor-plan change so badly I should hope that it was just a local screw-up. This particular grocery store went from okay to "penny-thriftstore" useless.

Kroger is the primary grocery store in my neighborhood and I shop there at least once a week. Despite that, I can never quite grok the store layout. It feels like it's been designed to make it impossible to find the last three items on your list so that you will roam the store endlessly picking up random impulse items while hunting your white whale condiment.

This makes me wonder, has anyone used the Walmart "drive-up" shopping system where you shop online, drive to a specified location and they load your groceries after you pay?

Almost all ALDI and Lidl stores have a nearly idendical floor-plan, at least when they have their own buildings and are not located in a mall or railway station. This usually makes shopping there a straight forward thing.

The major player currently is Walmart for most Americans. It's investing into online at a rapid pace, they recently added free online pickup for groceries and purchased Jet and Bonobos, so I think the real war will be between Walmart and Amazon/WF.

Value basics and speciality stores like Aldi and Trader Joes (which have very spotty coverage currently in the US) and regional full-inventory stores (Piggly Wiggly, Harris Teeter, Bi-lo etc) will pick up the crumbs.

I will bet against Walmart. They have a high cost structure for their existing stores which makes them vulnerable to hard discounters but they also invest a lot of money into their online ventures to fight Amazon. It's a battle on two fronts and will rip the company apart.

In the past, Walmart failed hard in Europe but ALDI and Lidl even conquered UK and Australia. As you might now, Europe is far away from a single culture and yet both chains were able to win in every country due to adoption and experience. While they are no franchise concept, there strategy reminds me of McDonald's.

Walmart is the closest thing to "discount, no-frills" in the US, however it's 100% a facade. Their prices are realistically no better than chain grocery stores like Kroger, yet they do a very good job convincing poorer people that they are. Walmart is also really really gross. It doesn't matter where in the country you go, it feels like a hospital, and mysteriously the people always look like they're one stop away from one.

They spent a lot of money and energy trying to roll out in store pickup, 2 day pickup, and online grocery shopping, which I have been reasonably pleased with, but I think this is slowly becoming a death sentence for them. The one thing they're missing is the brand.

ALDI doesn't have as much dominance yet. Trader Joes has a bit more, and is all around a great store and reasonably priced compared to Whole Foods.

"Walmart is the closest thing to "discount, no-frills" in the US, however it's 100% a facade. Their prices are realistically no better than chain grocery stores like Kroger, yet they do a very good job convincing poorer people that they are."

I don't have a Kroger nearby, but WM is far cheaper than any other grocery chain in my area. I go to WM for all nonperishable items and then a more expensive store for fruits/veggies/meats.

> ALDI/Lidl (discount, no-frills)

I really see this as the future. Not the whole foods, upper scale, and more expensive store; model. By and large, the middle class is shrinking and with automation looming, it will only get worse.

This is not good for Instacart. My understanding is WF was their biggest partner and source of revenue. No way amazon will use them.

Why? Instacart uses humans to pick inventory from a "warehouse" and deliver it to the buyer. Amazon needs people to pick and pack, they can't just use robots to store cereal boxes on the nearest shelf in the grocery store. I bet Instacart was a major reason why Amazon bought WF. Actually, didn't Apoorva work for Amazon before creating Instacart?

I would definitely guess not.

Why would Amazon pick and pack from a retail store and not a distribution center?

And what does Instacart bring to the table?

Amazon already has a website and seems to have no trouble building gigantic on-demand workforces. What else does Instacart have? I would guess close to 100% of Instacart users already use Amazon for things as well.

I don't see things ending up well for Instacart at all.

I'm thinking that the grocery store would be the distribution center. I don't know what their transportation lanes look like but most produce just goes from the field to the grocery store. If you're already storing it there, why put it in a distro center when these stores are in the same locations.

Instacart brings a userbase. Heck, maybe Amazon just buys Instacart as well.

Not sure if amazon's FCs are currently equipped to store produce and milk and other things like that. Just seems like they can take advantage of existing supply chains and synergies if they embrace Instacart.

Amazon has no need for Instacart. None.

They already have the infrastructure in place to replace Instacart overnight.

Every Instacart shopper currently working for Instacart hates Instacart. Amazon can just hire them all away, run their own logistics, profit.

That's not to say it won't be worse than Instacart. It most definitely will be.

  Every Instacart shopper currently working for Instacart hates Instacart.

citation needed

As the engineering manager actually looking at our NPS scores from our shoppers it's disheartening to see this kind of blatantly wrong trolling on HN... if you actually have any insight (other than outdated and wrong news articles from last year), I'd love to see it.

I'm personally excited for the opportunity this affords us -- completely validating this space and market.

60% of US households have a prime membership. I'd say the majority of Instacart's database is already a prime member anyway. Whole Foods customers would just switch to Amazon even if they move away from Instacart.

Challenge often becomes an opportunity. Instacart recently landed Publix who has MUCH higher market share in the markets they serve.

Disclaimer: I'm an Instacart investor.

Instacart's service model, which allowed them to scale up really fast and cheap, should also allow them to scale down fast and cheap. They still have a brand, customer relationships, and demonstrated credibility partnering with retailers. I'd say the company will be fine, but many of their workers will face tough choices soon.

Challenge will be that folks who shop at Whole Foods (aka Whole Paycheck) are already relatively price insensitive compared to people who shop elsewhere. Instacart was such a good match for WF because it's the same demographic of people who are willing to pay a lot for convenience. Your average Publix shopper is likely to be much more price sensitive.

Whole Foods is reasonably priced for actual food. They just have a different approach to high-margin products where instead of Twinkies they sell you special homeopathic Twinkies.

I call BS. I really like Whole Foods, but they are WAY more expensive to fill a "normal" grocery list than a place like Publix. Granted, a lot of that is because they only sell more expensive versions of things (e.g. sometimes organic-only produce, and their meat especially tends to be much more expensive), but it's still very difficult to shop cheaply at WF.

I was the early CTO for Shipt who helped build their grocery delivery platform and engineering team. This is obviously HUGE news in the grocery delivery space. Both Instacart and Shipt will need to double down on customer service in order to continue to thrive. The Publix/Instacart partnership is BIG for them and Shipt's partnership with Meijer is helpful to them in the midwest. The biggest keys to success here going forward is extreme efficiency and laser customer focus.

I haven't had good experiences with Shipt.

1. It wasn't available in my city initially. I'm still not sure if it is. I checked fairly frequently and was never notified. That was at least a year and a half ago.

2. Applied for an iOS gig with them after they posted on HN. I've been building apps for clients for 5 years now. Never got a reply. I even followed up with their lead personally via email. Nada. Just seemed weird since they kept posting to HN asking for talent.

This is a Walmart counterattack. Walmart is on the verge of capturing large swathes of busy "middle-class buyer" pickup orders.

Amazon saw it and responded quickly.

Or Bezos was at home and jokingly said "Alexa, add Whole Foods to my shopping list".

