
Amazon to Acquire Whole Foods for $13.7B - whatok
https://www.bloomberg.com/news/articles/2017-06-16/amazon-to-buy-whole-foods?cmpid=socialflow-twitter-business&utm_content=business&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social
======
scotchio
Oof. I wonder what this means for Whole Foods culture and employees.

If you don't know, John Mackey, the CEO / founder, is a major believer in
conscious capitalism and of empowering his employees.

Whole Food employees get paid pretty darn well with some crazy good benefits
for their industry and line-of-work (UNION FREE most of the time too!).

WF banks on them being true believers and motivators of the cause - including
dedicating a fair amount of paid time to trainings. I've heard mix stories
about how Amazon treats employees. I wonder how that will mesh.

So I guess I'm asking:

* What is going to happen with employee culture?

* What is going to happen with all the "Fair Trade" deals WF has in place that might not be the most economical decision now?

* Here comes store automation and hefty lay-offs?

Source: Worked at WF for 3 years

~~~
illumin8
Disclaimer: I work for AWS, but my opinions are my own.

I don't think you have much to worry about if you're a WF employee. Amazon
actually treats their employees very well. In my experience here, I've never
seen any of the things the NY times article talked about, either on my team or
any other team I've interacted with. People have a healthy work/life balance
(40-50 hours a week), get paid very well (definitely above average, and
probably in the top 25% of industry), and in general they are concerned with
long-term employee sustainability, rather than letting employees burn out and
quit.

I know that there are some stories about bad experiences in the fulfillment
centers, but keep in mind that those positions are temporary seasonal work by
unskilled labor. That's a completely different environment than full time
employees work in.

~~~
nebula
_I know that there are some stories about bad experiences in the fulfillment
centers, but keep in mind that those positions are temporary seasonal work by
unskilled labor._

The tone of your writing suggests that you are OK with treating these people
badly. If a company treats some set of its workers badly, what stops them from
treating other employees the same way? In this case, they may treat SW
engineers well because there is a lot of demand for engineers, and they have
to be treated well to retain good folks. That is not comparable to the good
culture that OP claims WF has.

~~~
illumin8
Have you ever worked a minimum wage food service or warehouse job before? I
have, and believe me, it's hell. I spent my high school years working as a
cook at KFC. Hot summer days spent making $3.35 an hour standing over pressure
cookers full of 400 degree hot oil and lifting 50 pound baskets of deep fried
chicken out of them. You get a 15 minute paid break every 4 hours, and a
mandatory 30 minute unpaid break for lunch.

I'm not saying its ok to be inhumane or break laws and treat your workers like
cattle. I'm just saying that if you've never worked at a minimum wage
unskilled job before, you probably don't realize how much it can be hell, just
due to the nature of the work. The same thing can be said for lots of labor
like farming, construction work, mining, etc.

------
AndrewDucker
[https://twitter.com/dkberman/status/875701677504024576](https://twitter.com/dkberman/status/875701677504024576)

"Amazon did not just buy Whole Foods grocery stores. It bought 431 upper-
income, prime-location distribution nodes for everything it does."

~~~
maxerickson
I don't think that is right, Whole Foods stores are already full of...food.
They don't have room for hundreds of additional products, never mind tens of
thousands.

~~~
ccorda
Place an order by noon for groceries plus anything you want from Amazon.
Amazon fills up truck(s) at whatehouse and drops off at local Whole Foods.
Stop by on your way home from work and they bring your items to your car.

You get free same day delivery. Amazon just greatly saved on last mile
delivery costs.

That's the value of those nodes without having to store all the inventory.

~~~
rainbowmverse
I'm closer to Whole Foods' nearest distribution center than an actual Whole
Foods. The nearest Whole Foods is almost 40 miles away.

If this works out for Amazon, I wouldn't be surprised to see Walmart try and
buy Trader Joe's. They own Aldi, which has made a big push to compete with
Walmart's reach outside cities. The nearest Aldi is closer than Walmart, and
that's already not far away.

~~~
maxerickson
Walmart has ~4500 (US) stores already. Aldi is expanding rapidly but has far
fewer than that.

The two Aldi locations I drive past are both located less than a mile from the
nearest Walmart locations (I expect they do a fair amount of piggybacking).

The purchase doesn't make a huge amount of sense to me. I guess the most
sensible thing is that they see the stores being located by the best
populations to start out doing food deliveries for (affluent, so they can
charge higher prices while they figure out how to do it).

Walmart has a pickup service. They keep experimenting with rapid delivery but
people don't really want to pay much for it.

~~~
bigjimmyk3
After a few initial hiccups, my wife is sold on Walmart's grocery pickup
service. For short-range delivery, they are also experimenting with
"terrestrial drones"[1] which I have seen around town once or twice.

1\. [http://www.chainstoreage.com/article/different-kind-drone-
ro...](http://www.chainstoreage.com/article/different-kind-drone-rolls-
walmarts-backyard)

------
harrisreynolds
_HUGE_ news in the grocery delivery space.

Groceries are one of the few large markets that require some proximity to
customers due to costs and spoilage. Each grocery store is a type of mini-
distribution center for grocery products.

Shipt and Instacart have succeeded to date because they use existing
distribution channels and set up marketplaces for the "last-mile" of delivery.
This is in contrast to Webvan in the early 2000's who tried to do grocery
delivery by building their own distribution and failed spectacularly.

Amazon has become an expert in distribution and logistics. But it is clear
that using their current model doesn't generally work with groceries (RIP
Webvan, 1998-2001). Bananas need to be treated much differently than books.

So what does Amazon do? But Whole Foods!! A moderate sized grocery store with
a significant national footprint and lots of higher income customers.

Now they instantly have a pre-built distribution channel that is already
optimized for the grocery business (which again is much different than non-
perishable consumer goods etc).

