Amazon will lower Whole Foods prices right away
recode.net
recode.net
What was truly laughable was what they charged for non-organic fresh fruits and veggies and the poor quality of those. Most of what they had was stuff other stores would have thrown out several days before they got to the point they had there.
They were charging over $3.50 for an organic cucumber and around $30 a pound for T-Bone steaks. I guess I've been living in the Ozarks for too long because I had to laugh about that.
The headline price doesn't actually tell you this. The fact that WF gets a 5% margin and Amazon gets 2% is what tells you there's a lot of room for price reduction.
BTW this is a classic example of how an asset can be worth more to the buyer than the seller (i.e. how you can get a win-win transaction): Whole Food's market cap was based on those margins, which are significantly higher than its competition. It was hard for them to move (lower prices, expand etc) as it would challenge their true differentiator.
While Amazon's investors are comfortable with lower margins, so Amazon has plenty of room in which to make experiments, move some of their supply chain expertise into the business, discover what parts of their existing model don't transfer etc.
They really don't have enough to justify the 20-30% increase in weekly grocery bills over shopping at Kroger. I go there for the seafood counter and that's about it.
Amazon has a golden opportunity on their hands. I tend to rotate between grocery stores because not every place has what I want. If Amazon could make Whole Foods cheaper and widen the selection I could probably shop there exclusively (especially if there are prime perks).
The button mushrooms at whole foods were six dollars. The exact same ones at aldi were under three.