
Amazon cuts Whole Foods prices - kelukelugames
https://www.washingtonpost.com/news/business/wp/2017/08/24/amazons-takeover-of-whole-foods-begins-monday-and-youll-see-changes-right-away/?utm_term=.f02c44b3de6a
======
sowbug
Brick and mortar retailers finally got their way in 2012 when Amazon started
collecting sales tax in states where it had no physical presence.

This removed the reason for Amazon to avoid that very same physical presence
in so many states. Now we have local Amazon warehouses with one-day and same-
day delivery, Amazon delivery lockers in convenience stores, Amazon-operated
delivery vehicles, and soon Amazon grocery stores.

Is this the level playing field[1] that B&M retailers had in mind?

1\. [http://www.mercurynews.com/2012/09/13/mercury-news-
editorial...](http://www.mercurynews.com/2012/09/13/mercury-news-editorial-
amazon-others-finally-will-pay-california-sales-tax/)

~~~
whipoodle
Maybe so but I don't see that as an argument against having Amazon collect the
sales tax.

~~~
bayonetz
I think they are just pointing out an irony and that Amazon is having the last
laugh.

~~~
velobro
Amazon's last laugh will be when the average consumer gets used to their
innovative "checkout-less shopping experience" and forces the smaller B+M
retailers to license the technology or risk going out of business.

------
cgb223
It's funny that a paper owned by Jeff Bezos is reporting on a company owned by
Jeff Bezos cutting the prices of another company just bought by Jeff Bezos

~~~
panarky
It's fun to bash on great accumulations of power, that's my instinct too.

But despite all the controversial things Amazon has done, they still seem to
live up to their #1 leadership principle [0]:

 _Customer Obsession - Leaders start with the customer and work backwards.
They work vigorously to earn and keep customer trust. Although leaders pay
attention to competitors, they obsess over customers._

Since the first result of the WF acquisition is lower prices for customers, it
looks like that tradition continues.

If Amazon makes good on their third principle, "Invent and Simplify", they'll
fund lower prices with higher efficiency and greatly expand the number of
people who can afford WF quality.

[0] [https://www.amazon.jobs/principles](https://www.amazon.jobs/principles)

~~~
bickfordb
I don't believe Amazon has a public customer service phone number where you
can speak with a human.

~~~
AznHisoka
No but they have a ridiculously friendly refund policy. You can lie and say
you saw someone stole your package from the front porch and they will give you
a refund the next day.

~~~
mcny
People reading this: don't do it because from I've read you can get
permanently banned from shopping at amazon.com for doing this "too much".
Absolutely not worth the risk!

~~~
mathgeek
I'd say don't do this because it's theft. Whether or not you get punished for
stealing multiple times shouldn't even come into the equation.

------
makecheck
Most Whole Foods stores I’ve seen aren’t exactly hurting for business and the
parking lot is basically full. If their stuff becomes cheaper, that’ll drive
demand way up, at which point they’ll need to have more ways to buy. That
might mean building more stores but my guess is that Amazon is expecting
_online_ shopping to go up once it becomes a bit too crowded at the actual
stores.

~~~
cuchoi
Anecdotal evidence but the Whole Foods I have visited in the Boston area are a
lot less crowded than other supermarkets.

~~~
adventured
We don't need to be anecdotal about it, we have data.

2015 sales: $15.389 billion

2016 sales: $15.724 billion

Their business growth has stopped. In fact, it's that negative turn (in
regards to the perception of WFM as a growth machine) that halved their stock,
which led to Amazon acquiring them.

To make matters worse for the company, their net income had been contracting
for years.

2014: $579m net income

2015: $536m net income

2016: $507m net income

Amazon will hack that down further, basically taking WFM where it was already
going as their margins were eroding for years.

~~~
RijilV
What was it that Jeff said? "Your margin is my opportunity" I believe. Anyone
who hoped to see WF as a profit center aught find a new past time.

But yes, this was a company that found a niche, grew into it and could go
elsewhere. Amazon will presumably change that, though in the end I doubt WF
will be recognizable.

~~~
stonewhite
Amazon is rarely destructive against its acquisitions. I don't think they will
really change WF all that much, at least on the outside.

------
afpx
I'll believe it when I see it.

"salmon, avocados, baby kale and almond butter" \- sounds more like they're
going to go the Trader Joe's route: have a few high-visibility loss leaders
that give the appearance of generally low prices but higher prices overall.