Things definitely just got interesting in this space!! I still believe that
Instacart and Shipt can succeed, but they need to maintain a laser focus on
making their shoppers and customers happy! And grow as fast as possible while
Amazon digests Whole Foods!

[Note: I was the early CTO for Shipt responsible for building their grocery
delivery platform and initial engineering team. Go Shipt!]

~~~
FLUX-YOU
> I still believe that Instacart and Shipt can succeed

Amazon could just buy Shipt and/or Instacart as well, barring FTC
intervention.

I'm not sure what B2B partners Shipt has, but I know they have a mobile app.
Joining the mobile app to Amazon would give Shipt a boost and Amazon a start,
I'd imagine.

[I worked with one of Shipt's mobile developers at a previous position. Go
Shipt!]

~~~
kp1234321
Serious question: would it be beneficial for Amazon to buy out an existing
grocery distribution company like Instacart when Amazon is already an expert
at distribution?

~~~
FLUX-YOU
They would be paying for customers and talent. Why spend time building your
own network when you can buy someone else's for the right price?

------
StevePerkins
Wow... all the articles I've been reading about Whole Foods lately deal with
how they're hurting, and losing market share to more affordable competitors
like Trader Joe's.

If this is about Amazon thinking they can turn things around for Whole Foods,
then it will certainly mean drastic changes to price, selection, and employee
structure.

If this is about Amazon using a brick-and-mortar chain as a tool to help
Amazon's own ventures (e.g. grocery delivery, local storage for same-day
deliveries, product return and support locations, etc), then it will certainly
mean drastic changes what a Whole Foods store even is.

Either way, I can't imagine a course in which Whole Foods as we know it isn't
basically over. Which doesn't necessarily bother me (I migrated to Trader
Joe's and similar competitors long ago), but does seem like a big deal in the
grand scheme of things. The grocery industry was heading in a Walmart-ish
direction... and Whole Foods was almost single-handedly responsible for
bringing a counterculture into the mainstream, and forcing all the other
chains to reverse course and up their game.

~~~
deelowe
I think this is more about amazon easily acquiring a ton of retail space for
it's JIT order deliver business. I'm starting to think they're actually
serious about this drone delivery stuff.

~~~
sh87
Yeah my thoughts did rev up to the drone delivery concept till I realized Elon
Musk is building a tunnel underneath because thats more realistic than drone
delivery.

------
lwlml
Amazon is now (or more so now) like Evil Corp in the Mr. Robot kind of way.
You can ship your Evil groceries via Evil Prime purchased via voice-command
with your Evil assistant device paid for with your Evil credit-card. Evil.

Frankly I don't buy as much from WF anymore considering that what they carry
is much more like "organic junk-food" than actual food.

If you really want to support the "cause", find yourself a local farmer or CSA
to buy from and support them directly.

[https://www.localharvest.org/csa/](https://www.localharvest.org/csa/)

~~~
dx034
They don't offer bank accounts yet. Only then Mr Robot could come and change
the world by hacking them /s

~~~
lwlml
If Amazon could drop $13B on a national grocery retailer they could just as
easily drop some number of billions to buy every podunk regional bank willing
to sell and merge them into the Bank of Amazonia.

If Elon Musk doesn't do it first to enable easy financing for Elon Musk-fans'
buying everything Elon Musk. Musk.

~~~
deegles
Where do I sign up?

------
nfriedly
Bezos: "Alexa, buy me something from whole foods"

Alexa: "Buying Whole Foods"

Bezos: "Shit"

~~~
niyazpk
Credit(?):
[https://twitter.com/ChicagoPhotoSho/status/87570898151116390...](https://twitter.com/ChicagoPhotoSho/status/875708981511163905)

~~~
IAmGraydon
Nice catch. Plagiarizing for upvotes is rather sad.

~~~
ransom1538
So is public shaming.

------
Geekette
You know the race for global trade dominance is heating up and playing out
regionally when the same company tries to buy Slack and Whole Foods in the
same week. While one is familiar with conglomerates holding a diverse array of
businesses, it's fascinating and slightly unnerving (in terms of market power
increasingly concentrated in fewer hands) to see it in motion.

~~~
mikekij
Agreed. I love Amazon prime, and also love Slack. But I fear the day when all
of the "good companies" end up being owned by one corporate overlord.

~~~
joering2
That's nothing new...

Media:

[http://libreria.sourceforge.net/library/Free_Culture/images/...](http://libreria.sourceforge.net/library/Free_Culture/images/media-
concentration-cl.png)

Food:

[http://2.bp.blogspot.com/-7KY4dEnHmnc/U9bkkriu8hI/AAAAAAAAD9...](http://2.bp.blogspot.com/-7KY4dEnHmnc/U9bkkriu8hI/AAAAAAAAD9U/Iay01ZL4amg/s1600/Food+Co%27s.png)

~~~
lkbm
A large share of media companies owned by a single conglomerate.

A large share of food companies owned by a single conglomerate.

A large share of retail, cloud hosting, and online messaging owned by a single
conglomerate.

You're right that there's long been some serious consolidation in sectors, but
those two examples seem a little different from Amazon grabbing up large
portions of _multiple_ sectors.

------
tuna-piano
Some quotes from a 3 month old article about Amazon and physical grocery[1]

“The whole premise [of online grocery] is that you’re saving people a trip to
the store, but people actually like going to the store to buy groceries.”

“A bunch of smart people at Amazon have been thinking about re-imagining the
next phase of physical retail. They want more share of the wallet, and
habitual, frequent use of Amazon for groceries is the ultimate goal.”

"Long term, a stronger grocery business could position Amazon to become a
wholesale food-distribution business serving supermarkets, convenience stores,
restaurants, hotels, hospitals and schools. "

"A group of Amazon executives met late last year to discuss the disadvantage
Amazon faced compared with grocery competitors such as Wal-Mart and Kroger
because of its lack of physical stores and customer apprehension about buying
fresh foods online. They decided they needed something more to jump-start
Amazon’s grocery push beyond plans already under way for the Amazon Go
convenience store, modeled for urban areas, and drive-in grocery pick-up
stations suited for the suburbs."