Busy middle class buyers don't go to whole foods except for definitions of middle that are inclusive enough to appease the diversity committee at UCB.

Middle class people definitely shop at Whole Foods. There aren't enough upper class people to sustain something as low margin as a grocery store.

I quite like wholefoods. Now that Amazon will own it I feel less likely to support it.

Amazon is a cut throat profit making machine at the expense of human exploitation.

Wholefoods felt like the little guy who was trying to do things differently from mainstream supermarkets.

By that reasoning you would also have to stop visiting any website that uses AWS.

I think that would mean you'd have to stop using the Internet entirely.

Are you implying that it's unreasonable for him to dislike Amazon for its labour practices if he's an internet user? That doesn't make any sense.

No. I tried to say that if he wants to avoid things to stop supporting Amazon, then he will have a hard time. A similar case would be Nestle, since they own so many products.

Wow! Overstatement of the day.

Purity tests / "all or nothing" thinking is reductive. Everyone picks their battles. Ethical consumption is not possible in the light of a global economy.

Companies that use AWS are not owned by Amazon. WFM is. There is a big difference there.

AmazonFresh is an expensive service. The team is searching for routes to dominate the high-end grocery market (worth billions) before launching into the worldwide grocery market (worth hundreds of billions). AmazonFresh customers and Whole Foods customers value convenience and quality. They are much less price sensitive than most.

Whole Foods has millions of customers. Amazon will surely be advertising AmazonFresh or some re-branded form of it - such as "Whole Foods Direct" - to Whole Foods customers. Do Whole Foods turn into AmazonFresh warehouses? Possibly, but it's unclear how the two business will eventually integrate. It's also possible that Instacart gets acquired by Amazon, but for the most part I see them getting screwed in this deal. Instacart's business development deal is like bringing a knife to a bomb-fight.

The other major value this deal brings to Amazon is the industry-specific knowledge that the Whole Foods team brings. As a frequent East Coast, Whole Foods shopper, I am always amazed to see how much of their food comes from the West Coast/all over the world. I think the execs of AmazonFresh, who are mainly HomeGrocer/Webvan execs, appreciate the complicated logistics of doing the businesses. Amazon will be able to combine its software engineering knowledge/logistics knowledge with Whole Foods' expertise at creating an amazing grocery-shopping experience.

Interesting so they are looking to take on Costco in the organic grocery market then:

http://www.seattletimes.com/business/retail/costco-becomes-l...

I'm surprised the article didn't mention this.

Amazon wants to kill retail and their biggest threat is Walmart. Walmart currently uses groceries as a way to get people in stores and when they're in the store they buy other things as well.

Now imagine if you are Amazon and you'd like all those people going to Walmart to just use your services. If I could get my groceries delivered to my door and only need to go to stores once in a blue moon I'd be really happy.

> Walmart currently uses groceries as a way to get people in stores and when they're in the store they buy other things as well.

Walmart groceries is a sad and pretty recent phenomenon. It got people in the stores just with cheap prices long before they had groceries.

Walmart only has good grocery selection at super-centers for the most part

Which is almost all of them now?

$13.7B is quite a satisfying amount.

That's $1 for every year since the Big Bang.

Or $30M per Whole Foods (rented) stores.

Grocery stores are a tough market with razor thin margins. Whole Foods has a ton of competitors like Trader Joes that happens to still have organic options.

Since I did not see it asked, any idea if we will see some new Prime benefit at Wholefoods?

Out of curiosity, what's your insight into grocery store profit margins? Were you an exec at a grocery chain, or something giving a similar window into their numbers?

they're called 10-k's. https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&S...

I work in the finance industry, so I see a lot of earnings releases.

I'm from the Twin Cities in Minnesota which has tons of co-op grocery stores. They're successful and growing with cheaper prices than Whole Foods and much more progressive values (as well as giving regular folk an ownership stake in a crucial community institution). Whole Foods seemed to me to be just a poor copy of cooperative grocers. I'm surprised no one else has mentioned that in the comments here.

I'm not shedding any tears for Whole Foods' "culture" now that they've been bought by Amazon. They were always a sort of sham-progressive company. In the words of Portlandia, "Whole Foods is CORPORATE."

I suppose if you're going to be corporate, might as well go full Amazon. They do it very well.

Seward Co-op is literally my standard for grocery store. I always laugh at stuff like Whole Foods and Trader Joe's because, like you said, they are sham-progressive in every sense IMO.

interesting. i never thought of Trader Joes as progressive. do they try to market themselves that way?

Since the article doesn't mention it, Whole Foods is apparently:

> an American supermarket chain exclusively featuring foods without artificial preservatives, colors, flavors, sweeteners, and hydrogenated fats.

I was waiting for this to appear (a common grocery store with seen-as-healthy stuff) but it already exists. TIL.

WF has been struggling because they helped paved the way for mainstreaming of organic, sustainable, etc. They couldn't pivot really and everyone else was undercutting their high prices and they've been unable to increase profitable foot-traffic to stay alive. Amazon could basically use WF as a laboratory for deploying Amazon Go without having to build grocery logistics from scratch. Hope it works out.

I think this might signal the walk in walk out payment paradigm of Amazon Go going national. If we could say goodbye to lines, I am all for it.

^ This. Quick video on what Amazon Go is: https://www.youtube.com/watch?v=NrmMk1Myrxc

One thing I haven't seen mentioned here yet is that I wonder if Amazon intends to sell on their regular online store some of the non-perishable items that Whole Foods sells. Currently, Amazon is not usually competitive vs. VitaCost, Lucky Vitamin, and Swanson Health. I didn't realize until checking just now that VitaCost is owned by Kroger.

What happens to Sprout's Farmers Market?

People seem to think it will be bought, but this would seem to be negative news because the price paid for Whole Foods was about half what Sprout's is trading at.

Aw, poor Blue Apron.

Poor Instacart too. Can't imagine they'll keep them around for long.

Blue Apron is not a good company relative to the other meal kit delivery services anyway. Their recipes are overly simplistic and their whole experience using UX dark patterns limiting which meals one can get in combination turned me off, and misleading people regarding cancellation.

The higher quality meal kits like Home Chef won't have this problem because they give you, for about the same price, more complex recipes with cool ingredients like demi-glace. There are enough things you can't buy in small quantities easily.

I felt the opposite way; the recipes I got when I tried Blue Apron were more trouble than I really wanted to bother with on a weeknight.

Yeah, I can relate. I probably cook 3 meal kits every 2 weeks when I'm doing them which is on/off, and I feel like it is a time commitment (especially cleanup). So, I could commit 30-45 minutes and get a Blue Apron level meal that's usually ~5/10 experience or commit 15 more minutes to get something really nice one that's ~9/10.

Practice and sharp knives will dramatically change how quickly you can prep, cook, serve and cleanup a blue apron or plated meal. I can usually beat the estimated time by 10+ minutes.

That's awesome... I haven't really invested in good knives yet.

