Everything in the piece sounds like one path that Amazon could take. But Amazon also has a long history of exploring a lot of ideas before deciding where it will commit big resources. Hearing the same scenario from multiple sources would have been helpful.
That's a huge change. You go into Whole Foods, and it's mostly good-looking, thin people, not the wide loads and screaming kids of Wal-Mart. If Amazon wasn't looking to go upscale and high-margin, what did they buy Whole Foods for?
Lower prices, lack of brand names. Think AmazonBasics, but for food. I wouldn't buy anything important off AmazonBasics, but for cables, shower speakers, and other minor things it's Good Enough.
If you had to choose between perfect, high quality produce and staples you drive to a physical store for, or decent (but not perfect) produce you can have delivered at the same (or lower) cost, which would you pick?
They're going to automate as much as possible with the goal of reducing costs, use the stores as a base for the Amazon Fresh delivery business, expand prime fresh and reduce product selection at the stores. I suspect the stores will become a base for Blue Apron like ready to make food deliveries.
There are tons of grocery delivery services around where I live, none of which I use. We still go to the Whole Foods because we like to wander around tasting the free samples, being able to pick the produce items we want, maybe having lunch at the prepared food section, etc. That's a big part of the appeal.
I assumed the same, then actually bought something off Amazon basics. I can't speak for everything, but man was it low quality. It's like they were aiming for just barely above the bar. Simple things like sheets and blankets. So cheaply made.
(See: https://qz.com/807419/is-it-even-possible-to-sell-luxury-on-..., among other articles that you can find from googling.)
But I agree that it's very strange that Amazon is buying Whole Foods, which is a luxury grocery store, to then try to replicate Walmart. This will just alienate the customer base and drive them to Traders Joes, Coops, etc.
I guess we will have to just wait and see what happens. Normally when one company buys another, they say "nothing will change," which means that in six months all trace of the thing will be gone.
Personally, I'm not looking forward to the change. One of the things I like about WF is that they're pretty good about stocking products from local/regional producers. And they have a pretty good cheese section. I'm betting Amazon will not care about these things.
What are you basing this on? Amazon (Prime) customers are way more wealthier than Walmart customers:
Aesthetically perhaps, but it seems very well designed in terms of making purchasing painless, which is part of the reason Amazon do so well.
I do try to avoid buying things on Amazon now though, they've gotten too big, it's a little scary how much influence they have on online retail.
For my good looking thin people needs I go look into the mirror
This strongly suggests it won't be the same food.
I agree with the former, but not the latter.
>(hence expect and demand healthier food
...and so they pay for the placebo instead?
(Just kidding. There are no Whole Foods in my region.)
I completely agree that such a strategy throws away much of the value of the Whole Foods brand.
It doesn't surprise me that Amazon is taking it in this direction though. What Amazon is best at is ruthless price differentiation and/or logistics. They don't do price discrimination in their cash cow businesses as far as I know: online retail, streaming (comes packaged with prime for "free), aws, kindle, etc. Their brand is providing the best value and convenience for purchasing commodity retail items. Even their branded items compete on price.
It's interesting that Whole Foods already started down the path towards competing on price before Amazon swooped in.
I suspect they wanted an in on retail grocery, and WF was on the market at a price that was worthwhile for the number and distribution of locations they have.
- Locations: WF is located where the well-off go,
- Warehouses: good for use after WF employees quit, and
- Real estate: sell unusable locations off.
If Amazon can convince customers to pick up packages they may win a bit; but that works only in densely-populated parts of larger cities.
Whole Foods was a grocery chain; Walmart is a retailer. But Walmart can't compete in the grocery business (they've been trying awhile and never gained traction).
Whole Foods cannot become a retailer like Walmart w/o starting from scratch (except for the real estate, buildings and a bunch of cash registers, refrigerators, meat bins, butcher shops, beer distilleries, escalators, etc).
So this move, in the end, is a liquidation sale. It came about b/c Whole Foods simply couldn't gain sufficient grocery market share. All Amazon will get out of this acquisition is the real estate and the buildings.
