Winners and losers in Amazon’s $13.7B purchase of Whole Foods
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Now compare that with Amazon, who co-mingles inventory and can't even guarantee what I purchased was authentic.
Also, will I pay more for Kale after reading a book on food nutrition? Will I have to put the food in the basket to know what the price is?
I see two very different cultures. Time well tell, I guess.
As for the other half, are you suggesting that only those of liberal politics would ever buy organic or fresh produce, or be taken in by the marketing of Whole Foods? The statement reads as a non-sequitur, and I'm not sure how it is relevant.
Whole Foods sells an image and a promise of organic, and I'm pretty sure they will meet the current US legal definition of organic for whatever they're selling. It's not a relevant factor for me when buying, but I wouldn't call people who do buy there "gullible", as I'm pretty sure Whole Foods is giving the customer exactly what they want.
The food there is excellent. I'm not rich by any standard and I love shopping there because to me it is high quality. Go to a typical large grocery store deli, then go to Whole Foods deli, you can easily see which one is better.
I'm not sure where you came up with the "I feel guilty about the money I have so I'm going to spend it on foods that are healthy (or claim to be healthy, I'm not sure if you're making that connection or not)" construct. Seems like a reach.
Some oranges are sweet, and make delicious orange juice. Some oranges are sour, and make sour orange juice. When I'm shopping for oranges, my first choice is locally-grown, then organic, then I might try whatever 'conventional' orange the store happens to carry. I find some stores to be more reliable for carrying decent oranges than others. I think Trader Joe's organic frozen orange juice is more reliable than the other frozen orange juices that I've tried.
tldr: IMO organic oranges are usually sweeter than non-organic; local > organic.
I understand a certain lifestyle is annoying for some people and that a lot of bullshit is sold in organic stores (homeopathy, ...) and that not everything is healthy because it's "ancient and natural" but let's not confuse everything.
Worrying about hormones and antibiotics in meat and dairy while being concerned about health makes as much sense as worrying about the effects of filters in cigarettes while looking to avoid lung cancer. Animal products are unhealthy, and inhumane.
Do you understand the difference between plants and animals? Animal antibiotics and hormones are not applied to plants. Plants are not susceptible to diseases that can be transferred to humans. The pesticides that are sprayed on plants are entirely different chemicals. Plants have the least problems with heavy metal and toxin bioaccumulation because they are at the bottom of the food chain. The risks for contamination of animal and animal product foods are orders of magnitude greater than for plant based food. But all that ignores the fact that meat and dairy are inherently unhealthy for humans - they are carcinogenic and cause heart disease.
I used to live near a WF and shopped there semi-regularly. They definitely stock non-organic produce, and it's consistently of high quality. Likewise for their salad bar, bakery & hot meals.
It's not the only place in the world that stocks healthy food, but I can certainly see why people shop there.
And I don't think anyone on the chain is arguing to abolish chemical fertilizers. We're talking about the health benefits of the food sold at Whole Foods, which may or may not be organic and/or contain certain additives.
I would never buy a melon that I can't smell first, or a fish without seeing its eyes, or shrimps that I can't see how blue the head is, or cheese that I can't press, etc.
How is this going to work? If you don't care about these things, isn't it easier to buy canned goods or go to the restaurant?
What are the customers who want fresh but don't need to see / touch first?
Online grocery retailers have their employees (and stock management practices) doing those checks for you.
A short-sighted company might think it was profitable to send bottom-of-the-barrel leftovers to online customers - but in the long term there's much more money to be made by sending a family $100 of good quality groceries every week forever than sending them $100 of poor quality groceries once. So retailers have every incentive to get the checks right.
With that said, if you're an expert cook, it's possible you're sensitive to nuances the average person would overlook. In that case online shopping might not meet all your needs.
However, when you shop in person you can choose, and so the best eye gets the best products (or at least, so she thinks!)
And it's not only about quality: sometimes the same customer wants different things. Regarding ripening for example, sometimes I want very ripe fruits to use now, and sometimes I want greener ones because I intend to use them in a few days. Same for cheese, what you want depends on when you intend to use it. I don't want a Camembert hard as stone to eat tonight. I want one that's "almost bad".
How do I tell all this to Amazon Fresh?
Some retailers also let you provide instructions as free text. Obviously this is more flexible, but prevents a computer from checking the worker's work.