My girlfriend who's been a daily cook for years can look at the meal kit recipes and find ways to parallelize or speed them up that aren't necessarily obvious, like boiling this water before you start prepping, or cooking a thing inside another already hot pan instead of a separate one. I think the directions prioritize easy before fast.

The Victorinox 8-inch Chef's knife is only $45 on Amazon (cheap for a good knife), and is really excellent for the home cook who's not yet ready to invest $200 on a fancy German or Japanese knife. It just needs a little sharpening after 2 weeks or so of daily use.

It slices baguettes, onions, and raw meat like dream. I've even managed paper-thin slices of garlic!

I am always attracted to ceramic knives, although they have a tendency to chip.

The thing that killed me was I needed way more pots than I wanted to use; I usually try to go for one- or two-pot meals.

I was in an urban organic-ish grocer last weekend and I saw they had meal kits. I'm surprised more places don't do this.

Kroger, which is probably the biggest grocery chain accounting for all of the chains under their umbrella, just started rolling out their own last month. Their price point is $14–18 for two, or just under the price of meal kit delivery services but probably still with better margins given their supply chain. I haven't tried them yet but I plan to.

http://www.produceretailer.com/article/videos-article/watch-...

Of course you can also buy a lot of pre-prepped food these days if you're so inclined. That said, I expect the main market here is people who are OK with cooking but just don't want to put a lot of thought into planning, making a shopping list, etc.

HelloFresh automatically re-activated my membership when I thought it was paused, with no notification until after they'd charged my card on file and shipped a week's worth of food. Never touching them again.

Home Chef proactively emails you a week ahead of time telling you what the menu is. I've forgotten to customize my meal selection once or twice, but have been happy enough with the defaults for the "carb conscious" eater profile that I never really have to.

Don't think I had any major issues with Blue Apron, except that yeah, their recipes were simplistic, and often used lots of bread, rice, and potatoes.

That's exactly the experience I saw canceling Blue Apron. You request to cancel, they acknowledge your request and say okay but with a weasel word reply. Something like 4-6 weeks later a new shipment shows up unexpectedly and they purport that they can't refund because it's been delivered.

I even tweeted at their CEO about the company's use of questionable and shady growth tactics to no avail. That is the kind of move that makes me open a credit card dispute against the company and write them off for good.

Yeah, I currently use Blue Apron, and I wish there was an option to just pay a little more for what I want rather than have to figure out what combination of foods I need to fly under the cost limit for the week.

Didn't Blue Apron file for IPO yesterday?! Their staff must be crushed by this.

The old joke is that it isn't "Whole Foods" but "Whole Paycheck" because of how expensive they are. I wonder how that will change with Amazon's typically price cutting ways. The two seem somewhat at odds with each other.

I'd be curious about what this also means for Instacart given their strategic partnership with Whole Foods and their direct competition with Amazon Fresh.

If the brick and mortar grocers weren't scared of Amazon before, they sure are now.

Investors are scared too. WalMart shares down 5%, Target down 8%.

This might just be a strategic move to block Instacart as every WF I've been to recently had created an entire checkout section just for Instacart.

Whoa, really? I've never seen this in New York.

Are you upstate? In the stores I've used around NYC, the Instacart presence in WF is huge. Branded coolers by the doors for deliveries waiting to go out and everything.

I wonder if they'll roll out the tech they showed a few months ago for the store in Seattle where you didn't have to check out.

The impression I got was that the store is more of an R&D project. It didn't work super well or scale with number of people so they had to artificially limit food traffic to keep it working. I'd be surprised if they rolled that out in an environment as busy and complex as Whole Foods stores so fast (or ever).

Well, if successful, it will be a great leap forward for Amazon to advance its grocery vision. Maybe some kinda deal will be given to Prime members? Amazon Go Wholefoods? For the employees, it is neutral, if the company keeps underperforming Amazon will surely do something about it.

This is very bad news for InstaCart. I know most of InstaCart orders are WholeFoods and CostCo

How do you know that?

This is another step in how an online book store slowly becomes the Umbrella Corporation.

What does this mean for Instacart I wonder? Will Amazon shut them off from their stores?

Probably. Which is good, because AmazonFresh has much better inventory control and tracking than Instacart—which has none.

Now that they control the distribution, they should control the supply. Well functioning, scalable greenhouse solutions should definitely pique Bezo's interests. I'd love to be a head grower over a large operation like that.

I wonder if they're going to implement Amazon Go in Whole Foods https://www.amazon.com/b?node=16008589011

pretty sure that's the partly the motivation behind the acquisition

Probably in the long term. Over the next years, the technology is not likely to be ready for the number of customers a wholefoods can have.

But the stores should work well as distribution centers for grocery (and other) deliveries.

Yep it will take a while. But it's a faster and less risky route to market than Amazon branded brick and mortar grocery stores from scratch. And many other synergies like you say

In this part of the country, it seems like Kroger's ClickList service has been very successful. I'd imagine other larger chains in other parts of the country are doing similar things. Sure, it's not delivery but if you are driving right past the store on the way home and don't even have to get out of the car, it's a pretty close competitor. That's especially true in smaller communities where Amazon's grocery delivery doesn't yet make sense. Might this be a partial reason that Amazon is making a bet on the grocery market?

I can't wait for drones to deliver organic quinoa straight to my door.

Anyone know if they'll pilot Amazon Go approach at some of these stores? I don't think it's nearly ready for scale but could see it working out for certain locations...

I've noticed that comments here that are critical of Bezos gets met with downvoting. Sad. Why Microsoft got the 3rd degree and Amazon gets a pass is beyond me. I guess that large unethical companies like Amazon can use AIs to police sentiments about them and do the needful. We should start looking for anti AI mechanisms in discourse as well as work to ensure paid sockpuppeting and gas lighting is not going on. The truth is going to be harder to get at these days.

People are also forgetting that CEO Mackey was about to get ousted or his wings significantly clipped.

I feel this is more Mackey cashing out than anything else.

Whole Foods is about to change a lot and quickly.

Nothing Amazon does makes sense immediately. Only in hindsight does the strategy emerge.

What would be also helpful would be for Amazon to disrupt the wine and liquor sector.

> disrupt the wine and liquor sector

Explain?

Maybe they mean the inefficiency in the producer -> distributor-> retailer chain? What value does the middle guy add?

Aldi/Lidl will make sure that happens. They already buy directly from producers around the world (they are the biggest wine retailer in Germany and quite big in some other European countries) so they'll just use the same producers for their US business.

From experience Aldi is quite good when it comes to wine in the middle price segment. Often 20-30% cheaper than comparable wines in other stores.

Would require an insane amount of political lobbying to get rid of the legally obligated three tier system. Maybe Amazon has the $$ to do that?

Liquor is heavily regulated on a state by state basis. The distributor relationship is often required by law.

So Amazon will create a spin off a distributor company

Yeah, that might work. It appears to be very political/corrupt in Massachusetts at least. It doesn't really matter what liquor store you go to as prices are basically fixed here. They'd have to get the distributor license approved, and a separate retail license... and then (I think) a single company is allowed no more than 3 retail locations in the state.

