
The Amazon-Ification of Whole Foods - IntronExon
https://www.theatlantic.com/business/archive/2018/02/whole-foods-two-hour-delivery-amazon/552821/?single_page=true
======
niftich
Whole Foods gave Amazon a high-end, nationwide, yet arguably "mainstream"
grocery store to enter into the US grocery market. It's an aspirational brand,
yet not so specialty to be ostentatious. It's a nationwide chain, unlike other
top-rated grocery stores -- Wegmans and Publix come to mind. And it's a store
that, through savvy and market timing, has located its sites in areas that are
experiencing growth in upper-middle-class households: Amazon's preferred
demographic.

They can likely cut Whole Foods' margins on many items and, through the magic
of the warehouse club nature of Prime, offer further discounts to Prime
members, incentivizing the choice of Amazon over their competitors. Not all
people will we swayed, but some will.

This will shake up the grocery market in many metros, where margins are tight
and incumbents are often saddled with tight margins, concerns about real
estate, and preexisting debt. Some will spend more to retain customers with
extra features like free at-store pickup or cheap delivery, but they won't be
able to outmatch Amazon's warchest. The most vulnerable among their
competition will fold, allowing customer bases to re-align.

~~~
Shivetya
There aren't enough of these stores to impact any major metro area. Aldi tends
to have more storefronts and their impact hasn't been that great. What did
smack the old school grocers was when Wal Mart got into the business years ago
and to a point Target.

example, there less than ten Whole Foods stores in Metropolitan Atlanta. There
are probably that many competing grocery chains in the same area, with sixty
plus of each of the larger ones.

~~~
Whiteskin_Kanye
In Detroit, a "food desert", they could potentially take over the majority of
the downtown/midtown upper middle class grocery market.

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11thEarlOfMar
When I was a kid, mom would do the grocery shipping once every 2 weeks. She'd
load the five kids into the van and we'd trek over and fill 2 shopping carts
with 10 boxes of breakfast cereal, 2 gallons of milk, 2 pounds of bacon, 8
pounds of hamburger, 24 cans of Campbell's soup...

Flash forward to 2018 and my wife is buying things online to the point that
we're getting 4-6 items delivered per week. I'd guess that's not exceptional.

With 'free delivery' for under $35, I can see her increasing that to on
average one delivery item per day.

Kind of like the milk man used to do.

What concerns me is that the amount of energy that goes into getting all that
stuff into my home seems to have substantially increased, and, will continue
to increase as more businesses incorporate low cost or free delivery.

So it makes me wonder where this ends. It seems we'll wind up with delivery
trucks, perhaps autonomous electric vehicles, combing the suburbs throughout
the day.

I keep contemplating the extremes: 149 items acquired in one trip the way my
mom used to operate, vs.149 items delivered to my home one at a time over a 2
week period. What are the trade-offs?

~~~
cowsandmilk
> What concerns me is that the amount of energy that goes into getting all
> that stuff into my home seems to have substantially increased, and, will
> continue to increase as more businesses incorporate low cost or free
> delivery. > > I keep contemplating the extremes: 149 items acquired in one
> trip the way my mom used to operate, vs.149 items delivered to my home one
> at a time over a 2 week period. What are the trade-offs?

Energy-wise, you present a fallacy that all those deliveries serve just your
home.

50 houses getting deliveries every day from the same truck for 2 weeks = 14
trips. Those 50 houses all going to the store once every 2 weeks = 50 trips.
Not to mention all the land wasted for building parking around said store.

------
amzn_wf_throw2
If Amazon is smart, they will keep their brand out of Whole Foods, at least
until they rehabilitate it some. Neither media or public sentiment towards
Amazon is great right now for a variety of reasons, many of which have been
posted on HN. Some people are getting disturbed that it seems like they can
only get important goods from one company; indeed, this is basically the
monopoly future that Amazon wants. Personally, I don't want to feel like I'm
being stalked or "optimized" by Amazon at my local Whole Foods.

I don't think we've seen the end of non-Amazon retail yet. When almost every
transaction is conducted through Skinnerian workflows developed by MBAs in
Seattle and neural networks running in Virginia data centers, doing all your
shopping at Walmart is an act of radical physicality.

~~~
adventured
> I don't think we've seen the end of non-Amazon retail yet.

Amazon is less than 3% of US retail. Walmart's retail business is three times
the size of Amazon's retail business. And that's before we count the fact that
half of Amazon's retail business, isn't Amazon at all.

