Amazon offers Whole Foods discounts to Prime members
reuters.com
reuters.com
1) under price to get market dominance,
2) then increase prices higher than competition
3) before customers realize they're actually more expensive than the competition.
I stopped trusting Amazon at step 3 and only shop there if they actually have the cheapest option. They act like grocery stores: advertise a low price on one item to get you in the door, but profit off the other items.
Seriously, the idea that capitalism = choice is bullshit, as is the idea full stores is a capitalist quality or that the problems with Venezuela are all caused by being non-capitalist (implied that Venezuela is the inevitable outcome of any non-capitalist approach).
Amazon underprices and offers a better service like Prime with 2-day delivery. Competitors start freaking out and begin launching responses to tackle this. Industry changes for the better.
So yes. Capitalism at its finest. Offer a better price or a better product to compete in a marketplace.
Without Amazon, the brick & mortars would have never begun to think about such things like a better online experience, online-to-store pickup, etc.
Amazon certainly engages in price discrimination, but I’d bet its algorithms weigh race much less than the incumbents.
Also, the studies I’ve seen suggest amazon charges rich people more, which is a lot less slimy than systematically overcharging poor minority groups.
Kroger isn't a monopoly. If Kroger was truly price gouging as you're alleging, then any other company can just sweep into that neighborhood and take all of Kroger's business.
As Black economist Thomas Sowell notes: "despite higher markups in prices in low-income neighborhoods, there is a lower than average rate of return for businesses there — one of the reasons why businesses tend to avoid such neighborhoods."
In other words, the cost of doing business in poor neighborhoods is higher. You can attribute this to higher taxes in urban areas, higher cost of transporting goods to the area (increased traffic leading to longer duration supply routes, higher insurance requirements for transporters), higher cost of securing the business due to higher crime levels.
This should be the default whenever/wherever possible.
I always laugh when people say “It’s cheaper!” somewhere else and then it turns out it’s only by like 4 bucks.
I'll shop at wholefoods, but goodeggs is also about the same price (post delivery) and is better quality.
I guess it seems strange, but that’s quite a lot of money to some people. Totally justifiable that you wouldn’t find it worth the time... but some have to economize or came from a background where they have to count every penny.
If someone says they chose a particular supplier because it was 4USD cheaper, that’s a reasonable decision and not reason to ridicule them.
2) Find online retailers that focus solely on the item categories you need, and shop those specifically. I find General Stores (aka Amazon) have less breadth of selection than online retailers who focus on a single domain.
3) Buy in bulk from Costco. I describe Costco's product sourcing as providing 90% of the items that 90% of the population needs for daily living. The rest can be purchased from specialty stores. And since Costco prices items to break even, you have a pretty good indication that you're not getting "screwed" on most of your purchases.
Read the story of Henry Dow about how price dumping can fail.
https://www.investopedia.com/ask/answers/09/dow-chemical-bro...
The most ludicrous thing is people falling for the Prime membership. Why lock yourself in their system? It only encourages abuse.
Are Prime memberships valuable for Amazon? Certainly.
Do they lock you in? Not really; that’s assuming you could have spent less without a Prime membership, which might be true for many people but is certainly not true for all people.
Is it “the most ludicrous thing”? Not at all.
Most websites either have free shipping and higher prices, or non-free shipping and lower prices. Take your pick. But with Amazon, you're giving an extra $120 per year for the privilege of paying a higher price for that "free" shipping.
You’re making a lot of uncharitable assumptions about other people.
It's a bit inaccurate to talk about "lock in" when a consumer can choose a modestly more expensive month-to-month membership.
For me (plus two roommates), Prime Video adds enough additional content on top of Netflix and Hulu that it would justify the ~$10/mo all on its own.
That doesn't mean they are always the cheapest option, but they aren't messing with prices to gain customers and then making a profit, since they aren't pricing things to make a profit in the first place.
It sounds like Costco also makes a profit of Kirkland Signature sales, though. I suppose if you didn’t like generic drugs you could apply a similar argument here.
Costco’s loss leaders (e.g. the hot dogs) are also arguably instances of “messing with prices to gain customers.”
https://www.investopedia.com/articles/investing/070715/costc...
Except the article was a bit confusing on this point:
The biggest Costco loss leaders in America right now are rotisserie chicken, the hot dog & soda combo and gas. A Bloomberg article has calculated that Costco earns only $14 million in profit a year on its sale of 70 million chickens.