Anyway, I agree there's a lot of bullshit that adds to the cost of alcohol, and does make it look ripe for disruption, but I suspect there'd also have to be a lobbying effort to get the laws changed on a state by state basis (for it to be scalable), and whoever was trying to get the laws changed would be facing the alcoholic beverage industry lobby, who are also a fairly powerful/entrenched group.

Well this is a huge exit for WholeFoods which was seeing fewer and fewer people enter it's stores and increased competition from value grocers introducing organic foods. A number of articles asked if WholeFoods had a future in this new environment. As for Amazon, I see this more as a real-estate play to help them further their new push into grocery and the no-checkout process.

Amazon is getting too big.

How's this for an investment strategy... Long AMZN, short a basket of all other mid to large retailers & grocers.

Agree on the getting too big; how's this for a political strategy... bust the trusts again

EDIT: and for those pointing out (correctly!) that amazon doesn't violate antitrust, http://www.yalelawjournal.org/article/amazons-antitrust-para... is a good article

The acquirer stock price often falls after an acquisition. So probably not a really good strategy.

Conglomerates have happened in the past. They become very big until they stop making a lot of money and people realise that they could be more efficient if you split them up. Amazon and Google can afford growing so much because they have a very successful business line. If growth there stops they would likely start selling some parts.

> Conglomerates have happened in the past. They become very big until they stop making a lot of money and people realise that they could be more efficient if you split them up.

Yeah, who could forget when companies like Standard Oil or AT&T decided to split up, entirely through the power of market forces, with no government intervention at all.

Those are different examples. There are still countless competitors in each of their businesses, no reason for the government to act.

Conglomerates are companies that hold unrelated businesses. Berkshire Hathaway is a conglomerate. Railroads and car insurance in the same company!

Standard oil and AT&T were not broken up because they were conglomerates. They were broken up because they were monopolies in single (or closely related) markets.

Further, AT&T was a government granted monopoly in the first place.

The reason for Standard Oil's success was not specialization so much as expanding into every single business that could possibly affect the price of oil. Their ability to boss around railroads, and their eventual direct investment in railroads themselves, certainly calls Amazon shipping to mind.

Well, Trump said Amazon had a 'huge' antitrust problems, and Bezos's Washington Post is scooping dirt on Trump daily, so that should be fun to watch

https://news.vice.com/story/amazon-buying-whole-foods-could-...

Pretty good rundown of reactions and implications of this deal here: http://circulaat.com/main/amazon-to-acquire-whole-foods-in-1...

Wow all cash? Amazon's cash pile will be pretty small relatively speaking after this. Less than $10B.

I read they will have to borrow the purchase amount.

Ah okay. I tried searching around a bit for more details but skimming only got me the same info from main outlets. Do you know where you read that?

Does anyone else think that this purchase is largely in part so they can get AmazonFresh in a lot more places quickly?

In my area where there is a big college campus, they have been hiring for AmazonFresh devs for over a year. We have no AmazonFresh here but we do have a Whole Foods.

Are we talking about SLO haha?

Yes :)

I buy things on amazon when I feel the price is good or better than I can get locally. Whole Foods doesn't fit that mold at all.... now maybe they provide different products but then Whole Foods isn't Whole Foods anymore.

I wonder how long until the first beta of Elastic Grocery System?

How long till somebody develops the UBER of groceries? Your neighbour could do your shopping for you.

Like a decentralized Instacart, interesting.

Why isn't there a total decentralized on demand platform? The bulk of the value is in the people performing the services, not the app technology to connect them.

That is what Instacart and Shipt are. Marketplaces that pair people who don't want to go to the grocery store with people who are willing to go for them. Exchanging time for money.

Same as Uber, but instead of moving people, they're moving milk & eggs.

Bezos will then start putting pressure on farmers. I don't know how these things work in the states, but the dairy industry would be the prime example in the UK.

I wonder if they will keep the brand or change it to Amazon.

Said it will operate as a standalone business for now.

Completely standalone, or integrated into the Amazon infrastructure while maintaining the Whole Foods brand and product line? I could see Amazon using whole foods as a kind of local "base" for grocery delivery services. Having a physical store to offload perishables onto if online demand doesn't match supply really makes sense.

Margin on them asparagus water is tremendous!

Could be assimilated with the Amazon brand. Say, Amazon Whole Foods (AWF for short).

Most likely they'll keep it. Amazon has acquired brands in the past and kept their name. Twitch is a good example.

I wonder if instead of Amazon building out their own stores, they're going to use Whole Food's... unlikely but possibility is there if they do it well.

Perishable goods like groceries are one of the few businesses that Amazon is not in yet. My guess is that Amazon is looking to take Pantry to the next level.

What about Amazon fresh?

What do you mean? Currently I can have fresh groceries delivered to my door by an Amazon Fresh truck or I can drive to a local Amazon Fresh pickup store...

What an exciting development! It will be interesting to watch Amazon apply its logistics experience to a large-scale groceries operation.

I wonder what happens to Whole Foods business code of conduct, including the “Online Forums” approval requirement I dislike.

Liked a joke from by spouse:

Mr. Bezos: - Alexa, buy me something from Whole Foods Alexa: - Good. Buying Whole Foods.

If there's ever going to be a world government, it's probably going to be Amazon.

I have a job interview with Amazon next week. Wish me luck, I'll be likely doing entry level work but I hope I can keep working on websites for clients (have 2 currently), keep learning data structures/algorithms, and build a personal project. All this to one day get hired by Amazon for UX or web developer.

Race to the bottom!

Amazon checklist:

1) Import cheap Chinese goods,

2) avoid sales tax,

3) destroy the environment (china),

4) destroy brick and mortar stores,

5) destroy small/medium business.

=== PROFIT!

i've been helping my friend with his channel and we were pitching for amazon to buy whole foods a few months ago:

https://youtu.be/fvZ8mGZZins

"The transaction also may help Amazon sideline Instacart Inc., a startup that has delivered grocery orders from Whole Foods stores in more than 20 states and Washington, D.C."

... I wonder how this will play. Is Instacart's business threaten by losing Whole Food as a client?

Now, with a prime membership I'll never need to leave my house!

The American dream

I do my banking and food shopping at Walmart; I wonder if Whole Foods will offer this. Probably not, but I'm still excited to see Amazon moving into the food retail business.

This is all Marc Andreessen's fault. If we had just left it at Gopher, none of this would have happened!

ugh. In 1966 the supreme court forced the 3rd largest grocery chain in LA to divest the 6th-largest (which they bought in 1960). https://en.wikipedia.org/wiki/Vons

Why would they buy Whole Foods as opposed to Grubhub/Seamless. Seems like a better fit...

What percentage of instacart's business is tied to Whole Foods?

RIP Instacart.

What will happen to Instacart?

Sucks for Instacart.