That said, I'm looking forward to the 365 brand being available through
amazon.com. But, like at Trader Joe's, I'll have to re-check packaging to see
from where they're sourcing the food.

~~~
freehunter
>from where they're sourcing the food

Completely off topic, but do you naturally avoid ending sentences with
prepositions, or do you edit your sentences when you realize you've done it?
Like many people, I was taught in school not to do that, but the lesson never
stuck because I really don't care enough. However, I can easily see when
myself or others have ended with a preposition or (more notably) when they
avoided it like you did.

It's one of those things that stands out to me as a language nerd. It's
something that I want to not care about, but deep inside I'm super conflicted
on.

~~~
capnrefsmmat
If I may alleviate your preposition anxiety, a quote from _Garner 's Modern
American Usage_ (p. 654):

> The spurious rule about not ending sentences with prepositions is a remnant
> of Latin grammar, in which a preposition was the one word that a writer
> could not end a sentence with. But Latin grammar should never straitjacket
> English grammar. If the superstition is a "rule" at all, it is a rule of
> rhetoric and not of grammar, the idea being to end sentences with strong
> words that drive a point home...

> Winston Churchill's witticism about the absurdity of this bugaboo should
> have laid it to rest. When someone once upbraided him for ending a sentence
> with a preposition, he rejoined, "That is the type of arrant pedantry up
> with which I shall not put."

I once received an angry email from a reader of my book complaining about
sentences ending with prepositions; my reply ended every sentence with a
preposition. Perhaps I enjoyed that too much.

~~~
kartD
I agree with you're point, but that quote may not be from Churchill

[http://itre.cis.upenn.edu/~myl/languagelog/archives/001715.h...](http://itre.cis.upenn.edu/~myl/languagelog/archives/001715.html)

------
mack1001
I feel this is the beginning of the end of instacart. Amazon is getting into
same day delivery big time with this. Now they own the grocery warehouses to
drive the end to end supply chain.

~~~
victor106
It could in a way be good for Instacart. They could partner with other grocery
store chains more easily as those other stores would be more willing to fight
Amazon. It depends on how they play the game.

~~~
koolba
Unless they've got logistics so tight that their delivery cost is less than
the grocers doing themselves, I don't see this working for Instacart.

The margins for groceries are already paper thin. Consumers have no appetite
for delivery fees so vertical integration and proper logistics is key.

Only path I see for them is getting acquired by a major grocer purely for the
platform. That grocer would become the first party integrator. I don't see
that happening though as it'd be cheaper for them to do it from scratch in
house.

~~~
gsnedders
> Consumers have no appetite for delivery fees so vertical integration and
> proper logistics is key.

At least in the UK, most of the major supermarkets offer delivery for fees of
around £4, last I knew. And at the end of the day, much of the US lives in
places that aren't that different in terms of population density to the UK.

~~~
foota
I might be mistaken but I think that groceries are generally more expensive in
the UK, so people there might be willing to pay more for delivery because it's
a lower relative cost.

------
Fej
"Your margin is my opportunity."

\- Jeff Bezos

Seems like they are continuing to follow this ethos.

~~~
rectangletangle
Hopefully they maintain their quality. I always treated them as a specialty
store, where I could get specific hard to find, or high quality items,
particularly cheese.

If they cut too deep, they loose their appeal (at least to me).

~~~
zjaffee
For what it's worth, they absolutely can cut their prices and continue to keep
the current level of quality simply because amazons investors care far less
about profits than whole foods former investors did.

In Q3 whole foods made 3,725 with a gross profit of 1,268 representing a
profit margin of 34% and their current P/E ratio is around 35, Amazon for
context has a P/E ratio of 240 at time of writing.

This means, that amazon can reduce the price of food by quite a bit and keep
their investors happy. Amazon, based on the comparison between the two
companies P/E ratio, can cut that profit margin by a factor of 7, meaning
whole foods fits perfectly within amazon's model (unless they were to direct
profits elsewhere), with the ability to reduce their prices there by 25% on
average (representing a billion of dollars returned to consumers).

However, with such a price reduction, it's very possible that whole foods
could become a mass market grocery store, while keeping it's current brand
prestige. Additionally according to [http://www.businessinsider.com/how-much-
more-expensive-is-wh...](http://www.businessinsider.com/how-much-more-
expensive-is-whole-foods-2016-6) the prices are really only 15% more than
normal grocery stores, so amazon can choose to keep even more of the profit
that they could afford to return to their customers (by investment standards)
while also still undercutting the competition.