Amazon is not going to actually dominate all of retail. Amazon is not going to
become a retail monopoly. Amazon is not going to build a retail business
dramatically larger than Walmart's retail business. The shrieks to the
contrary are strictly emotionalism rather than fact-based, just as they were
12 or 15 years ago when Walmart was going to destroy everything in retail and
monopolize everything. It's just as silly and absurd to pretend Amazon is
going to do the same thing. What Amazon has is an early lead in online retail,
because they were an aggressive first mover. Only ~10-12% of US retail has
moved online. As that percentage dramatically increases in the next 20 years,
Amazon's total share of online commerce will fall accordingly. They're not
going to be doing $3 trillion in annual sales in 15 years. It'll be extremely
impressive if they can manage to one day catch up to Walmart's retail size.

> Neither media or public sentiment towards Amazon is great right now

Public sentiment towards Amazon is extraordinarily high. They typically have
the highest, or one of the highest rated brands and consumer experiences.
Their customer service is routinely voted as among the best of any company.

What opinion pieces in the NY Times say about Amazon, are not at all
representative of how the majority of people feel about Amazon. That's a
classic echo chamber premise.

~~~
mrep
> They're not going to be doing $3 trillion in annual sales in 15 years.

Actually, they will hit that in 9 years if they can sustain their current
growth rate. It'll take 15 years at half their current growth rate.

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jimmywanger
It's sort of funny. Amazon now does is doing the same thing Walmart did back
in the day.

If you were a supplier for Walmart, you _had_ to adopt their business
practices in order to stay competitive in the market. They would demand that
so you could constantly lower prices.

Amazon is sort of the same in that if they enter a vertical shopping market,
if you don't provide the same level of service, you're kind of sunk. And to
get to that level of service, the insidious thing is that you either let them
take care of logistics and pay them a cut, or you adopt their business
practices which have been honed for years.

I don't think Amazon-Ification is necessarily a bad thing. Amazon runs a tight
ship and companies would do well to learn.

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Dowwie
They recently stopped roasting fresh coffee every day. Cost cutting coffee is
so wrong...

~~~
rrdharan
Really? In all locations or just some of them? I'm kind of surprised I can't
find anything about this change, though there are lots of older blog posts and
reddit threads etc. about how they roast fresh beans daily.

~~~
notyourday
WF coffee is overpriced for the quality. Coffee roasting is a skill, skill WF
employees do not have and are unlikely to have in future.

Absolutely excellent coffee roasted by small bean producers that built small
empires can be had at the same or sometimes cheaper prices than Whole Foods
coffee.

~~~
josephjrobison
Whole Foods Allegro roasting Asustin downtown is on par at $10-14/lb vs
$20-25/lb for small roasters.

~~~
notyourday
$10-$14/lb is La Colombe/Brooklyn Roast price, both of which blow WF out of
the water.

It has to do with volume. The reason why small batch producers that know what
they are doing are so much better is because they are small batch. It is
impossible to source enough identical beans to get the identical result, which
is why larger operations generate at best very decent but not anywhere close
to excellent roasts. They know that they are inferior to small batch producers
so they price themselves accordingly. WF is a large producer that prices
itself at the level of small batch where its roasts are sharing the category
with Dunkin and Trader Joes.

Coffee is like wine. If you need to produce a lot, you may get a boat loads of
Merlot and blend it together producing a quite drinkable wine but you will
lose to a bottle of St Emillion as yours would be too washed out.

------
FlyingSideKick
Over the last couple of years I’ve been shopping at Whole Foods less as the
quality of their produce has gone downhill. As one who cooks almost every
night I like to personally select the produce I’ll be using. Delivery drivers
on a tight timeline will never be able to meet the expectations of others like
myself. I simply don’t see driving to the store as a problem, I see it as an
enjoyable experience(and I have small kids). All of the free delivery in the
world won’t keep me from driving to my local organic Co-op to choose the best
vegetables, fruit and cuts of meat.

Point being that Amazon’s impact on the grocery business will likely be far
short of transformational.

~~~
gowld
There's plenty of room to be transformational short of your extremely niche
use-case.

~~~
acheron
“People who don’t mind going to the store” is not “extremely niche”.

~~~
cloakandswagger
I'd say they're in the same league as people who say they love flying on
airplanes. Once the novelty wears off it's a pretty joyless, tiring
experience.

~~~
salvar
So your experience is the correct one, and others just haven't gotten it yet?

~~~
jcwayne
I believe that's what everyone in this thread is saying.

------
ironjunkie
Amazon Prime Now... Is that the thing where delivery is "free" but where we
are supposed to "tip" the driver ?

~~~
spraak
I've ordered from Prime Now about 3 to 4 times per week for the past 7 months.
It's incredibly helpful for me. Mostly because I don't have a car and prefer
to shop from Sprouts (which is similar to Whole Foods) and I'm able to do so
with Prime Now. I usually leave a tip to the delivery person because they
carry all my heavy groceries up to my apartment, and they've told me it helps
them a lot (which is unfortunate in that way, that I'm subsidizing their
wage). I literally depend on Prime Now.