Somewhat off topic, but I have had a weird thought circulating in my head (triggered by reading Red Plenty) that I wanted to put out there:

What is the relationship between a centrally planned economy as for example Gosplan was trying to run in the USSR, and the presence of these huge market-like but centralized entities like Amazon and Wal-Mart inside a free-market economy? This becomes particularly interesting because Amazon apparently does not have any particular interest in turning a profit.

A central problem faced by Gosplan was the collection of high quality data about supply chains and the estimation of the utility function of consumers. I would say Amazon is in a pretty good position to do both right now.

Another question, somewhat related: At what point does it become profitable for Amazon to lobby for more redistributive taxation? This might sound paradoxical because you would assume that Amazon represents the interests of it's owners, who would probably suffer under such a taxation scheme. But shouldn't there be a point at which giving more disposable income to poor people will boost the overall income of an entity Amazon (since Amazon doesn't sells many flat-screen TVs but not as many mansions or yachts)?

The major difference is that if Amazon stop running well then someone else will come along and replace them. Whereas government is a monopoly, so if it runs badly then it doesn't automatically get replaced.

Now, democracy is supposed to fix this, by allowing you to vote for a different supplier of government every few years. But because of the voting system in some countries (like the US and the UK) it's actually really hard to do this, because everything gets turned into a black/white struggle between opposing forces, rather than lots of options being available for you make a choice between.

A large business has a lot of tools at its disposal to snuff out upstart competitors in a permissive legal environment like we live in today.

Hmm, as I remember the socialist governments were replaced (not easily, but they were). Have we even seen a conglomerate of AMZN size replaced in living memory?

Not quite the size, but on the same order of magnitude when adjusted for inflation: Enron.

Amazon's not fake. Enron was basically fake: Uber is a closer match to Enron than Amazon will ever be. Amazon is no hype-supported tech unicorn. They are basically a supply network to the Nth power, run by dedicated maniacs willing to destroy themselves to prevail, and executed by a combination of incredible capital utilization (in the form of physical warehouses, robots, automation, systems design) and human exploitation (what jobs can't be automated yet are handled by that more sophisticated robot, the desperate peak-performance human).

Sure, frequently.

IBM, Sears (far more dominant in retail in its day than Amazon is today), General Motors (hi Toyota), US Steel (hi foreign steel), Pan-Am (hyper powerful at its peak), Alcoa (anti-trust + foreign competition), and a dozen others that were every bit as powerful as Amazon at their peak.

Oh and Walmart is slowly being replaced by Amazon. Walmart is/was the most dominant retailer in world history.

The rise and fall of major corporations isn't necessarily the result of the inexorable application of market forces. Alcoa's grasp on the market was broken as much by the aftermath of 'war socialism' as anything else, for example. Companies compete with each other on legal, regulatory, and social planes as well as in the marketplace.

I think it's difficult to find any single X that makes "if a company is bad at X, it will be replaced by competitors" a consistently true statement, without X being essentially synonymous with "succeeding".

Maybe Sears as a predecessor to Amazon?

Kodak

Polaroid

Blockbuster

Research in Motion / Blackberry

Motorola

Nokia

Sun Microsystems

Yahoo

Not if you were born recently.

Also, it's only the top level of management, loosely speaking, that's easily swappable. Most of the bureaucracy stays in place.

>if Amazon stop running well then someone else will come along and replace them

Is this really true though? Over the past few decades we've seen that if a company is big enough, and it fails, the government will step in and prop it up with a bailout.

Sears, K-Mart, Circuit City, Radio Shack.

IIRC most of the companies in the S&P 500 didn't exist 30 years ago. I think the DJIA is mostly companies that are younger than I am. The US has an unusually dynamic economy. Bailing out companies is reserved for politically important ones (GM, Ford) or politically and financially important ones.

If that's the case, it's not a free-market economy, and you won't get those benefits of the free-market economy.

It's weird to me to see "if that's the case" followed by an explanation of a possible bad outcome, written as if nobody has said this and it needs an explanation. It's a quite old idea. I have for many years heard the political left decry: we get socialism for the rich and capitalism for the poor. The Wikipedia page on "corporate welfare" says Ralph Nader used the term in 1956 -- which is much older than I thought having only been exposed to it ~20 years ago.

Only for the financial sector though.

Chrysler, GM, Ford, United Airlines, American Airlines, Delta, and Lockheed have all also been bailed out by the government.

Which is why we need instant-runoff voting in the US, so we can vote for third party candidates but still choose between the top two candidates if our preferred candidate loses.

There is no doubt that IRV would be superior to what we use today, plurality voting.

However, if we achieve the momentum necessary to reform voting in the United States, it would be a shame to squander that momentum to receive IRV rather than an easier and better model such as Score voting or Approval voting.

More on the matter: http://electology.org/approval-voting-versus-irv

instant-runoff is sold on false premises. Advocates suggest that you can honestly vote and not see spoiler effects. But instant-runoff eliminates a candidate in each round, and when your 2nd choice gets eliminated before your 1st choice, your 2nd choice never gets counted. This results in a wide range of messed up results that spoil elections and can fall back to strategic voting.

The best answer is Star voting (Score Then Auto-Runoff), which just does one instant runoff between top scoring candidates, thus counting everyone's scores equally. See http://www.equal.vote for details

No, STAR is not the best answer; it has the same problem as all scoring (instead of ranking) based methods—there's no clear mapping between actual subjective preferences (which can be consistently reduced to ordinal, but not interval, measures) and ballot markings, with the result that the same preferences by different voters produce different ballot markings. This is especially problematic in multicultural jurisdictions, because score ratings aren't distributed among the space of markings consistent with a set of preferences consistently, but instead show clear cultural differences. (This is a well-documented, though rarely-addressed, problem with star ratings in general; one example of a difference on this axis is that with the same degree of satisfaction measured vy other means, Americans of European ancestry give significantly higher ratings than Asian-Americans on fixed-rate scales.

This problem (the inconsistency in general, not the cultural variation though that underlined the problem) makes STAR and other score-based methods utterly unsuitable for most public elections.

If you want to fix the problems caused by loser elimination in IRV, just drop loser elimination and accept as winner the candidate who gets past the bare-majority threshold first as you check first all first preference votes, then total of first and second preference votes, and so on.

> no clear mapping between actual subjective preferences (which can be consistently reduced to ordinal, but not interval, measures) and ballot markings, with the result that the same preferences by different voters produce different ballot markings

No, you completely misunderstand. There's no universal reference for what scores "mean". You can give candidates from, say 0-5 stars in terms of how much support you want to give them in the race. That's it. 5 = most support, 0 = no support. It's ONLY relative to the actual pool of candidates in the election. People can just learn to understand this clear fact, and ballots can be marked as such as "least support" to "full support". And educating people about this is easier than educating them about IRV and all it's weirdness (and more honest than making false claims about IRV). There are NO cultural issues or biases or problems here in terms of what a score "means".