However, as a consumer, I do agree with you in principle that they are messing with things, including pricing and placement of products, mostly to get people to buy more (possibly even to get customers in the doors), just to a lesser degree.
OTOH, the magnitude of that lesser degree is so great that it makes a difference. I know I'm not always getting the best deal if I buy any particular item at Costco, but I can be reasonably confident I'm not paying a huge markup.
In fact, I find Costco so reliable for fair pricing, I consider them my benchmark for seeing if other stores' discounts are really deals or just borderline scams like doubling the base price but offering an evergreen "sale" that's around 50% off. (Mostly only relevant to items with widely fluctuating prices or ones I buy so infrequently inflation is a factor).
CostCo doesn't do weird pricing scheming, but they have higher-profit items and getting people in the stores with memberships does get people to buy more stuff there, even stuff people might have not bought at all otherwise.
Don't get me wrong, CostCo does a better ethical and consumer-respecting business than most, but they DO profit on sales, it's just slim enough profit that they couldn't get by well without the member fees.
You're wrong.
> Through two quarters of its fiscal 2017, Costco has reported $1.06 billion in income (profit). That number is slightly smaller than the $1.26 billion it collected in membership fees.
> If you examine the company's sales, it brought in $56.59 billion in net sales with a merchandise cost of $50.21 billion and sales expenses of $5.92 billion. That's a small loss when it comes to actually selling goods,
https://www.fool.com/investing/2017/05/05/how-costco-wholesa...
Quote from the Washington Post[0]:
“while Winn-Dixie and Harvey’s are far from mom-and-pops, a number of those stores slated for closure are in areas where it’s a 15- or 20-minute drive to the next-closest grocery store.”
[0] https://www.washingtonpost.com/news/wonk/wp/2018/03/22/the-a...
Edit: typo
On the other hand, they've made me care more about counterfeit goods. I've received a few this year already. What's scary is that on some health items - like vitamins - if you're ordering for the first time, how would you even know what the real thing is supposed to look like?
I now try to order items directly from the manufacturer or authorized distributor whenever possible, simply to avoid counterfeit risk. Kohl's for clothing and LifeExtension for vitamins. Ironically I have more faith in these retailers because their traditional single-source supply chains are less efficient than Amazon's crowd-sourced/FBA model. Less efficient and therefore more trustworthy. Maybe this is one of the few ways David can beat Goliath.
There also seems to be broader opportunities in this area around supply chain integrity that's transparent to and verifiable by end consumers.
This is the best way to trigger the suspension of a fraudulent seller and the review of an ASIN.
This is the one that's starting to really surprise me. You generally expect there to be counterfeit versions of items that are expensive or easy to replicate, but I've now received counterfeit:
* Burts Bees face wipes
* 3M command strips
* Curad alcohol prep pads
... and quite a few others. The alcohol prep pads were the most unexpected, but also the easiest to spot because I buy them all the time at Costco and other stores.
4) Pollute the world over with cardboard boxes and single serving deliveries
Amazon isn't actually monopoly in any industry, yet, but it's difficult to see how this is different to the approach a monopolist takes in entering a new market.
- Some items at WF aren’t at a standard grocery store
- Excellent, vast selection of cold / hot ready to eat food
- Locations
There are products available at one and not the other, which is why I at least sometimes shop there.
I’ve shopped almost exclusively at WF now for about 6 years. In those six years I’ve lived in four separate locations, and in all but one the WF was within walking distance of my home. My current home has one about .5 mike away.
So, proximity is a nice factor for me. Then once I’m inside, the quality of the fruits and vegetables is noticeable. I don’t go out of my way to buy organic (not a priority for me), so the prices can be quite reasonable. I find that I can get an extra day or two of refrigeration with whatever I buy at WF, which saves me a trip compared to buying from, say, Star Market or Ralph’s.
Next up is their pre made deli counter. I absolutely LOVE their selection of ready to reheat / deli selections like their rosemary chicken, or tuna / chicken salad. They are pricey by the pound, but when I tried out the other supermarket near by which had cheaper options, the quality and taste weren’t even close.
Also, for additional context, I’m the primary cook in the family. When I quit my job to start my startup 1.5 years ago I started cooking to help save money. I make breakfast, lunch, and dinner for my wife and myself 6 days a week. So, I’m definitely a “frequent flier” with my WF.