[1] [https://www.bloomberg.com/news/features/2017-03-20/inside-
am...](https://www.bloomberg.com/news/features/2017-03-20/inside-amazon-s-
battle-to-break-into-the-800-billion-grocery-market)

------
dkrich
I don't mean to be a naysayer, I don't really know what this means. But with
all of the euphoria I'm hearing regarding Amazon and the doom-and-gloom
regarding "traditional" grocers, I can't help but remind myself how horribly
bad people are at predicting the future. Most of the people I'm hearing make
predictions about what this means have been wrong about _everything_ to this
point.

Not saying it won't be a game-changer, but it is fascinating to watch people
extrapolate this out to the extremes as soon as the news hits the ticker.

To put it another way- if it were that obvious that buying Whole Foods was
going to make Amazon the dominant grocery seller, why weren't people
predicting that they would do it all along and asking what they were waiting
for? It isn't until Amazon acts that people say "Oh yeah, that was the right
move."

~~~
omarchowdhury
Scott Galloway predicted AMZN buying WFM last month:
[http://www.businessinsider.com/scott-galloway-explains-
exact...](http://www.businessinsider.com/scott-galloway-explains-exactly-why-
amazon-would-acquire-whole-foods-retail-acquisition-billions-2017-6)

~~~
dkrich
I saw this and I give him credit although I think his idea that Amazon will be
the only winner is pretty irrational. Less than 10% of purchases made today
are online and even with that number growing, there are lots and lots of very
smart companies with tremendous resources who can compete, not to mention lots
of very smart people who can innovate in this space in ways Amazon won't think
of and disrupt them. It happens virtually every time a newcomer is predicted
to become monopolistic.

~~~
omarchowdhury
I agree, he also has a video where he posits that Amazon will kill brands, and
make brands obsolete. I don't think we will ever live in a world where every
product is manufactured and packaged by Amazon. Sure Amazon would love that
outcome, but it goes against the consumers need for choice, and then there's
also the fact that brands have the resources to compete like you mentioned.

------
cercatrova
[https://www.youtube.com/watch?v=cA2-iMz479o](https://www.youtube.com/watch?v=cA2-iMz479o)

I watched this video a while ago about what Amazon Go is a precursor for. In
summary, if AWS is renting out server infrastructure for people, then you can
imagine that Amazon can make the infrastructure to lease out Amazon Go to
other stores. They first integrate it with Whole Foods, then as customers
expect no more checkout areas, they will only go to Whole Foods because it's
faster and maybe cheaper. Then because customers want it everywhere, Amazon
could force other stores like Walmart and Target to integrate Amazon Go
infrastructure to their stores, without Amazon directly competing with these
stores, and make a ton of money leasing it out without spending money on
building whole new stores. Of course, the acquisition could also be like nodes
for warehousing and delivery, but both avenues are not mutually exclusive.

~~~
tuna-piano
Counterpoint... is Amazon Go really that difficult to build? If given three
years, do you not think a different software company can build a similar
system as well? Is this type of system really a winner-take-all market?

~~~
dx034
Same with AWS. First they were the only ones, now they seem to lose market
share to Google and Microsoft.

Amazon doesn't have a monopoly in any of their businesses, they're just very
successful in a lot of them.

------
tuna-piano
I'm confused.

Amazon is known to work backward from an imagined future press release, and
then do the actions necessary to make that press release. How does Amazon see
the future in this case?

-Amazon already has PrimeNow and Amazon Fresh, which offer a great grocery delivery service. For those who have tried these services, it's easy to see how addicting they are vs going to a physical store.

-I can't see Amazon using existing retail stores as distribution centers. I would think you really only need one grocery distribution center for each city in America, and PrimeNow (and AmazonFresh) already has that! Or, has Amazon determined that picking/packing from a retail store is actually efficient? Retail as a DC seems tough to automate, items are in the wrong spot, suspiciously missing, etc. I don't get it.

-I would have guessed that online grocery from highly automated distribution centers is where the majority of the market would be within ~20 years. Does Amazon, the king of online, not think that!?

-Or does Amazon just believe that they can run Whole Foods better than it is currently run?

-Do they just want the purchasing, existing relationships, etc to also sell their customers through other channels?

~~~
tuna-piano
One thought. People still like food and food things and being social, and the
"farmers market" feeling. Even in a future which makes online grocery great
for mundane shopping, people still need stuff to do.

Whole Foods already has bars, cafes, and restaurants. Maybe Whole Foods
locations turn into places where people can hang out, try new things, and buy
online grocery delivery (or pickup delivery as well)?

Who should be trembling in their sleep even more so with this news:

-Blue Apron, HelloFresh, Plated, etc

-Drizzly, alcohol delivery, etc (I think absolutely doomed)

-WalMart? (Maybe completely different customer sets)

-Target, Kroger, other grocery?

-Instacart (I think absolutely doomed)

Whole Foods is a large cafe/fast casual business. I assume competitors in that
space aren't scared at all yet... but I would not necessarily sleep well if I
were Starbucks or Chipotle. Amazon seems to play to win, and they usually win.
Do they want to play is my main question.

~~~
arzt
Whole Foods is an instacart equity owner. I would be curious how this is being
handled given the new conflict.

~~~
etjossem
Probably factored into the final price, heavily discounted given Amazon's own
plans for last-mile.

------
rmoriz
Looks to me like the ultimate war between grocery stores in the US will be
fought out between Amazon/WFM (premium, delivery) and ALDI/Lidl (discount, no-
frills).