> If you want to fix the problems caused by loser elimination in IRV…

I don't know what you mean here, but it isn't IRV, it's some other rank system. Tons have been proposed, none are perfect, all are far harder to calculate and understand than Star voting. Ranked Pairs is actually pretty good, probably the best way to handle ranked ballots. I'm not sure what you're proposing.

Or sortition, perhaps.

It would be enormously, impossibly wasteful for anything to come around and replace Amazon. It'd be like replacing Google. You're basically talking market chaos and massive supply chain disruption, probably to the point of extensive loss of life: you'd be surprised how much depends on these giant, government-like systems.

Personally, I think the poster suggesting that Amazon may start lobbying for basically welfare, is onto something. What if they lobbied for a massive redistribution scheme where half the excess/arbitrageous profits made by the 0.001% are redistributed to the 99.999% in the form of Amazon store credit and only Amazon store credit?

Since that is either already, or will inevitably be, the single most efficient distribution network by which you could get goods and resources to the populace in a market system?

> It'd be like replacing Google. You're basically talking market chaos and massive supply chain disruption, probably to the point of extensive loss of life

What? Granted an overnight transition could cause disruption, but in a few months, what couldn't be replaced? Gmail? GMaps? Android? Youtube? Search+Adwords+GAnalytics? GCE? their CDN could be the worst, maybe? they all already have big competitors, and since Google's quality is minimal, it wouldn't be that hard to switch over. But you need a motivated company, i.e. just a little more effort than OpenStreetMaps or FastMail.

The observation was made in "Theory of the Firm" a long time ago that companies tended to be command economies internally, rather than having internal markets; and the hypothesis supported that this is due to informational costs.

WRT redistribution, I suspect the shareholders would jump on that.

The Amazon services imperative sounds like a driver toward internal markets.

Wasn't Google a market economy internally?

The Theory of the Firm claimed that those information limitations were the limiting factor on firm size, bit a motivation. (Motivation for large firms being to avoid transaction costs.)

Some very large companies, like Google/Alphabet and Samsung, are more focused on concentration of wealth (ie functioning as holding companies) than on avoiding transaction costs, and hence have internal market economies.

Hence oddities such as Samsung's semiconductors division selling screens and memory, often custom-designed, to the competitors of Samsung's cellphone division - they act as separate companies reach pursuing their own profit.

In that sense, conglomerates are sometimes not "firms" in the traditional economic sense.

I don't think large monopolies really point to everyone moving toward a planned economy; they're the natural tendency of capitalism and the opposite is only maintained by vigorous regulation and intervention.

No one has given more disposable income to poor people than Wal-Mart and Amazon. It just hasn't come in the form of wages.

To your first statement, is this even true of Amazon?

In the US, Amazon Prime has something like 80% penetration into households making >= $100k/year. This move into Whole Foods reaffirms this focus on high-income households, where convenience is often as large a factor as costs.

My hunch is that Amazon has been a massive positive in aggregate, but poor households have been negatively impacted by Amazon, taking into account loss of jobs, lowering of wages, and some positive lower costs for goods.

>but poor households have been negatively impacted by Amazon

Households where money is tight are sharing prime memberships among them and using that to undercut the cost of buying consumer goods locally. You can go into your local $typeofstore and get ripped off for a set of $releventproduct or you could buy something that came out of the same overseas factory with a different brand label on it and wait 50hr for a third of the price.

> To your first statement, is this even true of Amazon?

Definitely, to the extent that Amazon puts pressure on everyone selling commodity goods.

To your second point, it's not obvious to me that Amazon has cost jobs at the lowest rungs.

For this gigantic assumption of a comment to have any merit whatsoever you would have to show that:

1/ Poor people actually shop at amazon in a significant way 2/ The massive job and wage losses Amazon causes in the poor community are insignificant compared to the "wage gains" #1 would imply.

I suspect both assumptions are false. This sounds like a comment from someone in a bubble like SF where lots of people have the disposable income to buy everything online. People in the rest of the country live very differently.

You mean like Alcoa, IBM, Standard Oil, the Pennsylvania Railroad, American Tobacco, AT&T, Sears, General Motors, Ford, Kodak, Pan-Am, US Steel, etc?

I'd suggest studying US economic history, as there isn't a single example of a juggernaut corporation that sustained said dominance very long-term (either due to competition / changing technology or government anti-trust actions).

I'm not suggesting Amazon will never fail, I was rather talking about that they seem to be essentially solving the socialist planning problem, for a limited but ever-expanding section of the economy.

This. I think there's much value to be had in using a thing like Amazon for what it's good at: an efficient distribution network, and to some extent a captive market that controls its own terms, inputs and outputs and optimizes for that efficiency.

Apart from labor abuses (and some are entered into willingly: see higher level Amazon true believers putting in 90 hours a week to provide half a cent cheaper toilet paper), what Amazon is, is not the problem.

The problem is the idea that all such toilet paper consumers must work to get paid the money to buy that toilet paper, in an Amazon-ified world. And that all the providers of goods feeding the Amazon supply chain must earn their own profits to survive so that they can keep feeding Amazon, on Amazon's terms.

And most of all the problem is that the penalty for failing to earn these wages/supplier profits is death, because there's no alternate system pumping capital down to where consumers do their choosing. Amazon is TOO efficient and a world based on that ethos can't maintain a consumer class at all. The solution isn't necessarily to make Amazon inefficient so it can provide 'jobs', the solution is to decouple job wages from continued existence as a human.

The limitation of studying history is that 2 people can look at the same event and make 2 diametrically opposed conclusions about it.

Where someone sees juggernaut corporations being broken up and outmaneuvered by nimble competitors, someone else will see a temporary effect that eventually leads to re-consolidation, regulatory capture, and settling back into an oligopolistic market without any innovation.

Ordered the book based on the fact that it helped you make these connections and hypotheses. Must be a good book.

fwiw, starslatecodex did a review of Red Plenty

http://slatestarcodex.com/2014/09/24/book-review-red-plenty/

I'm sure reading the whole thing would be a useful exercise as well

I don't think that's the right metaphor. Amazon is still selling to match demand and doing an incredible job. The USSR dictated what and how much to supply of things and people just had to make do.

Amazon is becoming like a chaebol/zaibatsu. The problem I see is them controlling businesses across to wide of a spectrum. They're in retail, computer infrastructure, media, now food. Bezos himself owns a newspaper and a spaceship.

Amazon doesn't shoot you when you protest it.

They used neo-nazis at a fullfilment center in Germany to keep immigrant laborers in line, so...

https://www.independent.co.uk/news/world/europe/amazon-used-...

Plenty of companies have.

https://en.m.wikipedia.org/wiki/West_Virginia_Coal_Wars

https://en.m.wikipedia.org/wiki/Johnson_County_War

https://en.m.wikipedia.org/wiki/Baldwin–Felts_Detective_Agen...

https://www.theguardian.com/world/2015/mar/04/east-india-com...

http://www.ibmandtheholocaust.com

So, no, I really don't think that distinction flies.

Moreover, a government is, at least in theory, answerable to all people, not just the stockholders.