~~~
chrisper
Your situation is ok, because you want to tip. I don't think it is ok to
automatically fill out the tipping field.

~~~
eropple
Then seek out an equivalent service that pays their delivery folks more and
doesn't require a tip. We have those here in Boston; Peapod's delivery drivers
can be tipped and they've said that it's a major part of their income but
Roche Bros.'s drivers have literally laughed and said "we don't accept tips,
we actually get paid." (I had a $10 in hand--he turned it down. Peapod has a
big huge field _on the invoice_ and charges it to the card. Skinflints.)

Or accept that, yes, obligatory tipping is part of the culture, and while you
may not like it (I sure don't) it is incumbent upon us to do right by the
people whose services we are buying.

~~~
hnaccy
It's not immoral to not tip.

~~~
eropple
It's immoral not to treat people who are performing services for you fairly
and well. If that means tipping, because their employer--who you chose to do
business with--doesn't pay them a livable wage, then guess what? You tip. If,
_at the same time and in no way exclusive to the former_ , you would like to
campaign for better worker rights and wage floors that make tipping
unnecessary (or, hell, even _illegal_ ), then I will join you in that.

You might not like tipping. (Again: I don't.) The person you're rationalizing
the stiffing of probably doesn't like having to work for tips. Capitalism
kinda sucks and the person-to-person patching is something that more fortunate
folks just plain _get to do_. Sorry.

~~~
felipelemos
I find strange how you call him immoral for not tip while is the employer who
do not pay them a _liveable_ wage.

~~~
TheDong
They are both immoral.

In a situation with 3 parties, there can be any number of immoral people from
0 to about 9 billion, so I don't know why you immediately assume that because
the commenter is immoral that doesn't mean the company isn't also behaving
immorally.

~~~
AstralStorm
Specifically, the company is providing a service which depends on _charity_ of
the people receiving it to continue. Remember that charity is supposed to be
voluntary. This fact is not documented anywhere. "Customary" is code word for
non transparent and exploitative.

If the company wants to incentive good quality of service, they can do so
explicitly with direct ratings instead of some unclear way of tips.

------
narrator
I used to use Instacart, but it was a hassle to manage the people doing the
shopping. They would get bad produce. They would mistake zucchini for
cucumber. They would make nonsensical replacements. Constant screw-ups. Sure
if you're buying toilet paper or some other generic commodity then it's fine,
but you can already do that with Amazon.

~~~
6ak74rfy
I was trying out Instacart a few days ago and thinking whether I should
purchase their Express program. This is what I realized:

\- You pay them $150 a year. \- On every order, they add a 10% service fee
_that helps them keep the service running_. This is optional, but you have to
remove it every time. \- The delivery guy expects his tip.

I am wondering if this is cost-effective this way or not.

~~~
no_wave
I haven't used them in ages so I didn't believe this. It seemed too ludicrous.
I logged in to check and actually laughed out loud when I saw it. How much
trouble must this company be in?

------
trevyn
Datapoint: Prime Now in Los Angeles has quite a few Whole Foods branded
products already (just got some coconut milk this morning!), although it's not
part of this launch.

Prime Now is really a fantastic service, but it seems like not many people
really know about it; Amazon seems to never promote it on their site.

If Amazon buys IKEA, my life will be complete.

~~~
s0rce
I've tried Prime now a few times (Bay Area) and its frequently out of stock of
really standard items (ex a 1/2 gallon of whole milk, non-organic) or you'll
add some celery to your cart and then by the time you order its out of stock.
Prices don't seem to be particularly great either. I can order from wholefoods
via instacart and it might be cheaper depending on the items you get. Last
time I went to order they didn't have enough drivers and had no delivery slots
available, I had to wait a day and then schedule it again for the following
day...

~~~
spraak
I've had stellar experience with it in Los Angeles... perhaps it's their
flagship at the moment.

------
skywhopper
> when a dad says to the smart speaker on his counter, “Alexa, I need brown
> rice and pork,” the product that arrives is an Amazon-branded box containing
> Amazon–Whole Foods–branded rice and pork.

I question whether the author here has ever cooked a meal, much less shopped
for ingredients. There's no way this style of interaction can produce the
desired result here.

~~~
Theodores
Actually, in this brave new world the home AI system - Alexa - asks the dad
what dinner is going to be this evening. The dad says that he fancies risotto
with some herb tasting sausages and maybe some side salad. Alexa does not
magically do the cooking but will establish that ingredients will be needed.
The contents of the fridge and general provision levels will be known, plus an
existing house way of doing things, e.g. mixing brown rice in with the risotto
rice and hand making the sausages from whatever pork is available.

Alexa will also be able to know what you like from what stays and what goes
out to recycling. So that tin of prunes in the cupboard won't become a dozen
tins for programming error reasons.

It will be a bit like living with someone that stays at home all day and has
time to go out and do the shopping, you might do all the cooking as part of
the relationship with a fair expectation that everything needed for agreed
meal plans is purchased.

Alexa could also know how to optimise inventory, so if it makes sense to buy a
25 Kg bag of brown rice due to so much of it being eaten by such a large
family with such a large house that have been customers at that address for
such a long time, then so be it.

If the home cupboards and fridge are a 'cache' in this food network then the
AI would also know of favourites and have things on hand. So there may be a
variable selection of ice creams that could be on hand if the main course
needed a dessert without one being specially requested. Favourite main meals
could also be 'cached', this could be learned to suit the lifestyle, so if you
do have a dozen people needing feeding at ad-hoc dinner parties or if you
actually never have friends visit, the AI should get it.

