Amazon cuts Whole Foods prices
washingtonpost.com
washingtonpost.com
This removed the reason for Amazon to avoid that very same physical presence in so many states. Now we have local Amazon warehouses with one-day and same-day delivery, Amazon delivery lockers in convenience stores, Amazon-operated delivery vehicles, and soon Amazon grocery stores.
Is this the level playing field[1] that B&M retailers had in mind?
1. http://www.mercurynews.com/2012/09/13/mercury-news-editorial...
But despite all the controversial things Amazon has done, they still seem to live up to their #1 leadership principle [0]:
Customer Obsession - Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.
Since the first result of the WF acquisition is lower prices for customers, it looks like that tradition continues.
If Amazon makes good on their third principle, "Invent and Simplify", they'll fund lower prices with higher efficiency and greatly expand the number of people who can afford WF quality.
Oh yes? I never asked to be reminded 10 times a day to become a "Prime Member", every single time I purchase something via Amazon using evil dark patterns (make the "skip" option appear as a text link and not a button).
This and the whole concept of selling certains items to Prime members ONLY, and the fact that their prices are far from being as good as they were just 2-3 years ago, I can tell you the obsession now is clearly with profit margins than anything else.
If Amazon is trying to use Prime Video as a bonus selling point, I don't see any point in restricting their own 'TV' shows to 'anything except a TV'. Pretty sure my friend didn't ask for that.
Sarcasm aside, my Samsung TV has an Amazon app which streams Prime Video just fine...
If her box really can't get Amazon video natively, a fairly cheap Fire stick will do the job nicely.
basically Apple would have wanted a cut of revenue and Amazon wanted none of that
Apple is an Apple problem, they usually want a cut of all sales, since Amazon Prime Video offers subscription, pay per view rental, and digital purchase of content it would mean that Amazon would have to pay Apple a share of the proceeds which might be a problem since the margins are already pretty low.
Also last time I've checked Amazon Prime Video works on any device that can accept Chromecasts so this means any Android TV even if it's doesn't have an Android app (I don't know if these even exist) if you have an Android phone, tablet, or laptop can be used to watch the content.
And lastly lets not forget that a Fire TV stick costs 40$....
Not true. Amazon can still have an app on Apple TV, and Apple won't get a cut, if Amazon sells subscriptions through their website instead of the app. That's what they're already doing on iOS at least.
> And lastly lets not forget that a Fire TV stick costs 40$....
This is the problem, not the solution. Nobody wants one device per service. I don't want an Apple TV for Apple stuff, a Fire stick for Amazon, a Roku for something else, and so on. It's annoying, and my TV doesn't have that many HDMI ports.
>This is the problem, not the solution. Nobody wants one device per service. I don't want an Apple TV for Apple stuff, a Fire stick for Amazon, a Roku for something else, and so on. It's annoying, and my TV doesn't have that many HDMI ports.
Isn't it funny that this is an Apple problem always?
I love the damn thing, best £30 I've spent in a long long time. It does Prime video, it does netflix, it does spotify, it does plex, kodi, it does sonic 2 for fuck's sake.
Newer Vizio TVs use what's essentially an embedded/modified Chromecast as their smart tv OS, which works really really well. But since Prime Video on iOS (last time I tried) doesn't support the Chromecast protocol, I can't watch anything from Prime Video on my TV.
It plays fine for me in ubuntu's chromium browser...
It was recently announced that Prime video is coming to the AppleTV.
Amazon has arm-twisted competitors like Zappos into sub-optimal acquisitions by selling goods at a loss, and it's a fair question to ask if less or no competition really benefits consumers in the long-run.
I'm starting to wonder if all large successful corporations are just a type of legal sociopath, driven to crazy extremes via corporate zealotry.
Yes, in the same way that feudal lords and slave-owners are legal sociopaths. Capitalism is inherently exploitative.
