FTC Approves of Amazon and Whole Foods Deal | Hacker News Reader

FTC Approves of Amazon and Whole Foods Deal

ftc.gov

152 pointsjanober65 comments

Commentary of Amazon becoming a behemoth aside, I'm intrigued by the future we will be living in where everything will be delivered to us.

Intrigued for two reasons:

1) I'm reminded of DFW's words about shopping at large stores playing 'soul-killing musac': https://www.youtube.com/watch?v=8CrOL-ydFMI#t=10m8s This is going to make life easy for me. Grocery-shopping is stressful and time-consuming, I look forward to the day that I can do it all online without paying much extra.

2) Less people will need cars in the future of AmazonFresh/Grubhub/Blueapron. This is also why I love Uber pool incidentally... I feel like I'm saving the environment when I do that (vs. driving)! If you continue in this line of thinking, what you have is: one truck delivering 50 people their groceries via an optimized route vs. 50 cars traveling by stressed out people who are tired and just don't want to go the store. Less accidents, less pollution, less stress.

I am really looking forward to the future of optimized infrastructure for travel/transportation.

1. David Foster Wallace is commenting how one has to do the work to manage stress and bias. That's the truth, you work for it. You running away the stress by deferring it to someone else to handle (the delivery person or the warehouse picker) undermines his whole point.

2. So now instead of 50 cars, it's 1 truck with 50 people's worth of individually packaged goods that gets trashed.

Cattle also feel pretty good about fed three times daily before getting slaughtered.

1. A lot of the stress, at least imo, is in knowing what to get, how much to get, and balancing that against constraints like what's available at the store and price. Having to make a string of smaller decisions. Being able to do this online makes things a lot easier. I really doubt that outsourcing the mechanical part of it all - picking up, hauling, taking home the groceries - is going to stress out the workers to a comparable degree.

2. Sure, except a vehicle getting trashed will be much less likely if 50 cars are reduced to 1. Not to mention the increase in productivity due to 50 people not losing time by sitting in traffic, or being at risk of bodily harm.

Don't understand your cattle point.

> I'm intrigued by the future we will be living in where everything will be delivered to us.

Future? Welcome to the 1800's. Every little shop in town had delivery boys. The lady of the house could walk to a dozen shops, inspect wares and purchase everything for the week. Didn't have to carry anything back herself though - a fleet of delivery boys would distribute the day's purchases.

(I'm not saying it is a bad future.)

This wasn't exactly by choice though, not everyone had the means to independently go to the supermarket and buy their groceries

Everyone had the means to purchase the groceries also had the means to go to the store. Carrying the groceries home was not an absolute necessity.

There were definitely social stigmas and various social stratifications that prevented people with the means to pay from engaging in 'normal commerce.'

I remarked to my younger Indian colleague that we're replacing tiffin-wallahs with grubhub for work and I'm not sure that's a positive development for the West and its various peoples.

I now expect to go to Whole Foods and get upsold on a washing machine at the check-out counter...

All joking aside, I wonder if they will keep Whole Foods focused on food, or if that will be the doorway to brick-and-mortar retail—i.e. same day pickup services and the like.

You may see Amazon lockers in them, but that's probably the sum of it. Beyond that Whole Foods is just a perfect way to establish a delivery service: high prices and large footprint.

When I was an undergrad back in 2005, I bought my groceries online from Waldbaums with a $10 delivery fee - which was more than justified given that I'd usually shop once a week and would buy more than I could carry on a bus.

They ran their own delivery van around town; you got to pick a two-hour window during which the van would arrive.

Your future has already happened, and lingered unnoticed for quite a bit. I still don't understand why it didn't catch on back then.

Indeed, Tesco in the UK where doing 8% on home delivery about 3 years ago. Can't find more recent numbers but you have to think it's 10-15% now. Anecdotally at least it's not uncommon to see the delivery vans around.

Also companies like Ocado, which is exclusively online, and started operationally in 2002 I believe.

In India this kind of delivery is still the norm from local grocery shops as labour is cheap and the shop always sells the products at maximum retail price without any discounts.

"Drone mesh network" is discussed in another thread today.

Btw does anyone know if Amazon sells customer data for advertising? (Besides their own purposes)

You are already looking at the future of optimized infrastructure, as people have always moved homes to where the jobs, commerce, schools are. I think the're s a certain balance point. If everything is delivered, people will just spread outwards.

If 1) Amazon let me buy the groceries online and pick them up at the store and 2) started carrying "normal" brands, they would have my business. I don't want to pay $8 for a gallon of milk, and I don't want to see a sign that asks me to let the cashier know if I'd like the conveyor belt wiped clean in order to preserve the organic integrity of my produce.