It's somewhat dated, but Galbraith's _The New Industrial State_ has a lot of interesting insight into the role of large corporations in economic planning. People sometimes criticize the book because the large corporations (GM, GE, etc.) the book talks about are less central to the economy now, but I don't think that contradicts the book's message at all.

The difference is the ability for new firms to compete.

With centralized planning, there's only one source. If that source is inefficient or corrupt, that inefficiency and corruption stays around. You can try to regulate, threaten, and police it, but nothing can really take it down.

By contrast, Walmart and Amazon might be very large, but they still have competition. Heck, Amazon started less than 25 years ago. Remember when Walmart was going to be the future of retail? Well, now people say it's Amazon. So, it's one generation for the crown to be passed? Apple was in such dire straits that Michael Dell thought they should close up shop and return cash to shareholders. Now look at Apple. Yahoo had the chance to buy both Google and Facebook. Heck, it wasn't really until the 90s that Walmart became what it is today: Sears and Kmart were the big stores.

The point is that, while companies might have large barriers to entry, competition sneaks in. Walmart looked like no one could compete with it. Today, I wouldn't say it's precarious, but it certainly doesn't look unstoppable. Sears was huge and today people make jokes about it.

Companies like Amazon and Walmart create barriers to entry by building up capital. It certainly does stop some competitors, but I don't think we've seen companies able to hold on for long.

It's also not necessarily about whether the company turns a profit. Government-owned, centrally-planned companies don't turn a profit, but they might be run incredibly inefficiently. It's not just Amazon's low-profit range, but it's efficiency that keeps it where it is. Plenty of companies are being run right now with low to negative profits, but also not being run super efficiently.

How many companies have been "the unstoppable juggernaut" for 50+ years? Can we name a few? AT&T isn't the AT&T from 30 years ago. Remember when AT&T had wireless and home TV and broadband and long distance was king? Well, that company thought long distance was the future, spun off its wireless division and sold AT&T broadband. SBC eventually bought what was left of AT&T on the cheap and renamed itself. Microsoft was the unstoppable juggernaut... and then Apple and Google came along. Walmart was that in the 90s and then Amazon came along, people started using other stores, etc. Heck, Verizon and AT&T seemed like no one could compete with them and then T-Mobile comes along and kicks of an era of amazing growth for them. That's an industry that relies on a limited amount of wireless spectrum that's insanely hard to compete in and T-Mobile started grabbing all the industry growth and forcing the big two to lower their prices and offer unlimited. American automotive companies were once kings and while they still exist, they're a lot smaller and have lost that powerful position. Office supply companies were big and everywhere and OfficeMax and OfficeDepot combined to survive and Staples doesn't seem to be anything powerful. I mean, Staples was started in the mid 80s and had a nice upward trajectory and seem to be on a graceful down-slope. Heck, Blockbuster Video. Talk about a staple of American life. Despite stores everywhere, huge brand awareness, etc. they got toppled by Netflix. Oh, Nokia! They were huge and worth nearly 6x what they're worth today a decade ago. They saw the iPhone and just stalled out. They saw Android and stalled. Finally, Windows Mobile, but it was too late/the wrong OS.

There are certain natural monopoly industries like utilities, but even in the cable TV/internet industry, they're looking less secure for the long run. Many people are cord-cutters for TV, opting for Netflix and other internet-delivered video. Many people watch on tablets which might use 4G rather than WiFi and that's likely to accelerate over the next decade as wireless networks get much faster with much more bandwidth. Tesla seems like it might want to compete with utilities over the long run with a combination of solar roofs and home battery packs.

Amazon is certainly powerful, but so was Walmart as Walmart scurries to stay in the game. It's hard to come up with companies that have really been that juggernaut for long. Walmart was a relatively new entrant against entrenched retailers like Sears. Amazon was a new entrant against Walmart. It's certainly not easy to unseat a powerful company, but it also seems difficult to stay at the top. Whether it's inefficiency, inability to pivot to new ways of doing things, or just markets that dry up as they're replaced by something else, companies have a hard time staying in such powerful positions in our society for long.

And that's the difference between a market with powerful companies and central planning. Central planning would have said that Netflix isn't a worthwhile attempt. We already have all these stores, what will we do with the employees, isn't it a waste to shutter so much investment and capital we've built up in the old way of doing things, the new model doesn't look as good economically (yet), etc. In fact, that's basically what companies do. Shipping DVDs? Ridiculous. You're maybe paying $1 for the round-trip on the DVD (including labor) and charging $10/mo for two out at a time? Seems like it would never work. Shipping books? People want to browse at their bookstore, people want goods immediately, and shipping eats into profits. Ridiculous! Better search? Nah, people want portal sites and Yahoo is the biggest! The iPhone? It doesn't even have a keyboard which is an essential part of devices like Windows Mobile. Wireless and cable? We think the future of AT&T is our long distance service which currently has better margins and lower investment cost than that newer technology.

When you have so much invested in one way of doing something, it can be hard to pivot as the world changes. You become hesitant to kill your cash cows and might not try new things aggressively. In a centrally planned economy, no one challenges that. In a market economy, companies come along and do challenge that. Even when offered their competitor, they often shrug them off! Blockbuster was offered Netflix for $50M. It wasn't profitable at the time and seemed niche - PASS. Yahoo was offered both Google and Facebook and thought the prices were too high. Apple announced its iPhone 6-months in advance and most competitors just thought it was dumb. Luckily, people can pursue these endeavors outside of one, centrally planned company.

>It's certainly not easy to unseat a powerful company, but it also seems difficult to stay at the top. Whether it's inefficiency, inability to pivot to new ways of doing things, or just markets that dry up as they're replaced by something else, companies have a hard time staying in such powerful positions in our society for long.

Geoffrey West makes a compelling argument that it's due to the scaling laws around growth itself. The capitalist system demands exponential growth, but companies eventually reach a size where all their resources are devoted to maintaining existing "biomass." The exact scaling depends on the scaling properties of the networks that "feed" each "cell" of the system — circulatory/respiratory networks for animals, infrastructural networks for civilizations, social network for companies/cities.

Quite frankly most of the articles on Geoffrey West's work are hand-wavey bullshit, but he outlines it in this talk (including addressing this very question). https://www.youtube.com/watch?v=DFFVSvAr7Wc

> How many companies have been "the unstoppable juggernaut" for 50+ years? AT&T isn't the AT&T from 30 years ago. [...] Microsoft was the unstoppable juggernaut... and then Apple and Google came along.

These are very good examples. However in both cases the decisive action was taken by federal antitrust enforcement. The Bell System was broken up by a consent decree [1] and Microsoft only dropped its aggressive Browser Wars tactics (e.g. giving IE special API access) after a major antitrust case [2]. It makes for a nice story, but in practice big companies are rarely (if ever) defeated by scrappy competitors / market forces.

[1] https://en.wikipedia.org/wiki/Breakup_of_the_Bell_System

[2] https://en.wikipedia.org/wiki/United_States_v._Microsoft_Cor....