~~~
ikeboy
Gross is irrelevant here. Net profit is 2.85% - if Amazon drops by 5% and
doesn't introduce savings/efficiency, they will be losing money on Wholefoods.

~~~
bookmarkacc
They get a wealth of data for free though so 0% profit or marginal loss is
still great for them.

~~~
icebraining
For free? Pretty sure they paid quite a bit to buy it.

------
nemo44x
I believe that top quality ingredients will be strictly reserved for better
restaurants and home cooks that are willing to pay for it. There just is not
possible production capacity for this level of ingredient that the common
person can freely buy which is what Amazons strategy is here.

They can make a splash by lowering the price of a few ingredients with
shocking price tags, like avocados. But will be impossible due to supply lines
and cost of production for Amazon to turn Whole Foods into a high end merchant
of top quality ingredients while maintaining any kind of margin.

If they want to play the Amazon loss game they can for awhile but eventually
when a financial crisis hits and they have to rely on cash reserves, this cash
poor company relative to their peers will be in trouble.

VC's subsidize Uber rides. Amazon investors subsidize these types of ventures.
For now.

------
noobermin
Will there be as sexy of a press release when he cuts wages and lays off
workers?

~~~
swalsh
Considering Jeff Bezos also owns the Washington Post, he could sell the laid
off employees at the butcher counter, and still get a raving article written
about it.

~~~
freehunter
I haven't looked into it, but I've heard it claimed a lot (including by the
president)... does Bezos really retain editorial control over the paper? I'll
admit I don't really know how newspapers work, but I feel like if there was an
internal memo that said "Hey I'm Jeff, don't write bad shit about my other
companies" someone would have leaked it by now.

Does Bezos actually control the messaging coming from The Washington Post?

~~~
Retra
He doesn't have to. The editor only needs consider what _might_ happen if they
hurt Bezos' businesses or reputation.

------
petraeus
Its hilarious to me to think of the type of people who buy "organic" while
driving around in their v6s living in their million $ homes and dressing in
designers clothing.

its a feel good type of marketing intended for the weak minded ignorant
hypocrites.

You actually want to save the world? live a minimalist lifestyle, stop over-
consuming and realize your wealth is actually destroying the planet.

------
dotnetisnotdead
incredibly smart. There's a bit of a loss after an acquisition for obvious
reasons which usually means cutbacks and trimming the fat etc. Looks like
Amazon will be doing this but found a way to create a small rush of customers
to offset it a bit. Very smart.

I for one will be going in there just to see what has changed. I haven't been
in a WF for 2 years (new seasons girl here) mostly because of cost.

~~~
skadamou
As a new seasons girl myself, I worry about what kind of long term impact
Amazon might have in this market place. I’ve always considered WF and New
Seasons to be direct competitors. I would hate to see New Seasons swallowed up
or driven out of business by Amazon

~~~
dotnetisnotdead
Same here, they seem to do a lot for the community, and have items you can't
find anywhere else easily.

------
uniformlyrandom
Good. Whole foods is a nice idea gone horribly wrong (horribly expensive)? I
buy some stuff I cannot find anywhere else from WF, but I get the rest for
half of what WF is asking next door.

~~~
koolba
What exactly has gone horribly wrong? They made money hand over fist and
established themselves as _the_ place to grocery shop on a weekly basis.

~~~
debaserab2
They were the place to shop for me until I started actually cooking on a
regular basis. I just can't justify ingredients for a recipe adding up to the
same cost as a decent restaurant would charge for the meal.

~~~
nemo44x
The truth is a decent restaurant has almost no margin on the main course food.
The money is made on selling wine, cocktails and to an extent on starters and
deserts.

You're paying a premium for food that is expensive to produce. Good
restaurants buy the highest quality foods and this cuts deeply into the
margin.

So yes, buying high quality food and cooking it at home will cost about what a
restaurant charges you. You simply can not have it both ways. Either you want
high quality food and will pay for it or you're buying low quality food at a
premium with a nice brand on it or you're just buying cheap food which is of
poor quality.

~~~
icebraining
Are you saying that the main course price doesn't cover anything except the
cost of the ingredients? No salaries, rent, utilities, marketing, supplies or
maintenance?