With the problem of counterfeit merchandise that they have, there's virtually no reason for me to continue being a customer there, other than the convenience factor--and for that, eBay provides the same service.
I can believe that a lot of these engineers worked on a smaller thing, and some of them did call out that the phone wasn't going well. Just because they called it out doesn't mean they can override PMs gunning for a big promotion :) (or Bezos set on having his pet idea in the market).
This is nonsense. Whole Foods made a killing by convincing consumers that what they are buying is somehow magically "better" than regular grocery store items with clever marketing and presentation creating a false dichotomy between "natural" food and the rest. I've yet to see a single shred of evidence to back this up. I'd expect Amazon to do nothing less.
This seems like one of those "warm and fuzzy" things to frame and put on a wall somewhere, but I don't believe (based on my experience) that Amazon is far superior in this respect compared to others (though there are many companies with absolutely pathetic customer service). As an external observer, I see Amazon's primary and foremost principle as one to grow market share at almost any cost (to anyone) and crush competition through that route.
Just a nit though on your last one: Amazon bought Whole Foods, not Bezos, so that's "run by" or something.
Or resolve the bottlenecks.
Store | Total| #| Avg
-----------+------+--+----
Luckys | 91.86|51|1.80
Publix |133.09|58|2.30
Whole Foods|181.58|76|2.39
But that's going to be highly variable by location and who the local competitors are.
2015 sales: $15.389 billion
2016 sales: $15.724 billion
Their business growth has stopped. In fact, it's that negative turn (in regards to the perception of WFM as a growth machine) that halved their stock, which led to Amazon acquiring them.
To make matters worse for the company, their net income had been contracting for years.
2014: $579m net income
2015: $536m net income
2016: $507m net income
Amazon will hack that down further, basically taking WFM where it was already going as their margins were eroding for years.
But yes, this was a company that found a niche, grew into it and could go elsewhere. Amazon will presumably change that, though in the end I doubt WF will be recognizable.
"salmon, avocados, baby kale and almond butter" - sounds more like they're going to go the Trader Joe's route: have a few high-visibility loss leaders that give the appearance of generally low prices but higher prices overall.
That said, I'm looking forward to the 365 brand being available through amazon.com. But, like at Trader Joe's, I'll have to re-check packaging to see from where they're sourcing the food.
Completely off topic, but do you naturally avoid ending sentences with prepositions, or do you edit your sentences when you realize you've done it? Like many people, I was taught in school not to do that, but the lesson never stuck because I really don't care enough. However, I can easily see when myself or others have ended with a preposition or (more notably) when they avoided it like you did.
It's one of those things that stands out to me as a language nerd. It's something that I want to not care about, but deep inside I'm super conflicted on.
> The spurious rule about not ending sentences with prepositions is a remnant of Latin grammar, in which a preposition was the one word that a writer could not end a sentence with. But Latin grammar should never straitjacket English grammar. If the superstition is a "rule" at all, it is a rule of rhetoric and not of grammar, the idea being to end sentences with strong words that drive a point home...
> Winston Churchill's witticism about the absurdity of this bugaboo should have laid it to rest. When someone once upbraided him for ending a sentence with a preposition, he rejoined, "That is the type of arrant pedantry up with which I shall not put."
I once received an angry email from a reader of my book complaining about sentences ending with prepositions; my reply ended every sentence with a preposition. Perhaps I enjoyed that too much.
http://itre.cis.upenn.edu/~myl/languagelog/archives/001715.h...
Is this even valid English syntax? It doesn't sound grammatical to me; it reads more like German than English. Did you move “from” to the head of the phrase just to avoid ending a sentence with a preposition?
It's close to fighting google on the "pay with your data instead of money because we are the largest ad network".
The margins for groceries are already paper thin. Consumers have no appetite for delivery fees so vertical integration and proper logistics is key.
Only path I see for them is getting acquired by a major grocer purely for the platform. That grocer would become the first party integrator. I don't see that happening though as it'd be cheaper for them to do it from scratch in house.