AT&T was broken up 35 years ago, so the evolution of the company in the last 30 years from long distance provider to wireless should be looked at separately from the monopoly days (which were government granted in the first place).

tangent: Sears is 130+ years old and arguably it was a close analogue to Amazon over the early 1900's.

Yes the end result of capitalism and communism isn't so different.

> What is the relationship between a centrally planned economy as for example Gosplan was trying to run in the USSR, and the presence of these huge market-like but centralized entities like Amazon and Wal-Mart inside a free-market economy?

Amazon may not be trying to turn a profit short term, but they still pay huge amounts of attention to price signals. Prices are composable flows of information about demand and difficulty of production.

Read Coase's book on the theory of the firm. The short answer is yes, firms are just like gosplan. We put up with them because they reduced transaction costs.

Amazon obviously has an interest in turning a profit. The main different is incentives.

A private company is generally structured better to remain competitive and efficient as things change.

Think Amazon is getting too big to remain agile? They basically aren't making a profit (they are continually reinvesting instead), as you say. Reinvesting in new strategies is probably the best evidence that a company IS competitive.

The difference is prices, as Mises showed in 1920.

https://en.wikipedia.org/wiki/Economic_calculation_problem

>"triggered by reading Red Plenty"

>"A central problem faced by Gosplan was the collection of high quality data about supply chains and the estimation of the utility function of consumers."

Red Plenty is a book of fiction, is it not?

It is a book at the intersection of fiction and non-fiction. Every chapter is followed by a section explaining quite precisely what was dramatised and what was real.

Better buy than Slack for $9B.

I was thinking exactly the same thing except that WF might be a less profitable business.

I think in the long run you are likely be right - at scale software margins are amazing. As of today, Slack looses some money & is unprofitable.

Really? Slack is bringing in 150m/yr. They can't make money with that product at that rate?

Of course they can, but an extremely profitable well-oiled small company rarely gets acquired. You need to have way more employees than necessary and running at a loss.

Slack runs a chat app and has 870 employees. It's beyond absurd.

No idea they had that many employees. Any idea how many actually work on the product from a technical perspective?

What percent of that is support and how many customers do they have?

Not saying you're wrong, just that there's overhead for software as it scales for enterprises.

Thats some good perspective - to think that slack is worth more than WF is nuts. I ove both, but I can't imagine how slack is worth 2B more than WF... pretty amazing.

with software, you profit more if you do it right because you need less overhead

Totally agree. There is tons of synergy in this deal with what Amazon is today and what they'd like to be tomorrow (more dominant than they already are!).

Checkmate, brick and mortar!! Amazon is eating the world.

Well...isn't Whole Foods brick and mortar?

In 10 years, Whole Foods will not have retail locations, and its distribution network will have shifted to 100% online orders ;)

and, i should add, kroger and supervalu and etc will be struggling dinosaurs like sears

I dont know if you intended an /s to follow this but brick and mortar stores as a concept aren't going anywhere.

Nah, no sarcasm intended. There will still be brick and mortar stores in the future, but it will not be the main method of shopping- online will be.

This is especially the case for food. It is not getting cheaper to run a brick and mortar operation with many moving parts. That is why Amazon is winning :)

Only art galeries with high margin unique sales and low overhead costs will be surviving 10 years from now

I wouldn't say obviously. From my perspective Obamacare is fascist even as I support it compared to the alternatives save single-payer national healthcare.

What other ideology than fascism best describes government coercion of its citizens to engage in business relationships with the insurance companies to ensure their profits remain at certain levels?

It's not to ensure their profits remain at certain levels, the profits are capped, not floored.

The reason for this particular market is because health care costs in this country have gone out of control, and a major factor in that was people without insurance not paying bills, resulting in higher costs.

That's not facist simply because you don't like it.

I specifically said I like Obamacare more than any alternative other than single payer.

And the profits are guaranteed by the individual mandate on young people.

You also said it's facist which is wrong. And the profits are not guaranteed by the individual mandate, ALL that's guaranteeing is a slow-down in healthcare costs that are spiraling out of control. Young people use healthcare. Everyone uses healthcare. When it goes unpaid, those of us that have insurance pay for those that don't.

I'd rather have single payer too. But that doesn't make an "okay" alternative to it facist.

Nit: Why do you keep misspelling fascist?

I agree with Mackey, I don't have a good word for it. Fascism is not a good word for it, it means "an authoritarian and nationalistic right-wing system of government and social organization." This usually results in government control of industry, but that's not the defining feature of the ideology.

> I wouldn't say obviously. From my perspective Obamacare is fascist

It's not. Fascism is characterized xenophobia and militant nationalism, among other things.

You could, I suppose, argue that Obamacare is a weak single-industry example of corporatism, and it's true that fascism (like many things that are not fascism) incorporates corporatism, but calling it fascist on that basis is like saying an explicitly atheist free-market system looks Communist because it rejects religion.

We detached this subthread from https://news.ycombinator.com/item?id=14569540 and marked it off-topic.

If Hacker News had gold I would give it to you.

I don't understand why I got 10 downvotes on this one. What is the matter with this comment? What am I missing here?

HN will heavily downvote anything that (1) is a short, cheap joke, or (2) smells like reddit.

I'd guess that it is because people don't like reddit/4chan/meme type of comments here.

This comment adds no value and doesn't drive interesting discussion forward.

Reddit norms don't apply here. If you have a low effort comment, just keep it in your head.

You did nothing wrong. The HN-hive-mind deludes itself that it's a higher order being.

We detached this subthread from https://news.ycombinator.com/item?id=14568978 and marked it off-topic.

"Da $#&@?!"

Sometimes I forget just how big Amazon is.

... But it's nice to know I can get my artisanal, single-source, Fair Trade, organic, small-farm, no-GMO cucumber water with one day shipping now.

Or one-hour shipping with Amazon Prime Now, which is beginning to crop up in a lot of places with Amazon Prime Fresh.

I tried Amazon Prime Now in Denver yesterday to buy some fruit. I went for the free shipping in a 2 hour window instead of the $8 one-hour shipping.

I never used Amazon Prime Fresh, because of the monthly fee and sense of commitment that forces. But when you can get a lot of the same stuff (eg, fresh fruit) without the monthly subscription via Amazon Prime Now, it's more tempting to try out.

I'm a little worried about how big Amazon is getting, though.

Fruit from Prime Now is of variable quality. Thus far, for example, I've seen two suppliers of Granny Smith apples, one of which produces large, flavorful specimens, and the other of which does not. Better any apples than none at all, but it hasn't really encouraged me to investigate their grocery delivery options in more detail.

Instacarte is screwed

Just add it to the list of reasons to avoid Amazon.

I love the Windows Updates restart warning in the video. :)

Amazon's Global conquest continues.

What about Instacart? They had a sweet deal, if it continues then it means Amazon will buy them. If it gets cancelled it means Instacart is fucked.

Reply on news.ycombinator.com