As a German I'm amazed by the "food haul" videos on YouTube and the positive
feedback for ALDI US (belongs to ALDI Süd), Trader Joe's (ALDI Nord) and Lidl
(part of Schwarz Gruppe, they just started in the US yesterday).

~~~
pythonaut_16
Don't count out Kroger, the largest supermarket chain in the US. According to
Wikipedia in 2015 it trailed only Walmart and Costo in worldwide revenue, and
had 20% more revenue than Amazon.

[https://en.wikipedia.org/wiki/Retail#Global_top_ten_retailer...](https://en.wikipedia.org/wiki/Retail#Global_top_ten_retailers)

~~~
lwlml
The Kroger-based store where I live just botched a floor-plan change so badly
I should hope that it was just a local screw-up. This particular grocery store
went from okay to "penny-thriftstore" useless.

~~~
throwaway9980
Kroger is the primary grocery store in my neighborhood and I shop there at
least once a week. Despite that, I can never quite grok the store layout. It
feels like it's been designed to make it impossible to find the last three
items on your list so that you will roam the store endlessly picking up random
impulse items while hunting your white whale condiment.

~~~
lwlml
This makes me wonder, has anyone used the Walmart "drive-up" shopping system
where you shop online, drive to a specified location and they load your
groceries after you pay?

------
dawhizkid
This is not good for Instacart. My understanding is WF was their biggest
partner and source of revenue. No way amazon will use them.

~~~
baccredited
Challenge often becomes an opportunity. Instacart recently landed Publix who
has MUCH higher market share in the markets they serve.

Disclaimer: I'm an Instacart investor.

~~~
hn_throwaway_99
Challenge will be that folks who shop at Whole Foods (aka Whole Paycheck) are
already relatively price insensitive compared to people who shop elsewhere.
Instacart was such a good match for WF because it's the same demographic of
people who are willing to pay a lot for convenience. Your average Publix
shopper is likely to be much more price sensitive.

~~~
astrange
Whole Foods is reasonably priced for actual food. They just have a different
approach to high-margin products where instead of Twinkies they sell you
special homeopathic Twinkies.

~~~
hn_throwaway_99
I call BS. I really like Whole Foods, but they are WAY more expensive to fill
a "normal" grocery list than a place like Publix. Granted, a lot of that is
because they only sell more expensive versions of things (e.g. sometimes
organic-only produce, and their meat especially tends to be much more
expensive), but it's still very difficult to shop cheaply at WF.

------
hew
This is a Walmart counterattack. Walmart is on the verge of capturing large
swathes of busy "middle-class buyer" pickup orders.

Amazon saw it and responded quickly.

~~~
dsfyu404ed
Busy middle class buyers don't go to whole foods except for definitions of
middle that are inclusive enough to appease the diversity committee at UCB.

~~~
TheCoelacanth
Middle class people definitely shop at Whole Foods. There aren't enough upper
class people to sustain something as low margin as a grocery store.

------
nojvek
I quite like wholefoods. Now that Amazon will own it I feel less likely to
support it.

Amazon is a cut throat profit making machine at the expense of human
exploitation.

Wholefoods felt like the little guy who was trying to do things differently
from mainstream supermarkets.

~~~
chrisper
By that reasoning you would also have to stop visiting any website that uses
AWS.

I think that would mean you'd have to stop using the Internet entirely.

~~~
aylmao
Are you implying that it's unreasonable for him to dislike Amazon for its
labour practices if he's an internet user? That doesn't make any sense.

~~~
chrisper
No. I tried to say that if he wants to avoid things to stop supporting Amazon,
then he will have a hard time. A similar case would be Nestle, since they own
so many products.

------
snowman311
AmazonFresh is an expensive service. The team is searching for routes to
dominate the high-end grocery market (worth billions) before launching into
the worldwide grocery market (worth hundreds of billions). AmazonFresh
customers and Whole Foods customers value convenience and quality. They are
much less price sensitive than most.

Whole Foods has millions of customers. Amazon will surely be advertising
AmazonFresh or some re-branded form of it - such as "Whole Foods Direct" \- to
Whole Foods customers. Do Whole Foods turn into AmazonFresh warehouses?
Possibly, but it's unclear how the two business will eventually integrate.
It's also possible that Instacart gets acquired by Amazon, but for the most
part I see them getting screwed in this deal. Instacart's business development
deal is like bringing a knife to a bomb-fight.

The other major value this deal brings to Amazon is the industry-specific
knowledge that the Whole Foods team brings. As a frequent East Coast, Whole
Foods shopper, I am always amazed to see how much of their food comes from the
West Coast/all over the world. I think the execs of AmazonFresh, who are
mainly HomeGrocer/Webvan execs, appreciate the complicated logistics of doing
the businesses. Amazon will be able to combine its software engineering
knowledge/logistics knowledge with Whole Foods' expertise at creating an
amazing grocery-shopping experience.

------
bogomipz
Interesting so they are looking to take on Costco in the organic grocery
market then:

[http://www.seattletimes.com/business/retail/costco-
becomes-l...](http://www.seattletimes.com/business/retail/costco-becomes-
largest-organic-grocer-analysts-say/)

I'm surprised the article didn't mention this.

------
xutopia
Amazon wants to kill retail and their biggest threat is Walmart. Walmart
currently uses groceries as a way to get people in stores and when they're in
the store they buy other things as well.

Now imagine if you are Amazon and you'd like all those people going to Walmart
to just use your services. If I could get my groceries delivered to my door
and only need to go to stores once in a blue moon I'd be really happy.

~~~
Chaebixi
> Walmart currently uses groceries as a way to get people in stores and when
> they're in the store they buy other things as well.

Walmart groceries is a sad and pretty recent phenomenon. It got people in the
stores just with cheap prices long before they had groceries.

~~~
dsfyu404ed
Walmart only has good grocery selection at super-centers for the most part

~~~
Eire_Banshee
Which is almost all of them now?

------
joshfarrant
$13.7B is quite a satisfying amount.