~~~
chiph
I believe what they meant was that the price of the meal brings them to break-
even (ingredients, staff, rent, etc) and their profit is made via alcohol and
meal add-ons (appetizers, deserts). I don't know enough about the restaurant
business to know if it's true, but it sounds plausible.

~~~
icebraining
Right, but debaserab2's complaint was that the ingredients alone bought at WF
cost the same as a full meal at the restaurant (which includes all that other
stuff).

~~~
chiph
Wholesale vs retail, probably. Plus any volume discount (buying an entire
restaurant's worth of food at once instead of just one cart's worth).

------
diogenescynic
I just ordered three 14 pound boxes of cat litter for $20 with free delivery
on Amazon pantry. It's frightening how they can operate with margins so thin.
If Amazon can to afford to take the same strategy with Whole Foods, Costco,
Safeway and all the other regional supermarket chains are in for a world of
hurt.

------
odammit
Cheaper avacados. Well melt my California heart.

If you want an awesome combo on savings with Amazon in the meantime sign up
for their cash back credit card then buy all of your household items using it
"through subscribe and save."

It'll end up saving you ~15% (5% cash back; 10% off) on most of your household
and pantry items.

------
fragsworth
I'm willing to pay extra to eat ethical meats/dairy/eggs and products that
generally avoid factory farming. And otherwise eat vegan. By the look of
things, Amazon will eventually get rid of most of these things that Whole
Foods made very easy for us.

Yes it's more expensive. That's because the cheapest foods that you buy at the
cheapest supermarkets are _fucking terrible_ for the livelihoods of animals.

Not a fan of this corporate buyout. Amazon clearly has a much different
direction in mind for this chain. I wish they bought Kroger instead.

~~~
kraig
ethical meats and dairy?

~~~
quadrangle
There's a continuum. You could raise animals where you actively torture them,
raise them in ways that are torturous but unintended and not maximize the
torture, take steps to mitigate / reduce torture, avoid torture altogether, go
beyond non-torture to actually have them live fulfilled lives as far as their
species goes…

And then there's ethical issues like the pollution involved in raising animals
and how that's handled…

It's one thing to insist that all animal products are inherently unethical or
that ethics are irrelevant to the topic (most people would not agree with
either of those dogmatic views) and another to draw some sort of fuzzy line
where you think the efforts at ethics are adequate to call the production
"ethical".

FWIW, I'm convinced we should be eating insects
[https://www.ted.com/talks/marcel_dicke_why_not_eat_insects](https://www.ted.com/talks/marcel_dicke_why_not_eat_insects)

And then there's _cultured meat_ which is coming soon and truly bypasses most
of the really unethical aspects of meat production…

~~~
ruraljuror
Do you eat insects? I personally find the idea repulsive, but that was just
how I was brought up.

~~~
quadrangle
Yeah, they're great. The idea of them being repulsive is as good an example as
we can find of culturally-biased nonsense. (I grew up in the same way you did,
but I'm pretty practiced at sincerely rejecting culturally-inherited nonsense
once I recognize it).

I've only had a few occasions, had some cricket-flour chocolate-chip cookies,
some roasted ants, crickets, and grasshoppers. Mealworms sauteed with veggies
is great. I'm not crazy going out of my way to get weird stuff though. I'm
waiting for the day we can just go to the supermarket and buy grasshopper
burgers or something. Like any food, there's ways to do it well or do it
badly, and just like you don't want to eat rotten apples, it's not good food
just because it's insects; insects are good food when they're good (the right
type, healthy condition, prepared well).

------
gigatexal
Sweet! We can go back to Whole Foods again. And the Amazon Prime member’s
discount is rad.

------
perseusprime11
Something about reading this news in Bezos owned Washington Post feels weird
to me.

------
sjg007
Amazon wants to be the Ocado of the usa and will probably take out blue apron
as well.

------
fullshark
I'm pretty skeptical Amazon knows how to run a premium grocer. I hope they
didn't do this only cause they saw Whole Foods as a way to super charge their
prime pantry program.

~~~
tomhschmidt
"PC guys are not going to just figure this out. They're not going to just walk
in."

~~~
fullshark
As a WF consumer I'm more concerned that they are going to destroy the whole
foods brand and sacrifice the premium grocery market segment in their lust for
scale then that they will fail. There's no question every other grocer should
be scared shitless by this development.