Do we have evidence for this? Restaurant and grocery delivery fees in e.g. New York City as passed along without too much trouble.
At least in the UK, most of the major supermarkets offer delivery for fees of around £4, last I knew. And at the end of the day, much of the US lives in places that aren't that different in terms of population density to the UK.
Why? I don't think most grocery stores have a ton of IT resources or talent. I used Kroger's home delivery service off and on for years, and the UX was first horrible and then only slightly less horrible. And, in 2017, as far as I can tell, still has no mobile client.
An instacart acquisition, where you get the whole infrastructure, would seem pretty appealing.
- Jeff Bezos
Seems like they are continuing to follow this ethos.
If they cut too deep, they loose their appeal (at least to me).
http://www.cnbc.com/2016/07/08/amazons-chinese-counterfeit-p...
https://news.ycombinator.com/item?id=12061288
I'm confused ... this was all over HN and now I can't even seem to search for it and people have forgotten about it.
In Q3 whole foods made 3,725 with a gross profit of 1,268 representing a profit margin of 34% and their current P/E ratio is around 35, Amazon for context has a P/E ratio of 240 at time of writing.
This means, that amazon can reduce the price of food by quite a bit and keep their investors happy. Amazon, based on the comparison between the two companies P/E ratio, can cut that profit margin by a factor of 7, meaning whole foods fits perfectly within amazon's model (unless they were to direct profits elsewhere), with the ability to reduce their prices there by 25% on average (representing a billion of dollars returned to consumers).
However, with such a price reduction, it's very possible that whole foods could become a mass market grocery store, while keeping it's current brand prestige. Additionally according to http://www.businessinsider.com/how-much-more-expensive-is-wh... the prices are really only 15% more than normal grocery stores, so amazon can choose to keep even more of the profit that they could afford to return to their customers (by investment standards) while also still undercutting the competition.
There is a cost to low prices.
And Walmart, and literally every other business else that does high volume low margins sales.
They can make a splash by lowering the price of a few ingredients with shocking price tags, like avocados. But will be impossible due to supply lines and cost of production for Amazon to turn Whole Foods into a high end merchant of top quality ingredients while maintaining any kind of margin.
If they want to play the Amazon loss game they can for awhile but eventually when a financial crisis hits and they have to rely on cash reserves, this cash poor company relative to their peers will be in trouble.
VC's subsidize Uber rides. Amazon investors subsidize these types of ventures. For now.
Does Bezos actually control the messaging coming from The Washington Post?
Not trying to draw a false equivalency, I'd say the ordering in terms of worseness is
explicit censure >> reporters anticipate implicit bias
== admin shows implicit bias
> full journalistic freedomHe doesn't need to cut wages or layoff workers.He could hire every worker laid by retail and still want more.
its a feel good type of marketing intended for the weak minded ignorant hypocrites.
You actually want to save the world? live a minimalist lifestyle, stop over-consuming and realize your wealth is actually destroying the planet.
I for one will be going in there just to see what has changed. I haven't been in a WF for 2 years (new seasons girl here) mostly because of cost.
I see this idea thrown around but why can Amazon do a better job than Whole Foods has already done?
Can they combine the supply chain with their Amazon Pantry and get more cost sharing or something?
Basically, they have a whole lot more experience moving things around than Whole Foods.
So you think when someone buys them with lots of money, they can't cut prices? Um, what?
The trouble is that everything else was, and they are masters of the upsell.
It’s good value for what it is but more expensive overall.
You're paying a premium for food that is expensive to produce. Good restaurants buy the highest quality foods and this cuts deeply into the margin.
So yes, buying high quality food and cooking it at home will cost about what a restaurant charges you. You simply can not have it both ways. Either you want high quality food and will pay for it or you're buying low quality food at a premium with a nice brand on it or you're just buying cheap food which is of poor quality.