If Bezos was _really_ smart, he would have let Walmart buy up Whole Foods and then watched as the Whole Foods golden goose weighed Walmart down and drained its money. Believe me, WF is a commercial "tar baby". A better metaphor is the grocery market as a "tar pit", now with both Amazon/WF and Walmart trying to stay above the surface while all the other grocers have been living there happily for centuries.
Amazon need to be broken up by the Justice Department. Their "creative destruction" is more "destruction" than "creative" in this instance.
Also, I don't believe Whole Foods owns the land its stores occupy, it's all leased.
If true, one more reason Amazon fu'ed.
Walmart already has the larges market share in food and beverage business.
The main problem is that Walmart is not and never was a grocer - it is a retail store that subsidizes its grocery with its retail success. Nor is Amazon a grocer. Buying Whole foods will not make Amazon a successful grocer. My s/o asked "But Whole Foods will turn over all their knowledge to Amazon with the takeover, of course?" to which I replied "Once Mackey leaves, Amazon officers will be given a 4-inch binder by departing Whole Foods staff with 700 white blank pages and a top page that says in big letters "F* You!".
Grocers have existed for 100s of years in a very competitive market. Despite all the bravado and technology, neither Walmart nor Amazon know what a quagmire they are getting into by wading into that tar pit.
Whole Foods is a poison pill that marks the beginning of the end for Amazon's growth.
What if Whole Food's brand cachet means as much, or more, to people who can't afford to shop there? In some circles 'Whole Foods shopper' is a denigration, drenched in jealousy. There may be a demographic that perceive Whole Food brand aspirationally, who will be brought in by reducing quality and prices.
This has never happened to me at Trader Joe's.
The best salt? $5 Dr Teals from Walmart: the land of "wide loads and screaming kids."
When I do go into Whole Foods, the staff are always attentive and seem to be in relatively good moods and well treated. I am sorry for the negative impact I expect this will have on them.
I don't have a Whole Foods close to me. And, while some items there can be oddly cheaper, and they further offer a "case" discount that is quite significant , it can indeed be "whole paycheck" for other items and if you're not comparison shopping.
Which, for me, mostly means comparing with my local instance of a regional supermarket chain. Not as upscale as Whole Foods, but plenty ok, and a union shop, where the employees seem to be treated all right. (I know a few of them. I've heard at least one story about how the union had the back of a worker I know to be one of their better ones, when some new management douche tried to screw him over.)
Amazon... Well, my overall impression of Amazon, is that it's a meat grinder, unless you are one of its "blessed" employees.
We'll see whether they can manage to run contrary to that, in absorbing Whole Foods.
1) While a friend was in hospice, all she could eat reliably was yogurt, and she particularly liked one line that the facility she was in didn't carry. I stopped by Whole Foods and grabbed a bunch, of a variety of flavors -- whatever looked promising. At checkout, the cashier looked at it and gave me the case discount, without my asking. What should have been a $30+ total turned into... was it $10, or $15? I had to ask them to repeat the total, as it was nowhere near my mental math approximation.
Separately, I like Amy's chili. For a long time, Whole Foods was the cheapest place for it -- even without the case discount. Sometimes, on the order of a dollar a can cheaper.
On the other hand, some of their produce prices were double or more those of my local supermarket. Before getting into the whole "organic" question.
I would like to see some local Amazon presence, but coming into Whole Foods and trying to make it competitive with WalMart seems like a huge mistake. I mean, look at how well WalMart's attempts to move into Amazon's online space have gone...
If that's Amazons view time to short amazon
The last time I went in one I was confronted by an entire freezer case of renaissance mermaids basking in flowers on pizza boxes, each signaling virtue for some ecological or pseudo-science health idea.
If there is change in quality of product (and I don't mean their new age medicine stuff) I'll buy elsewhere.
The other day people were concerned WalMart might bring down Bonobos to their level --I'm concerned that Amazon might bring Whole Foods down to their level instead.
Amazon are not competing with just Wal-Mart. They want to redefine and compete in all categories of retail.
That inventory will have to include GMO foods if they are serious about competing in that space.
I think I recall other retailers complaining about competing with a company that doesn't need to make a profit. It does sound difficult, and it is at least a bit quizzical that Amazon gets away with it. Then again, their strategy does seem to have worked.
I know I'm buying their stock.