That's a huge change. You go into Whole Foods, and it's mostly good-looking, thin people, not the wide loads and screaming kids of Wal-Mart. If Amazon wasn't looking to go upscale and high-margin, what did they buy Whole Foods for?
Lower prices, lack of brand names. Think AmazonBasics, but for food. I wouldn't buy anything important off AmazonBasics, but for cables, shower speakers, and other minor things it's Good Enough.
If you had to choose between perfect, high quality produce and staples you drive to a physical store for, or decent (but not perfect) produce you can have delivered at the same (or lower) cost, which would you pick?
They're going to automate as much as possible with the goal of reducing costs, use the stores as a base for the Amazon Fresh delivery business, expand prime fresh and reduce product selection at the stores. I suspect the stores will become a base for Blue Apron like ready to make food deliveries.
There are tons of grocery delivery services around where I live, none of which I use. We still go to the Whole Foods because we like to wander around tasting the free samples, being able to pick the produce items we want, maybe having lunch at the prepared food section, etc. That's a big part of the appeal.
I assumed the same, then actually bought something off Amazon basics. I can't speak for everything, but man was it low quality. It's like they were aiming for just barely above the bar. Simple things like sheets and blankets. So cheaply made.
(See: https://qz.com/807419/is-it-even-possible-to-sell-luxury-on-..., among other articles that you can find from googling.)
But I agree that it's very strange that Amazon is buying Whole Foods, which is a luxury grocery store, to then try to replicate Walmart. This will just alienate the customer base and drive them to Traders Joes, Coops, etc.
I guess we will have to just wait and see what happens. Normally when one company buys another, they say "nothing will change," which means that in six months all trace of the thing will be gone.
Personally, I'm not looking forward to the change. One of the things I like about WF is that they're pretty good about stocking products from local/regional producers. And they have a pretty good cheese section. I'm betting Amazon will not care about these things.
What are you basing this on? Amazon (Prime) customers are way more wealthier than Walmart customers:
https://fortunedotcom.files.wordpress.com/2015/12/screen-sho...
Aesthetically perhaps, but it seems very well designed in terms of making purchasing painless, which is part of the reason Amazon do so well.
I do try to avoid buying things on Amazon now though, they've gotten too big, it's a little scary how much influence they have on online retail.
For my good looking thin people needs I go look into the mirror
I agree with the former, but not the latter.
Citation needed.
>(hence expect and demand healthier food
...and so they pay for the placebo instead?
This strongly suggests it won't be the same food.
(Just kidding. There are no Whole Foods in my region.)
I completely agree that such a strategy throws away much of the value of the Whole Foods brand.
It doesn't surprise me that Amazon is taking it in this direction though. What Amazon is best at is ruthless price differentiation and/or logistics. They don't do price discrimination in their cash cow businesses as far as I know: online retail, streaming (comes packaged with prime for "free), aws, kindle, etc. Their brand is providing the best value and convenience for purchasing commodity retail items. Even their branded items compete on price.
It's interesting that Whole Foods already started down the path towards competing on price before Amazon swooped in.
I suspect they wanted an in on retail grocery, and WF was on the market at a price that was worthwhile for the number and distribution of locations they have.
- Locations: WF is located where the well-off go,
- Warehouses: good for use after WF employees quit, and
- Real estate: sell unusable locations off.
If Amazon can convince customers to pick up packages they may win a bit; but that works only in densely-populated parts of larger cities.
Whole Foods was a grocery chain; Walmart is a retailer. But Walmart can't compete in the grocery business (they've been trying awhile and never gained traction).
Whole Foods cannot become a retailer like Walmart w/o starting from scratch (except for the real estate, buildings and a bunch of cash registers, refrigerators, meat bins, butcher shops, beer distilleries, escalators, etc).
So this move, in the end, is a liquidation sale. It came about b/c Whole Foods simply couldn't gain sufficient grocery market share. All Amazon will get out of this acquisition is the real estate and the buildings.
If Bezos was _really_ smart, he would have let Walmart buy up Whole Foods and then watched as the Whole Foods golden goose weighed Walmart down and drained its money. Believe me, WF is a commercial "tar baby". A better metaphor is the grocery market as a "tar pit", now with both Amazon/WF and Walmart trying to stay above the surface while all the other grocers have been living there happily for centuries.
Amazon need to be broken up by the Justice Department. Their "creative destruction" is more "destruction" than "creative" in this instance.
Also, I don't believe Whole Foods owns the land its stores occupy, it's all leased.
If true, one more reason Amazon fu'ed.
Walmart already has the larges market share in food and beverage business.
https://www.statista.com/statistics/240481/food-market-share...
https://www.thebalance.com/largest-us-based-grocery-chains-3...
The main problem is that Walmart is not and never was a grocer - it is a retail store that subsidizes its grocery with its retail success. Nor is Amazon a grocer. Buying Whole foods will not make Amazon a successful grocer. My s/o asked "But Whole Foods will turn over all their knowledge to Amazon with the takeover, of course?" to which I replied "Once Mackey leaves, Amazon officers will be given a 4-inch binder by departing Whole Foods staff with 700 white blank pages and a top page that says in big letters "F* You!".
Grocers have existed for 100s of years in a very competitive market. Despite all the bravado and technology, neither Walmart nor Amazon know what a quagmire they are getting into by wading into that tar pit.
Whole Foods is a poison pill that marks the beginning of the end for Amazon's growth.