Not really for me and other family members/friends.
Usually it's Safeway or Trader Joes (in the Bay Area at least).
Next project is to get an extra freezer and buy a whole cow and pig from a local farm.
Where I live WF is cheaper than the Safeway next door for any items that are carried by both. The rest might be more expensive but higher quality (hence worth it for some people).
WF in Portland, OR is a fair bit cheaper than WF in SF, for example.
As an ex-pat I honestly can't shop anywhere else. WF is basically comparable to a normal sort of non-discount supermarket chain in Australia (Coles, Woolworths). I've checked out Trader Joes a couple of times but I'm not sure if I can do all my shopping there.
Everything at Safeway is really low quality (?) and/or overly "American" (not really sure how to describe this :).
filled with sugar
If you want an awesome combo on savings with Amazon in the meantime sign up for their cash back credit card then buy all of your household items using it "through subscribe and save."
It'll end up saving you ~15% (5% cash back; 10% off) on most of your household and pantry items.
Yes it's more expensive. That's because the cheapest foods that you buy at the cheapest supermarkets are fucking terrible for the livelihoods of animals.
Not a fan of this corporate buyout. Amazon clearly has a much different direction in mind for this chain. I wish they bought Kroger instead.
> "Everybody should be able to eat Whole Foods Market quality -- we will lower prices without compromising Whole Foods Market's long-held commitment to the highest standards," Jeff Wilke, CEO of Amazon Worldwide Consumer, said in a statement.
Second, everyone I know who has ever worked at whole foods could talk for hours about their internal inefficiencies, food waste being a huge one. Their pricing was also almost whimsical, the most extreme example being their $4.99 "asparagus water".
My guess is that Amazon took one look at the books and saw that they could easily lower prices without suffering much in the way of profit loss. This doesn't necessarily imply there will be sweeping changes in quality.
Well, I hope you're right, but I think you're wrong. Here's why:
Amazon wants to dominate the world of retail, and Whole Foods currently targets a specific and smaller demographic than "The World". Amazon needs to expand the demographic to reach everyone else. The way they do that is by removing most of the expensive things Whole Foods carries, and replacing them with cheap, less ethical alternatives.
This means we'll eventually lose a lot of the things Whole Foods carries. For a lot of vegan and ethical suppliers, Whole Foods is the vast majority of their sales, and they'll just be shut down.
If their interest was in low quality, inexpensive supermarket locations, why wouldn't they purchase something like Publix, with its 1,154 stores, for a much cheaper price?
Furthermore, if you want guaranteed ethical, organic and fair trade goods, Whole Foods was always more about branding than reality on that front, anyways. Their stuff is better than most supermarket chains, but the independent stores still have them beat by a far margin.
If Amazon wants to target low end grocery retail, why do they acquire Whole Foods?
It makes business sense for them to let WFM stay high end, and start a Amazon Basics store to go down market.
Is that what you want?
His sarcasm does nothing of the sort, nor does his statement imply anything similar. I would really check that nerve he seemed to touch.
The only interpretation is about the weakness of labeling laws and ethical gerrymandering of commercial interests in the ethical treatment of animals (ie Lip Service).
And then there's ethical issues like the pollution involved in raising animals and how that's handled…
It's one thing to insist that all animal products are inherently unethical or that ethics are irrelevant to the topic (most people would not agree with either of those dogmatic views) and another to draw some sort of fuzzy line where you think the efforts at ethics are adequate to call the production "ethical".
FWIW, I'm convinced we should be eating insects https://www.ted.com/talks/marcel_dicke_why_not_eat_insects
And then there's cultured meat which is coming soon and truly bypasses most of the really unethical aspects of meat production…
I've only had a few occasions, had some cricket-flour chocolate-chip cookies, some roasted ants, crickets, and grasshoppers. Mealworms sauteed with veggies is great. I'm not crazy going out of my way to get weird stuff though. I'm waiting for the day we can just go to the supermarket and buy grasshopper burgers or something. Like any food, there's ways to do it well or do it badly, and just like you don't want to eat rotten apples, it's not good food just because it's insects; insects are good food when they're good (the right type, healthy condition, prepared well).