Basically, just get rid of the attitude where you expect someone to pay $6 for asparagus in water, and we're good. (https://www.eater.com/2015/8/3/9090797/whole-foods-asparagus...)

If you want "normal" brands, you're more than welcome to shop at Walmart. It doesn't sound like Whole Foods is catering to you.

Apparent elitism aside, Walmart is actually specifically catering to what he wants. You can buy your groceries online, they have the kinds of products he's looking for, and you can ship them to your nearest store and pick them up or have them delivered to your house.

GP is absolutely correct. Whole Foods does not cater to the Walmart market. In SaaS terms, WF is Enterprise which sometimes dips into Premium with its 365 brand. Those complaining about WF prices are those that want to spend $5/mo on basic service.

P.S. I want a Ferrari. I don't want to pay $150k for one. So I'm not Ferrari's market.

That's a terrible analogy. Walmart is the massive enterprise company built around high volume and low margins. WF is the SaaS provider selling nice but very overpriced audio and video software to some niche of the film industry.

He wants "normal brands", cheap products (or at least not premium-priced), and doesn't care for pointless procedures around organic food. How is it elitist to assume that he isn't in the target demographic of Whole Foods?

I'd imagine it was the inclusion of "you're more than welcome to". Whether intended or not, that turn of phrase makes it possible to read the comment with a snarky tone.

In all honesty... Walmart offers exactly what you're talking about[1]. Order your groceries online, pick them up at their store. None of the fancy organic-attitude stuff you talked about, either.

[1] https://grocery.walmart.com

Good luck finding a Walmart close enough to you if you live in New York City, Boston/Cambridge, Los Angeles, San Francisco, Seattle, or much of the SF Bay.

Hmm, I don't know about SF but I live in the Bay and there are at least five Walmarts within a short drive. Maybe SF real estate is too expensive in the city itself?

Perhaps driving is not an option if you live in major cities? Whole Foods has prime locations in urban centers.

Sure. I'm talking about Bay Area, not SF proper. There, not driving is pretty much not an option.

there is zero in SF proper, the closest one is in san leandro.

meanwhile I know of at least 2 whole foods i can go to.

walmart is pretty much impractical for people who live in sf even if they have a car.

I get that the more money you have the less any one dollar matters and that anyone who lives in those areas certainly has the money to pay for the convenience of shopping locally but driving 30min to go shopping isn't really unreasonable.

Or most places in rural America. It isn't uncommon for folks to drive 30-60 minutes to their nearest cheap shopping center. Sometimes there is a store closer, but they tend to have limited selection and high prices, especially on things like laundry soap.

That said, if you are going there anyway, the store-pickup still seems like an attractive option. Part of the downfall of Walmart is the time spent in the store, searching out things, wading through isles of people, and waiting for the badly staffed registers to get you through the line, only to be checked for stealing on your way out. This is worse if you must bring children with you. One can easily save an hour of time just picking it up.

ShopRite does this as well (northeastern US).

walmart is the largest seller of organic food in the united states and has been since they decided to be.

It's been a long time since I ordered something from Walmart for in store pickup, but it was a nightmare. Would have been much faster to locate the items myself and go through checkout.

You are not WholeFoods' market.

I took this photo of the milk at whole foods around the time the merger news with Amazon first broke, and people were going on about $8 milk. A gallon of non-organic milk is $3.49.

http://i.imgur.com/vfj52mx.jpg

A gallon of organic milk is $6.49.

http://i.imgur.com/Bly3ium.jpg

where I live organic whole foods milk is less

Amazon is testing car pickup options in Seattle. I think they’re even picking up your car’s license plate to trigger someone bringing out (and loading!) your groceries.

https://www.amazon.com/afx/nc/aboutpickup

I go to Whole Foods all the time and I don't get the "attitude" you're talking about. They've got a good selection of cheese and prepared foods, they carry milk from local producers, the meat is fresh, they do a good job sourcing their sea food, and they offer free samples. What "normal brands" am I missing out on?

Coca-Cola.

So, I've never seen that sign, but more importantly: why do you think we should care about it? The sign, if it exists, addresses a silly concern. But it's costing you literally nothing. You don't want to frequent a place that is hospitable to people's silly concerns? My dude, my fine, fine dude, I have some terrible news for you about HN...

Amazon won't raise any monopoly red flags until it's responsible for the vast majority of our non-public infrastructure; it is simultaneously growing toward becoming both a horizontal and a vertical monopoly in every field it operates while not technically meeting the definition yet.

I think the issue is that many people see monopolies as a good thing, as long as they are not being very blatantly abusive (and especially if you can say, "well look, they only control 80+% of the market!"). Examples: Thiel, Friedman, maybe there are others.