That's $1 for every year since the Big Bang.

~~~
omarchowdhury
Or $30M per Whole Foods (rented) stores.

------
tmaly
Grocery stores are a tough market with razor thin margins. Whole Foods has a
ton of competitors like Trader Joes that happens to still have organic
options.

Since I did not see it asked, any idea if we will see some new Prime benefit
at Wholefoods?

~~~
aerovistae
Out of curiosity, what's your insight into grocery store profit margins? Were
you an exec at a grocery chain, or something giving a similar window into
their numbers?

~~~
thomasthomas
they're called 10-k's. [https://www.sec.gov/cgi-bin/browse-
edgar?action=getcompany&S...](https://www.sec.gov/cgi-bin/browse-
edgar?action=getcompany&SIC=5411&owner=exclude&count=40&hidefilings=0)

------
Robotbeat
I'm from the Twin Cities in Minnesota which has tons of co-op grocery stores.
They're successful and growing with cheaper prices than Whole Foods and much
more progressive values (as well as giving regular folk an ownership stake in
a crucial community institution). Whole Foods seemed to me to be just a poor
copy of cooperative grocers. I'm surprised no one else has mentioned that in
the comments here.

I'm not shedding any tears for Whole Foods' "culture" now that they've been
bought by Amazon. They were always a sort of sham-progressive company. In the
words of Portlandia, "Whole Foods is CORPORATE."

I suppose if you're going to be corporate, might as well go full Amazon. They
do it very well.

~~~
trophycase
Seward Co-op is literally my standard for grocery store. I always laugh at
stuff like Whole Foods and Trader Joe's because, like you said, they are sham-
progressive in every sense IMO.

~~~
HillaryBriss
interesting. i never thought of Trader Joes as progressive. do they try to
market themselves that way?

------
lucb1e
Since the article doesn't mention it, Whole Foods is apparently:

> an American supermarket chain exclusively featuring foods without artificial
> preservatives, colors, flavors, sweeteners, and hydrogenated fats.

I was waiting for this to appear (a common grocery store with seen-as-healthy
stuff) but it already exists. TIL.

------
rollingpebbles
WF has been struggling because they helped paved the way for mainstreaming of
organic, sustainable, etc. They couldn't pivot really and everyone else was
undercutting their high prices and they've been unable to increase profitable
foot-traffic to stay alive. Amazon could basically use WF as a laboratory for
deploying Amazon Go without having to build grocery logistics from scratch.
Hope it works out.

------
cphoover
I think this might signal the walk in walk out payment paradigm of Amazon Go
going national. If we could say goodbye to lines, I am all for it.

~~~
electriclove
^ This. Quick video on what Amazon Go is:
[https://www.youtube.com/watch?v=NrmMk1Myrxc](https://www.youtube.com/watch?v=NrmMk1Myrxc)

------
joveian
One thing I haven't seen mentioned here yet is that I wonder if Amazon intends
to sell on their regular online store some of the non-perishable items that
Whole Foods sells. Currently, Amazon is not usually competitive vs. VitaCost,
Lucky Vitamin, and Swanson Health. I didn't realize until checking just now
that VitaCost is owned by Kroger.

------
dforrestwilson
What happens to Sprout's Farmers Market?

People seem to think it will be bought, but this would seem to be negative
news because the price paid for Whole Foods was about half what Sprout's is
trading at.

------
JumpCrisscross
Aw, poor Blue Apron.

~~~
tedmiston
Blue Apron is not a good company relative to the other meal kit delivery
services anyway. Their recipes are overly simplistic and their whole
experience using UX dark patterns limiting which meals one can get in
combination turned me off, and misleading people regarding cancellation.

The higher quality meal kits like Home Chef won't have this problem because
they give you, for about the same price, more complex recipes with cool
ingredients like demi-glace. There are enough things you can't buy in small
quantities easily.

~~~
mikelward
HelloFresh automatically re-activated my membership when I thought it was
paused, with no notification until after they'd charged my card on file and
shipped a week's worth of food. Never touching them again.

Home Chef proactively emails you a week ahead of time telling you what the
menu is. I've forgotten to customize my meal selection once or twice, but have
been happy enough with the defaults for the "carb conscious" eater profile
that I never really have to.

Don't _think_ I had any major issues with Blue Apron, except that yeah, their
recipes were simplistic, and often used lots of bread, rice, and potatoes.

~~~
tedmiston
That's exactly the experience I saw canceling Blue Apron. You request to
cancel, they acknowledge your request and say okay but with a weasel word
reply. Something like 4-6 weeks later a new shipment shows up unexpectedly and
they purport that they can't refund because it's been delivered.

I even tweeted at their CEO about the company's use of questionable and shady
growth tactics to no avail. That is the kind of move that makes me open a
credit card dispute against the company and write them off for good.

------
ShakataGaNai
The old joke is that it isn't "Whole Foods" but "Whole Paycheck" because of
how expensive they are. I wonder how that will change with Amazon's typically
price cutting ways. The two seem somewhat at odds with each other.

------
nihaar
I'd be curious about what this also means for Instacart given their strategic
partnership with Whole Foods and their direct competition with Amazon Fresh.

------
coleca
If the brick and mortar grocers weren't scared of Amazon before, they sure are
now.

~~~
Nicholas_C
Investors are scared too. WalMart shares down 5%, Target down 8%.

------
jarjoura
This might just be a strategic move to block Instacart as every WF I've been
to recently had created an entire checkout section just for Instacart.

~~~
magic_beans
Whoa, really? I've never seen this in New York.

~~~
sethhochberg
Are you upstate? In the stores I've used around NYC, the Instacart presence in
WF is huge. Branded coolers by the doors for deliveries waiting to go out and
everything.