If those specific things are important to you, WF offers two advantages:
(1) Wider selection because everything in the entire store meets your criteria.
(2) It's way less tedious than going to a regular store and checking the labels of every single item.
Fortunately, in Texas, we have HEB - Amazon will have to work pretty hard to beat their prices + convenience of being everywhere.
I've been to the central Central Market. The lack of products is kinda off-putting. Better to go hit the HEB at Mueller, which has a huge selection from upscale to downscale products.
And beer in growlers.
Pick your unique curated lifestyle today.
that isn't enough to disrupt but it is enough with a pliant press to make it seem you can. ALDI has 1600+ stores in 35 states and while its expected customers are more limited by means the appeal of ALDI does cover a lot of income levels.
At some point though, these discounts are going to get deep enough to get me to put up with the WF crowds.
This is definitely a huge factor in the equation and just due to proximity. We live in close proximity to 6 grocery stores, 3 are the same brand. The store we choose to shop at comes down to selection because even among the 3 same branded stores the stock varies.
And that Kroger, just this week, did a partnership with ocado, which is the world leader in automation for grocery deliveries.
Groceries are like pizza. Pickup is a viable option because sometimes it is more convenient...twenty versus sixty minutes (hopefully) before eating.
But I would underestimate the value of pickup: from a point of view of a busy mom with 2 small kids, doing a grocery pickup is a much better experience, enough to be the differentiator that will determine to which store to go.
You, personally, will still be able to opt-in to the old model by not using the loyalty program and paying the old Whole Paycheck prices, right?
There's always been a tension if avoiding loyalty-systems means paying extra, whether going to a more-expensive store or simply refusing to participate in the system.
These are systematic things.
You didn't consider for a tiny second that my complaint was about the way the system works and affects people overall rather than being a personal complaint as though I was one of those delusional libertarian folks seeing myself as some totally isolated individual actor… I'm complaining about loyalty systems and tracking and its effect overall on, yes, even individual anonymity and liberties etc.
So.. you're saying that the answer to my second questions is "no"? If loyalty programs routinely distort pricing that much, then the opt-out I suggested doesn't exist.
> Prices will continue to change and the idea of what they would have been becomes nothing more than a counter-factual speculation.
Still, I don't think we have to speculate. When loyalty cards first came out, there were some chains that slow to implement or, for whatever reason, decided their implementation needed cancelling and ended up trumpeting their failure in their ads as a feature to consumers "no card needed for discount!". How'd the pricing work out then?
> You didn't consider for a tiny second that my complaint was about the way the system works
That's a pretty huge counter-factual speculation (to use your words), considering I was merely asking questions. In point of fact, I did consider it.
> affects people overall
OK. So, if I understand correctly, you're worried about WF jumping on the loyalty bandwagon because of the implications for society/other-people, not for yourself. In that case, no opt-out strategy would be good enough, be it paying the non-discounted price or some version of 867-5309. That's fair.
I definitely see everything in a much more social context. I rarely make any decision thinking merely about the immediate short-term individual costs and gains. I can only technically but not sympathetically grasp how people can have self-centered, myopic mindsets, but obviously enough people do. I frequently fund myself having to bring up the idea that pro-social thinking is even a concept to consider.
Understanding that everything I personally experience is colored by my pro-social mindset, I feel really differently (positively) about places like Trader Joe's that refuse not only to have loyalty cards but even to have loss-leader discount sales and other such bull crap. The relationship between Trader Joe's and their customers is fundamentally more respectful and honest than these other stores.
Incidentally, I don't mind the sale discounts at places like Grocery Outlet because they are actually based on overstock and so actually pricing to supply-and-demand as opposed to playing some game with prices. Their highlighting of how much you "saved" over "other stores' prices" is annoying though.
Finally, I happen to know that many of the discount sales at other stores are actually forced upon them by outside brands. Brands are pushing their names and provide product at a discount to the store with the requirement that they promote a sale, all to drive the brand recognition etc. and that's part of why Trader Joe's is free from that crap (by not emphasizing outside brand names).
- Maybe 7 different kinds of fruit and vegetables. And I'm stretching this. Most in two varieties, organic and not. There was virtually no selection of fresh produce and what was there wasn't highly impressive in its freshness. The homeopathy section of the store was larger and better stocked.