The march towards efficiency, productivity, and profits naturally cuts into redundancy, diversity, and competition. Same goes for index funds, holding companies, etc.

I wonder if there is any way we can find a balance, because it seems like there are so many cases where giving up some efficiency/productivity for some other traits is desirable (renewable energy, research and development, health, safety, etc.)

One problem is the priorities of regulators. AIUI the US is concerned about direct consumer effects, whereas the EU is more concerned about whether competition is harmed. The problem is that consumer effects can be harder to spot, and if you have little competition, you perhaps don't know what you're missing.

Recent monopoly enforcement in the US has been based on damage to the consumer.

So it'll probably be Europe that tries to rein in Amazon.

I think the best take on this whole thing by far is from Ben Thompson:

https://stratechery.com/2017/amazons-new-customer/

(Incidentally, his podcast is fantastic)

I had assumed this deal had already gone through. Amazon Fresh has gotten orders of magnitude better in terms of selection and pricing this last month. Perhaps they started working together before the deal finished?

The only angle I saw for an antitrust concern was in delivery where Amazon is already dominant (but not focused on groceries) and Instacart is a serious player who has long partnered with Whole Foods - anytime #1 takes out a significant competitor in a space the FTC could be needed. But there are several more competitors in grocery deliveries including all the legacy companies - Safeway, Kroger, Albertson's, and even Walmart. Basically, this wasn't going to hurt consumers.

Until Amazon credibly deals with its counterfeit problem, I'm not buying any foodstuffs from them. While it's likely that Whole Foods / AmazonFresh supply chains are currently separate, that's beside the point. If the problem goes unchecked, Amazon may consider expanding the strategy further.

People are paying a premium for organic / fair trade / gluten free / $FAD_OF_THE_DAY groceries, so there is margin for counterfeiters IMO.

I mean, quite a bit of that stuff people pay premium for is already counterfeit even at stores like whole foods. I don't know how common it is, but it does exist.

Amazon probably wouldn't help much though yeah.

My complaint is not just that counterfeit exists, but Amazon's lackluster response in dealing with it (here's your refund; now GTFO). Secondly, I'd guess that WF may have 1 ~ 2 suppliers for a given product, but Amazon may have hundreds, if they eventually allow 3rd party sellers. So they would have a harder time vetting their suppliers just by numbers alone. Finally, Amazon's warehousing policy of co-mingling stocks from different suppliers exacerbates the problem further.

there are third party sellers on amazon groceries?

The system would seem setup to allow it, but at the moment there are not.

I can see “Amazon Farmers Market” now...

That'd be a nice feature. Creation to Shipment handling logs. Know which field(s) you food came from and what lots/etc.

Yes. But groceries and anything that expires is not commingled so if you buy from Amazon you get Amazon's inventory

They're not co-mingled yet, but there's no assurance that they won't in the future. And if / when they do, they're unlikely to forewarn you.

There's some crazy speculation about the whole deal. One more simple and obvious optimization is stuff like Amazon Go that could replace the need for cashiers.

Let's see if those stores will become even more useless. Maybe they will start selling healing crystals?

Url changed from https://techcrunch.com/2017/08/23/ftc-approves-of-amazon-and..., which points to this.

The FTC is so weak.

Could you expand?

My guess is that the parent thinks the merger is a bad idea and that the FTC is capitulating in some way by allowing it to go through.

But I think you knew that.

But it's not their job to block "bad ideas". And Amazon gaining control of 2% of the grocery market is clearly not monopolistic.

I agree that Whole Foods isn't a big deal merger but the fact that Amazon has a logistics system in place that could topple the other competitors is very scary. The silver lining to this is that it'll be mostly Walmart vs Amazon now rather than Walmart trying to destroy the regional chains (and Kroger to some extent on the national side of things). Hopefully this will add some competition on the Walmart front to force them to pull back where they're really not needed (or wanted).

How so? From an Anti-Trust perspective, the FTC recently blocked the Walgreens/Rite-Aid[1] and FanDuel/DraftKings[2] deals. I'm not sure this deal is anti-competitive and certainly doesn't come off as anti-consumer to me.

However, as it relates to the FTC, I am concerned with the increasing size of Fortune 100/500 companies [3] and their relationship to the decline in entrepreneurship in the United States [4]. The biggest companies are getting bigger and growing faster than ever and the FTC affects that by reviewing M&A activity.

[1] http://fortune.com/2017/06/29/walgreens-rite-aid-merger-ftc/

[2] https://www.forbes.com/sites/darrenheitner/2017/06/19/ftc-fi...

[3] https://fivethirtyeight.com/datalab/big-business-is-getting-...

[4] https://www.inc.com/magazine/201505/leigh-buchanan/the-vanis...

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