------
djhworld
I wonder if they'll roll out the tech they showed a few months ago for the
store in Seattle where you didn't have to check out.

~~~
tedmiston
The impression I got was that the store is more of an R&D project. It didn't
work super well or scale with number of people so they had to artificially
limit food traffic to keep it working. I'd be surprised if they rolled that
out in an environment as busy and complex as Whole Foods stores so fast (or
ever).

------
tanilama
Well, if successful, it will be a great leap forward for Amazon to advance its
grocery vision. Maybe some kinda deal will be given to Prime members? Amazon
Go Wholefoods? For the employees, it is neutral, if the company keeps
underperforming Amazon will surely do something about it.

------
msoad
This is very bad news for InstaCart. I know most of InstaCart orders are
WholeFoods and CostCo

~~~
karangoeluw
How do you know that?

------
sidegrid
This is another step in how an online book store slowly becomes the Umbrella
Corporation.

------
plusbryan
What does this mean for Instacart I wonder? Will Amazon shut them off from
their stores?

~~~
themagician
Probably. Which is good, because AmazonFresh has much better inventory control
and tracking than Instacart—which has none.

------
wcchandler
Now that they control the distribution, they should control the supply. Well
functioning, scalable greenhouse solutions should definitely pique Bezo's
interests. I'd love to be a head grower over a large operation like that.

------
buryat
I wonder if they're going to implement Amazon Go in Whole Foods
[https://www.amazon.com/b?node=16008589011](https://www.amazon.com/b?node=16008589011)

~~~
dharma1
pretty sure that's the partly the motivation behind the acquisition

~~~
dx034
Probably in the long term. Over the next years, the technology is not likely
to be ready for the number of customers a wholefoods can have.

But the stores should work well as distribution centers for grocery (and
other) deliveries.

~~~
dharma1
Yep it will take a while. But it's a faster and less risky route to market
than Amazon branded brick and mortar grocery stores from scratch. And many
other synergies like you say

------
aezell
In this part of the country, it seems like Kroger's ClickList service has been
very successful. I'd imagine other larger chains in other parts of the country
are doing similar things. Sure, it's not delivery but if you are driving right
past the store on the way home and don't even have to get out of the car, it's
a pretty close competitor. That's especially true in smaller communities where
Amazon's grocery delivery doesn't yet make sense. Might this be a partial
reason that Amazon is making a bet on the grocery market?

------
joycey
I can't wait for drones to deliver organic quinoa straight to my door.

------
synaesthesisx
Anyone know if they'll pilot Amazon Go approach at some of these stores? I
don't think it's nearly ready for scale but could see it working out for
certain locations...

------
mickrussom
I've noticed that comments here that are critical of Bezos gets met with
downvoting. Sad. Why Microsoft got the 3rd degree and Amazon gets a pass is
beyond me. I guess that large unethical companies like Amazon can use AIs to
police sentiments about them and do the needful. We should start looking for
anti AI mechanisms in discourse as well as work to ensure paid sockpuppeting
and gas lighting is not going on. The truth is going to be harder to get at
these days.

------
bsder
People are also forgetting that CEO Mackey was about to get ousted or his
wings significantly clipped.

I feel this is more Mackey cashing out than anything else.

Whole Foods is about to change a lot and quickly.

------
balozi
Nothing Amazon does makes sense immediately. Only in hindsight does the
strategy emerge.

What would be also helpful would be for Amazon to disrupt the wine and liquor
sector.

~~~
tantalor
> disrupt the wine and liquor sector

Explain?

~~~
spydum
Maybe they mean the inefficiency in the producer -> distributor-> retailer
chain? What value does the middle guy add?

~~~
ohyes
Liquor is heavily regulated on a state by state basis. The distributor
relationship is often required by law.

~~~
Danihan
So Amazon will create a spin off a distributor company

~~~
ohyes
Yeah, that might work. It appears to be very political/corrupt in
Massachusetts at least. It doesn't really matter what liquor store you go to
as prices are basically fixed here. They'd have to get the distributor license
approved, and a separate retail license... and then (I think) a single company
is allowed no more than 3 retail locations in the state.

Anyway, I agree there's a lot of bullshit that adds to the cost of alcohol,
and does make it look ripe for disruption, but I suspect there'd also have to
be a lobbying effort to get the laws changed on a state by state basis (for it
to be scalable), and whoever was trying to get the laws changed would be
facing the alcoholic beverage industry lobby, who are also a fairly
powerful/entrenched group.

------
gigatexal
Well this is a huge exit for WholeFoods which was seeing fewer and fewer
people enter it's stores and increased competition from value grocers
introducing organic foods. A number of articles asked if WholeFoods had a
future in this new environment. As for Amazon, I see this more as a real-
estate play to help them further their new push into grocery and the no-
checkout process.

------
codecamper
Amazon is getting too big.

How's this for an investment strategy... Long AMZN, short a basket of all
other mid to large retailers & grocers.

~~~
dx034
The acquirer stock price often falls after an acquisition. So probably not a
really good strategy.

Conglomerates have happened in the past. They become very big until they stop
making a lot of money and people realise that they could be more efficient if
you split them up. Amazon and Google can afford growing so much because they
have a very successful business line. If growth there stops they would likely
start selling some parts.

~~~
emodendroket
> Conglomerates have happened in the past. They become very big until they
> stop making a lot of money and people realise that they could be more
> efficient if you split them up.

Yeah, who could forget when companies like Standard Oil or AT&T decided to
split up, entirely through the power of market forces, with no government
intervention at all.

~~~
asr
Conglomerates are companies that hold unrelated businesses. Berkshire Hathaway
is a conglomerate. Railroads and car insurance in the same company!

Standard oil and AT&T were not broken up because they were conglomerates. They
were broken up because they were monopolies in single (or closely related)
markets.

~~~
emodendroket
The reason for Standard Oil's success was not specialization so much as
expanding into every single business that could possibly affect the price of
oil. Their ability to boss around railroads, and their eventual direct
investment in railroads themselves, certainly calls Amazon shipping to mind.

------
panooper
Pretty good rundown of reactions and implications of this deal here:
[http://circulaat.com/main/amazon-to-acquire-whole-foods-
in-1...](http://circulaat.com/main/amazon-to-acquire-whole-foods-
in-137-billion-bet-on-groceries-2)

------
skinnymuch
Wow all cash? Amazon's cash pile will be pretty small relatively speaking
after this. Less than $10B.