- All of the meats were vacuum sealed and prepackaged. No fresh fish or butcher. And I don't mean "butchered in the shop and plastic wrapped". I mean packaged at like a factory god knows where. Some of the meat was past the sell-by date.
- An extraordinarily large section of milk and milk-alike products. I remember years ago (the last time I shopped at a WF) there being different kinds of milk from different mammals (goat, etc.), but not like 4 different kinds of cow milk and then a dozen different varieties of vegetable-based "milks".
- The hot food bar was flavorless and in some cases bad...also very expensive.
- A quarter of the store was turned over to some kind of bar.
- A definite feel from the employees of not wanting to be there.
I thought it might just be this store, so I went to another one near my work for lunch and the same problems. The organic wine selection is fantastic I guess.
Keep in mind that this store is not far from a couple Wegmans (absolutely fantastic top-tier grocers who's organic produce section alone is the size of the entire WF's produce section) and in the middle of a ring of large ethnic and South/East Asian grocery chains (read:they all have local fresh fish markets where you can get fresh fish filleted on demand right next to a giant wall of fresh butchered and wrapped meats and animal parts from an entire menagerie of fauna).
The local regular old grocery I can walk to was a better experience tbh. It felt very much like a very expensive Aldi in terms of selection and quality.
https://www.usatoday.com/story/money/2018/02/08/empty-whole-...
If the victim weren’t a giant, ruthless megacorp, I’d probably be outraged instead of amused.
The context here is that WF used to use their back rooms to hold excess inventory, but transitioned to a just in time delivery model. This had two primary effects:
For a few quarters, their numbers looked better than they should, since they were juiced by selling down a bunch of inventory that had been stranded in the supply chain.
The second effect hit after the acquisition: The JIT supply chain they setup was an unreliable disaster, so the availability of goods at the stores plummeted after the buffer of backroom stock was depleted.
Understand, I am in no way defending amazon, i hope it all burns, but in the interest of fairness I must say that six months is too short a time to evaluate whether Amazon can run grocery stores well.
I worked in a piggly wiggly in Alabama during high school, and maybe three years later I was the produce manager, that whole side of the store was my responsibility.
20yo me was not ready for how much shit there is. Keep in mind, this is in alabama, not exactly an overregulated state, and definitely some of the regs were imposed by PW corporate. Anyways there were irrigation cleanings, audits, temperature sheets on the hour, display audits and secret shoppers, knowledge integrity audits where secret shoppers ask you about fruitveg factoids and you're supposed to know and love and worship that info, there's all the inventory sheets, fifo+backstock alleviation, backroom cleaning, etc. There's more I've forgotten probably.
My point being, there is a lot of variables in those stores. Some from the state, some from corp, and on top of all that the business itself is an organism. It changes and adapts with the seasons. I had a whole separate routine for stocking watermelons, I even rearranged the displays in the store per the PW rules. All sorts of shit like that takes time to learn and marinate in people's heads.
The grocery store that some ninety year old geezer has had open for fifty years will have a completely different logistics profile, because he got tired of dealing with the these problems forty years ago and fixed them. He has a tremendous advantage in that regard over a large corp doing groceries in unstable stores.
It's upsetting that even things like groceries are becoming millenialized. I shouldn't need a prime membership to get good groceries, the whole point of grocery stores is for them all to compete to get EVERYBODY good grocery prices.
It's too late for Amazon to put WF back. They will most likely find ways to make them little profit factories where oblivious young people shop there semireligiously, ignoring all the benefits of small biz groceries.
Sounds like you got unlucky with a bad store.
Prime can mean in German "Primzahl" -> prime number and "Erstklassig" -> first class.
Its $120, the same as Costco Executive membership, and twice Costco Gold Star membership.
No particular benefit of Prime solidifies my decision to subscribe but collectively a handful do.
I would imagine most long term members don't take advantage of all the Prime benefits but rather a select few that align with their habits.
The problem Amazon has to juggle is profitablity with members. I would guess if you used all of the benefits then Amazon might lose money on you. So Amazon has to price Prime such that it is appealing to as wide enough audience as possible to offset the loss incurred from people who maximize their benefit and at the same time offer benefits that are niche enough that not all members utilize them while at the same time perceived at potentially beneficial to all members.