I try not to think about the topic too much because I like the occasional spot of cheese, but the number of calves that get slaughtered each year to enable milk production is mildly disturbing. Even worse, some countries have regulations against selling animals under a certain age, and the milk's worth more to a farmer than the month-old calf, so you end up getting piles of male calf carcasses thrown into pits for composting.
That's if you merely think about the concept for a moment. If you bother considering it any further or make any effort to consider the cow's (mother's) experience, you should (if you're not a sociopath) find it far beyond mild disturbance.
Death itself is wasteful but isn't as tragically unethical as the specific aspect of taking a mother's offspring away, which hits perhaps the most powerful low-level aspect of mammalian experience. That we then go kill them is appalling in a human principle (in that we understand the whole picture). Killing them in front of the mother would be a further level of horror that I assume doesn't typically happen (Aside from the gratuitous torture, I bet that would increase cortisol levels in the milk).
https://ycharts.com/companies/WFM/gross_profit_margin
Bezos is famous for his mantra around "your margin is my opportunity" Amazon has a lot of margin available here for price reductions.
The economic signaling of WF's higher prices is a different topic entirely.
It's closer to ~3%.
When Amazon cuts costs, something about the way Whole Foods does business has to give.
Surely the name of the company is 'Whole Foods'?
(just edited this comment for clarity and grammar)
Weirdly, the article has one use of "Whole Food stores" in the text too despite many other uses of "Whole Foods"
> Amazon said it will continue to lower prices at Whole Food stores and will eventually offer special discounts and in-store benefits to Amazon Prime members.
1: Or "Whole Foods's"? I get almost 100,000 ghits for that.
1. They disclose that like they do in every article that mentions Amazon.
2. Many other outlets are reporting this. (Another one is on the front page of HN as I write.)
3. Do people honestly believe that Jeff Bezos exerts much, if any, editorial control over The Post?
[1]: http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-ne...
In what arena is disclosure a remedy for conflict of interest? Recusal is the remedy.
> “The two companies will together pursue the vision of making Whole Foods Market’s high-quality, natural and organic food affordable for everyone,” they said in a joint statement. “Whole Foods Market will offer lower prices starting Monday on a selection of best-selling grocery staples across its stores, with more to come.”
and
> “Everybody should be able to eat Whole Foods Market quality — we will lower prices without compromising Whole Foods Market’s long-held commitment to the highest standards,” Jeff Wilke, chief executive of Amazon Worldwide Consumer, said in a statement. “There is significant work and opportunity ahead, and we’re thrilled to get started.”
Some hard-hitting journalism here, especially considering the first thing Amazon is doing is leveraging their juggernaut status to lower prices and undercut competitors. Sure, we'll see "blistering competition" now, but when these other businesses falter and only Amazon is left standing, there won't be any news stories trumpeting the fact. Amazon is being particularly serious about PR on thsi one since they've gone so deep into anti-trust territory, and because they know that the false signifier of price that has been used in anti-trust cases for the last few decades is their shield against claims that they're a monopoly.
https://addons.mozilla.org/en-US/firefox/addon/open-page-in-...
"I ordered non-dairy, gluten free, fair trade, ethical, lactose free, halal, sanctified, low salt, low carb, kosher rice but instead I just got a plain bag of white rice and no certificates. Literally shaking right now"
Dead Kennedys - Holiday In Cambodia
Sorry. The rice bit just sent the mind there...
Strange. Last I heard Whole Foods has made no effort to get this quality of food into the hands of 7.2 Billion people that aren't Americans.
Or maybe it should be okay that different groups of world people have access to different quality of food.
But you can't have it both ways.