~~~
codecamper
I read they will have to borrow the purchase amount.

~~~
skinnymuch
Ah okay. I tried searching around a bit for more details but skimming only got
me the same info from main outlets. Do you know where you read that?

------
20years
Does anyone else think that this purchase is largely in part so they can get
AmazonFresh in a lot more places quickly?

In my area where there is a big college campus, they have been hiring for
AmazonFresh devs for over a year. We have no AmazonFresh here but we do have a
Whole Foods.

~~~
kevinsundar
Are we talking about SLO haha?

~~~
20years
Yes :)

------
duxup
I buy things on amazon when I feel the price is good or better than I can get
locally. Whole Foods doesn't fit that mold at all.... now maybe they provide
different products but then Whole Foods isn't Whole Foods anymore.

------
dpratt
I wonder how long until the first beta of Elastic Grocery System?

~~~
honestoHeminway
How long till somebody develops the UBER of groceries? Your neighbour could do
your shopping for you.

~~~
cercatrova
Like a decentralized Instacart, interesting.

~~~
omarchowdhury
Why isn't there a total decentralized on demand platform? The bulk of the
value is in the people performing the services, not the app technology to
connect them.

------
logingone
Bezos will then start putting pressure on farmers. I don't know how these
things work in the states, but the dairy industry would be the prime example
in the UK.

------
davidiach
I wonder if they will keep the brand or change it to Amazon.

~~~
whatok
Said it will operate as a standalone business for now.

~~~
opportune
Completely standalone, or integrated into the Amazon infrastructure while
maintaining the Whole Foods brand and product line? I could see Amazon using
whole foods as a kind of local "base" for grocery delivery services. Having a
physical store to offload perishables onto if online demand doesn't match
supply really makes sense.

~~~
jordache
Margin on them asparagus water is tremendous!

------
danm07
I wonder if instead of Amazon building out their own stores, they're going to
use Whole Food's... unlikely but possibility is there if they do it well.

------
tcbawo
Perishable goods like groceries are one of the few businesses that Amazon is
not in yet. My guess is that Amazon is looking to take Pantry to the next
level.

~~~
jonknee
What do you mean? Currently I can have fresh groceries delivered to my door by
an Amazon Fresh truck or I can drive to a local Amazon Fresh pickup store...

------
ckastner
What an exciting development! It will be interesting to watch Amazon apply its
logistics experience to a large-scale groceries operation.

------
yuhong
I wonder what happens to Whole Foods business code of conduct, including the
“Online Forums” approval requirement I dislike.

------
gryz
Liked a joke from by spouse:

Mr. Bezos: \- Alexa, buy me something from Whole Foods Alexa: \- Good. Buying
Whole Foods.

------
delaaxe
If there's ever going to be a world government, it's probably going to be
Amazon.

------
good_vibes
I have a job interview with Amazon next week. Wish me luck, I'll be likely
doing entry level work but I hope I can keep working on websites for clients
(have 2 currently), keep learning data structures/algorithms, and build a
personal project. All this to one day get hired by Amazon for UX or web
developer.

------
ransom1538
Race to the bottom!

Amazon checklist:

1) Import cheap Chinese goods,

2) avoid sales tax,

3) destroy the environment (china),

4) destroy brick and mortar stores,

5) destroy small/medium business.

=== PROFIT!

------
neonbat
i've been helping my friend with his channel and we were pitching for amazon
to buy whole foods a few months ago:

[https://youtu.be/fvZ8mGZZins](https://youtu.be/fvZ8mGZZins)

------
guiomie
"The transaction also may help Amazon sideline Instacart Inc., a startup that
has delivered grocery orders from Whole Foods stores in more than 20 states
and Washington, D.C."

... I wonder how this will play. Is Instacart's business threaten by losing
Whole Food as a client?

------
trophycase
Now, with a prime membership I'll never need to leave my house!

~~~
supercoder
The American dream

------
tgb29
I do my banking and food shopping at Walmart; I wonder if Whole Foods will
offer this. Probably not, but I'm still excited to see Amazon moving into the
food retail business.

------
codecamper
This is all Marc Andreessen's fault. If we had just left it at Gopher, none of
this would have happened!

------
awinter-py
ugh. In 1966 the supreme court forced the 3rd largest grocery chain in LA to
divest the 6th-largest (which they bought in 1960).
[https://en.wikipedia.org/wiki/Vons](https://en.wikipedia.org/wiki/Vons)

------
hendzen
Why would they buy Whole Foods as opposed to Grubhub/Seamless. Seems like a
better fit...

------
chaostheory
What percentage of instacart's business is tied to Whole Foods?

------
foobarbazetc
RIP Instacart.

------
psadri
What will happen to Instacart?

------
masonicb00m
Sucks for Instacart.

------
phreeza
Somewhat off topic, but I have had a weird thought circulating in my head
(triggered by reading Red Plenty) that I wanted to put out there:

What is the relationship between a centrally planned economy as for example
Gosplan was trying to run in the USSR, and the presence of these huge market-
like but centralized entities like Amazon and Wal-Mart inside a free-market
economy? This becomes particularly interesting because Amazon apparently does
not have any particular interest in turning a profit.

A central problem faced by Gosplan was the collection of high quality data
about supply chains and the estimation of the utility function of consumers. I
would say Amazon is in a pretty good position to do both right now.

Another question, somewhat related: At what point does it become profitable
for Amazon to lobby for more redistributive taxation? This might sound
paradoxical because you would assume that Amazon represents the interests of
it's owners, who would probably suffer under such a taxation scheme. But
shouldn't there be a point at which giving more disposable income to poor
people will boost the overall income of an entity Amazon (since Amazon doesn't
sells many flat-screen TVs but not as many mansions or yachts)?