No, you just need to trust the seller.
>How is this going to work? If you don't care about these things, isn't it easier to buy canned goods or go to the restaurant?
Just because somebody doesn't care to smell and tickle their melons (no pun intended) it doesn't mean that they have to go straight to canned food.
Most people don't check their fresh produce that much anyway, they just get some items off the shelve and that's that.
If that's the case, and there is sufficient demand, another "Whole Foods" will sprout and fill that market demand.
Other possibilities:
a) there's no sufficient demand, so that's the new situation the few discerning customers have to deal with forever
b) there's demand, but it's no sufficient enough to support two such big chains, so at best smaller, scattered around the country competitors arise, with jacked-up prices to support the higher standards (since they are not WF scale)
c) there's sufficient demand, but the Amazon merger has given WF so much power that they can crush any challenger
d) there's sufficient demand, but for a new challenger to emerge, gain traction and cover even half of the area WF covers will take close to a decade
Real markets are not like some economic fairy tale...
I'm a little interested in hearing how else this may play out in the spirit of "fearful when greedy, greedy when fearful" and welcome any contrarians to (respectfully) share their thoughts.
As a side note: I've found the various armchair M&A proposals triggered by this rather amusing. Just this weekend I heard various people earnestly suggest that:
1. Wal-Mart purchases Rackspace and RIM
2. Google purchases Costco and Disney
3. Apple purchases Netflix and Target
Amazon has already said they want to cut costs. I can't wait until they adopt their typical stocking practices, like they do with so much other stuff they sell. E.g. you'll have normal merchandise commingled on shelves side-by-side with third party supplied garbage. Much like they already do for DVDs and similar items, stocking genuine commingled with counterfeit. But don't worry, it'll all still be "fulfilled by Whole Foods".
That's a little hyperbolic. But I just don't see any positives at all for current Whole Foods customers.
Whole Foods most important asset is their reputation, which IMO is way way way above Amazon's reputation.
I don't think this is fair or even reasonable to say. It's going to be in a B&M store. You can inspect the item. The FDA/whatever organization will be inspecting food on the shelves. As for reputation, Amazon has the best customer service (tied with companies like REI) in my opinion.
I mostly agree that I don't see any positives for the customers at this point, but I don't think it's going the way of 3rd party counterfeit goods.
Sorry, I very very strongly disagree. I buy very little from them any more because I don't trust the provenance.
The saying is that a fish rots from the head down. Bezos and Amazon have proven time and time again that they don't really give a fuck about quality. Their one and only goal for the last 23 years has been to increase revenue, no matter the cost.
Here's this gem: Amazon's Chinese counterfeit problem is getting worse[1]. Here's some choice quotes from that article that illustrate exactly what I'm saying:
Always a problem, the counterfeiting issue has exploded this year, sellers say, following Amazon's effort to openly court Chinese manufacturers, weaving them intimately into the company's expansive logistics operation.
To unsuspecting consumers, fake products can appear legitimate because of the Fulfillment by Amazon program, which lets manufacturers send their goods to Amazon's fulfillment centers and hand over a bigger commission, gaining the stamp of approval that comes with an FBA tag.
Furthermore, Amazon's commingled inventory option bundles together products from different sellers, meaning that a counterfeit jacket could be sent to an Amazon facility by one merchant and actually sold by another.
It's almost inevitable that the Amazon corporate culture that has allowed crap like that to get worse and worse over the years will eventually take over Whole Foods.
[1] http://www.cnbc.com/2016/07/08/amazons-chinese-counterfeit-p...
> Their one and only goal for the last 23 years has been to increase revenue, no matter the cost.
How can that be remotely true? Amazon has spent millions on R&D for the future, not for the current.
A company can have a good reputation for customer service, while having a bad reputation for other things.
In your example, the way Amazon achieves their customer service reputation is reactionary. If you catch them selling you crap, then they will replace it or refund your money. It's a fool's errand to allow them to play that game with you.
The logical endgame to that business approach is the melamine poisoning in China about a decade ago. "Oops, sorry we sold you milk and infant formula adulterated with melamine. Sorry it killed your child. Here's your instant 100% refund with almost no questions asked".