~~~
DrScump
And Alexa will happily sell every detail of your household consumption for the
rest of you and your children's lives.

~~~
icebraining
Nope, for the same reason Google doesn't. The data is worth more to Amazon if
they keep it to themselves.

------
niftich
I live in the Virginia Beach metro, which alongside Austin, Dallas, and
Cincinnati, is one of the four test locations announced for their new Whole
Foods Prime delivery service. My theory is that the Virginia Beach location
was chosen as their "stress test", as it's the one where this service is most
likely to fail. If it can work there, it can probably work anywhere.

The metro has some positive attributes: high proportion and large number of
military families who are mostly concentrated in the suburbs. But it also has
many complicating factors:

\- A difficult metro for logistics. It's essentially a routing cul-de-sac: not
enough local demand to serve as a large distribution node, and it's ~100 miles
from the Richmond metro that's typically used for this instead. Getting
product in by rail is easier, but difficult to do just-in-time, and most rail
freight traffic flows the other way: out.

\- Low growth. Incomes in the metro grew slower than the US average [1].
Employment growth has been well below US average [2]. The region isn't quite
stagnant, but recovery after the recession has been markedly slower than
Northern Virginia, Raleigh-Durham, or the region's arch-rival Richmond. Most
population growth that is occurring [3] in Virginia Beach's vicinity is in
suburban areas beyond the single Whole Foods' delivery range [4].

\- Grocery saturation. In the past year, German-style chains Aldi and Lidl
have expanded, Publix has been rumored to be eyeing the area, and Wegmans has
been confirmed to be coming [5]. This is in addition to local incumbents owned
by Supervalu, Kroger, and Ahold Delhaize. Local press and commentators have
been noting that the area seems to now be overprovisioned with grocery stores
[6].

Meanwhile, Cincinnati is close to major trucking corridors and is adjacent to
Amazon's old freight hub in Ohio and its new one at Cincinnati's Kentucky
airport. Dallas and Austin are both major markets with high levels of growth.

[1]
[https://www.bea.gov/regional/bearfacts/pdf.cfm?fips=47260&ar...](https://www.bea.gov/regional/bearfacts/pdf.cfm?fips=47260&areatype=MSA&geotype=4)
[2] [https://www.bls.gov/regions/mid-atlantic/news-
release/areaem...](https://www.bls.gov/regions/mid-atlantic/news-
release/areaemployment_virginiabeach.htm) [3]
[https://pilotonline.com/news/local/article_8e17f21e-2180-5c1...](https://pilotonline.com/news/local/article_8e17f21e-2180-5c14-beae-80ce3a8b97c9.html)
[4]
[https://pilotonline.com/business/consumer/article_db7fe221-4...](https://pilotonline.com/business/consumer/article_db7fe221-4b4b-5b63-8255-f722c8e434df.html)
[5]
[https://pilotonline.com/business/consumer/article_610b32b7-6...](https://pilotonline.com/business/consumer/article_610b32b7-6cf7-5050-9b07-26516cd75120.html)
[6]
[https://pilotonline.com/business/consumer/article_8b636301-f...](https://pilotonline.com/business/consumer/article_8b636301-ffd0-5750-9793-15d63fda8f0b.html)

~~~
casey_lang
Austin is also the home of Whole Foods HQ. The HQ store downtown has often
been their pilot site.

------
brandonmenc
I've been living in Austin for the past two years, and shopping mostly at the
Whole Foods world headquarters. I'm not sure what the big deal is about this
place - overpriced for the quality, service is ho-hum, prepared foods are
nothing special, etc.

Wegmans absolutely crushes it.

~~~
tmh79
there is a wegmans in austin? So jealous.

Also there is a wegmans musical:
[http://www.telegram.com/article/20120502/TOWNNEWS/120509938/...](http://www.telegram.com/article/20120502/TOWNNEWS/120509938/0/business)

~~~
adrianmonk
There certainly isn't a Wegmans in Austin that I know of. I don't think there
is one within 1000 miles.

~~~
DrScump
But you have Rudy's. Don't get greedy. ;)