~~~
AndrewDucker
The major difference is that if Amazon stop running well then someone else
will come along and replace them. Whereas government is a monopoly, so if it
runs badly then it doesn't automatically get replaced.

Now, democracy is supposed to fix this, by allowing you to vote for a
different supplier of government every few years. But because of the voting
system in some countries (like the US and the UK) it's actually really hard to
do this, because everything gets turned into a black/white struggle between
opposing forces, rather than lots of options being available for you make a
choice between.

~~~
izacus
Hmm, as I remember the socialist governments were replaced (not easily, but
they were). Have we even seen a conglomerate of AMZN size replaced in living
memory?

~~~
adventured
Sure, frequently.

IBM, Sears (far more dominant in retail in its day than Amazon is today),
General Motors (hi Toyota), US Steel (hi foreign steel), Pan-Am (hyper
powerful at its peak), Alcoa (anti-trust + foreign competition), and a dozen
others that were every bit as powerful as Amazon at their peak.

Oh and Walmart is slowly being replaced by Amazon. Walmart is/was the most
dominant retailer in world history.

~~~
djur
The rise and fall of major corporations isn't necessarily the result of the
inexorable application of market forces. Alcoa's grasp on the market was
broken as much by the aftermath of 'war socialism' as anything else, for
example. Companies compete with each other on legal, regulatory, and social
planes as well as in the marketplace.

I think it's difficult to find any single X that makes "if a company is bad at
X, it will be replaced by competitors" a consistently true statement, without
X being essentially synonymous with "succeeding".

------
dkural
Better buy than Slack for $9B.

~~~
dexterdog
I was thinking exactly the same thing except that WF might be a less
profitable business.

~~~
dkural
I think in the long run you are likely be right - at scale software margins
are amazing. As of today, Slack looses some money & is unprofitable.

~~~
dexterdog
Really? Slack is bringing in 150m/yr. They can't make money with that product
at that rate?

~~~
meritt
Of course they can, but an extremely profitable well-oiled small company
rarely gets acquired. You need to have way more employees than necessary and
running at a loss.

Slack runs a chat app and has _870 employees_. It's beyond absurd.

~~~
bduerst
What percent of that is support and how many customers do they have?

Not saying you're wrong, just that there's overhead for software as it scales
for enterprises.

------
salesguy222
Checkmate, brick and mortar!! Amazon is eating the world.

~~~
balozi
Well...isn't Whole Foods brick and mortar?

~~~
salesguy222
In 10 years, Whole Foods will not have retail locations, and its distribution
network will have shifted to 100% online orders ;)

and, i should add, kroger and supervalu and etc will be struggling dinosaurs
like sears

------
wavefunction
I wouldn't say obviously. From my perspective Obamacare is fascist even as I
support it compared to the alternatives save single-payer national healthcare.

What other ideology than fascism best describes government coercion of its
citizens to engage in business relationships with the insurance companies to
ensure their profits remain at certain levels?

~~~
jhall1468
It's not to ensure their profits remain at certain levels, the profits are
capped, not floored.

The reason for this particular market is because health care costs in this
country have gone out of control, and a major factor in that was people
without insurance not paying bills, resulting in higher costs.

That's not facist simply because you don't like it.

~~~
wavefunction
I specifically said I like Obamacare more than any alternative other than
single payer.

And the profits are guaranteed by the individual mandate on young people.

~~~
jhall1468
You also said it's facist which is wrong. And the profits are not guaranteed
by the individual mandate, ALL that's guaranteeing is a slow-down in
healthcare costs that are spiraling out of control. Young people use
healthcare. Everyone uses healthcare. When it goes unpaid, those of us that
have insurance pay for those that don't.

I'd rather have single payer too. But that doesn't make an "okay" alternative
to it facist.

~~~
cholantesh
Nit: Why do you keep misspelling fascist?

------
aerovistae
If Hacker News had gold I would give it to you.

~~~
aerovistae
I don't understand why I got 10 downvotes on this one. What is the matter with
this comment? What am I missing here?

~~~
askafriend
This comment adds no value and doesn't drive interesting discussion forward.

Reddit norms don't apply here. If you have a low effort comment, just keep it
in your head.

------
ethbro
"Da $#&@?!"

Sometimes I forget just how big Amazon is.

... But it's nice to know I can get my artisanal, single-source, Fair Trade,
organic, small-farm, no-GMO cucumber water with one day shipping now.

~~~
heroprotagonist
Or one-hour shipping with Amazon Prime Now, which is beginning to crop up in a
lot of places with Amazon Prime Fresh.

I tried Amazon Prime Now in Denver yesterday to buy some fruit. I went for the
free shipping in a 2 hour window instead of the $8 one-hour shipping.

I never used Amazon Prime Fresh, because of the monthly fee and sense of
commitment that forces. But when you can get a lot of the same stuff (eg,
fresh fruit) without the monthly subscription via Amazon Prime Now, it's more
tempting to try out.

I'm a little worried about how big Amazon is getting, though.

~~~
throwanem
Fruit from Prime Now is of variable quality. Thus far, for example, I've seen
two suppliers of Granny Smith apples, one of which produces large, flavorful
specimens, and the other of which does not. Better any apples than none at
all, but it hasn't really encouraged me to investigate their grocery delivery
options in more detail.

------
md2be
Instacarte is screwed

------
Tokkemon
Just add it to the list of reasons to avoid Amazon.

------
collinmanderson
I love the Windows Updates restart warning in the video. :)

------
justinzollars
Amazon's Global conquest continues.

------
pfarnsworth
What about Instacart? They had a sweet deal, if it continues then it means
Amazon will buy them. If it gets cancelled it means Instacart is fucked.