------
indigo0086
A horror only capitalism can create...oh you said cut prices.

------
codemati
Anyone know if this will be applied to prices in Canada?

------
johnhenry
Probably not the right place to say it, but I really hope Amazon/Whole Foods
pays attention to the quality of their hot bar foot. In some locations, it's
consistently great, while in other locations, not so much...

------
TearsInTheRain
I was surprised at how quickly this was approved by the FTC. I think they
should be more active in preventing corporate consolidation.

~~~
positr0n
What would be their basis for preventing the sale when Amazon controls 0.19%
of the U.S grocery market and Whole Foods controls 1.21%?

~~~
TulliusCicero
This, and also anti-monopoly enforcement is usually oriented around prevention
of consumer harm. Amazon has done little in the way of harming consumers in
their business; quite the opposite, actually, Amazon has been pretty freaking
great for consumers.

------
ljf
Just the pedant in me, but seems odd that the title doesn't read: 'Amazon cuts
Whole Foods prices'

Surely the name of the company is 'Whole Foods'?

(just edited this comment for clarity and grammar)

~~~
abrowne
I feel like it should be to be "Whole Foods' prices"¹, which makes me feel
like the headline writer did that so that they didn't need to add an
apostrophe to the name.

Weirdly, the article has one use of "Whole Food stores" in the text too
despite many other uses of "Whole Foods"

> Amazon said it will continue to lower prices at Whole Food stores and will
> eventually offer special discounts and in-store benefits to Amazon Prime
> members.

1: Or "Whole Foods's"? I get almost 100,000 ghits for that.

------
ljlolel
Reports the news outlet owned by Jeff Bezos

~~~
objclxt
I don't really know what the point you're trying to make is? All the price cut
information is from a press release[1] that was reported on by NYT, CNN,
MSNBC, WSJ, amongst others.

[1]: [http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-
ne...](http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-
newsArticle&ID=2295514)

~~~
lvs
You know exactly the point he's trying to make, since you made a
counterargument to that point. The point is obviously that there is a
conflict-of-interest when a publication reports on its owner's business
activities. Not much to argue about it really. The conflict-of-interest is by
definition.

~~~
mikeash
What would be the consequences of a conflict of interest in this case?

~~~
lvs
It's not so hard to figure out. The euphemism everyone's apparently accepted
is "native advertising."

~~~
mikeash
So the worry is that they wouldn't be reporting this otherwise?

------
ajaimk
Seriously, why implement a paywall that can be dodges with Inspect?

~~~
kevinstubbs
The paywall doesn't have to be all or nothing. Probably a very small minority
of their readers are capable of bypassing the paywall using browser dev tools.

~~~
kardos
Until someone makes an antipaywall browser extension

~~~
cpeterso
I wrote a Firefox extension called "Open Page in Private Window" that adds a
toolbar button to open the current page in a new private window. This won't
bypass all paywalls, but it is useful for reading articles on websites that
limit the number of articles you can read per month.

[https://addons.mozilla.org/en-US/firefox/addon/open-page-
in-...](https://addons.mozilla.org/en-US/firefox/addon/open-page-in-private-
window/)

~~~
elyobo
Firefox's new focus browser has been great for this when opening links from
RSS/FB/whatever else as well.

------
amelius
After so many reports of fake items on Amazon, I wonder where this is going.
Fake food?

~~~
synicalx
I'm waiting for the Facebook reviews;

"I ordered non-dairy, gluten free, fair trade, ethical, lactose free, halal,
sanctified, low salt, low carb, kosher rice but instead I just got a plain bag
of white rice and no certificates. Literally shaking right now"

~~~
myrandomcomment
Well, you'll work harder With a gun in your back For a bowl of rice a day
Slave for soldiers Till you starve Then your head is skewered on a stake

Dead Kennedys - Holiday In Cambodia

Sorry. The rice bit just sent the mind there...

------
dsfyu404ed
Will shoppers now refer to it as "partial wallet" instead of "whole wallet"?

~~~
dotnetisnotdead
I prefer "whole paycheck"

------
randyrand
>Everybody should be able to eat Whole Foods Market quality

Strange. Last I heard Whole Foods has made no effort to get this quality of
food into the hands of 7.2 Billion people that aren't Americans.

Or maybe it should be okay that different groups of world people have access
to different quality of food.

But you can't have it both ways.