As for revenue, once again you're creating a straw man. Of course R&D is "for the future" and "not for the current". That's the literal definition. I said revenue, not R&D.
As for my comment about "no matter the cost", let me try to restate it in more detail, perhaps I didn't phrase it well:
Since its inception, Amazon's number one goal has been to grow revenue, from year to year, as quickly as possible. That's their #1 business goal. They have optimized for that revenue goal over other business goals. Revenue over profit. Revenue over quality.
If selling a larger quantity of crap means their overall revenue increases, then that's what they will do. That's what I meant by "no matter the cost". A different way to say that would have been "Amazon Marketplace optimizes for increased revenue at the cost of quality".
Marketplace is an easy way to increase revenue. No need for R&D. Just allow all sorts of counterfeit crap to commingle in existing warehouse, and generate revenue on fulfillment. The more crap you sell, the more you increase your revenue.
The more Amazon increases its revenue, the more the stock market rewards it. Wall Street values Amazon almost exclusively on revenue growth. Bezos has made clear that his #1 goal is revenue, and Wall Street has embraced that metric.
Not coincidentally, supermarkets are very high revenue operations with very low profit margins.
Amazon is routinely ranked by consumer surveys as being among the best companies to buy from. It has been that way for a long time. The average US consumer overwhelmingly disagrees with you, its reputation as far as consumers are concerned is drastically better than Whole Foods.
https://www.forbes.com/sites/forbesinsights/2016/03/29/l-l-b...
https://www.forbes.com/sites/karstenstrauss/2016/03/29/ameri...
And this has been mostly unchanged for a decade, eg:
"For the ninth consecutive year, customers ranked Amazon #1 in customer satisfaction during the holiday shopping season according to the newly-released ForeSee Experience Index: US Retail Edition. For their study, customer experience analytics firm ForeSee collected more than 67,600 surveys between November 29, 2013, and December 17, 2013, asking consumers to rate their satisfaction with the top 100 retailers."
And
"2015 Best and Worst Retail Customer Experiences - Customer Rankings in Temkin Research Report" (Amazon is ranked #4; Whole Foods is #22)
https://www.thebalance.com/best-and-worst-customer-service-r...
And
2014 "Amazon Has the Best Consumer Perception of Any Brand"
http://www.adweek.com/brand-marketing/amazon-has-best-consum...
And
"Wal-Mart Stores Inc. is the largest retailer in the U.S. by sales, but when it comes to America’s favorites, Amazon.com Inc. dominates. In consultancy PwC’s annual global consumer survey, 52% of about 1,000 U.S. respondents listed Amazon, as one of their three favorite retailers in 2014, followed by 41% who named Wal-Mart, and 29% who listed Target"
http://www.marketwatch.com/story/amazon-tops-wal-mart-in-thi...
The references really don't stop going back a decade or more.
Gourmet and similar grocery stores operate on the fringe but how much disposable income is out there to keep them all going? Do they really compete with Kroger and the like? To me its like comparing Costco to WalMart. Sure they had similar items but they have wildly different customer bases and income levels.
Walmart and others complained about Amazon stealing customers and had the states crack down on them for state sales tax.
In my area near Ferguson and Hazelwood Missouri Amazon plans a wharehouse. They should buy out Sears and K-Mart because they are closing down stores near us that Amazon can use as shops to ship packages to from their warehouse to compete with Walmart, Costco, and Sam's Club.
This is one of those rare instances where I'm going to agree with Wal-Mart here. Yes, residents of an area with a sales tax are supposed to remit that tax to the local government. No, virtually nobody actually does this.
Wal-Mart was at a legal disadvantage because it is following the local law that says "if you have a sales presence here, you must collect sales tax here." Amazon shouldn't be able to skirt that by saying "oh, our warehouses are technically owned by Amazon Warehouse Services, LLC and not the actual Amazon.com, Inc. that actually sold the products."
(Yes, I know the lore about how Bezos deliberately started Amazon in Washington State because, at the time, Washington was a smaller market compared to the ones he wanted to sell into "tax free," so that only proves my point about the deliberate tax dodge.)
Will Amazon gobble up the rest of the world and bring the economy to a halt?
The combined Amazon + Whole Foods will have only a few percent of the US grocery market (around 3.x% if I recall correctly), which is highly fragmented. Walmart by comparison, has around 16% of the US grocery market.