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Amazon cuts Whole Foods prices (washingtonpost.com)
343 points by kelukelugames on Aug 24, 2017 | hide | past | web | favorite | 246 comments



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...


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


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


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.


Yes, just making it clear that it's a good idea to collect the sales tax regardless.


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


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


> 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.

Oh yes? I never asked to be reminded 10 times a day to become a "Prime Member", every single time I purchase something via Amazon using evil dark patterns (make the "skip" option appear as a text link and not a button).

This and the whole concept of selling certains items to Prime members ONLY, and the fact that their prices are far from being as good as they were just 2-3 years ago, I can tell you the obsession now is clearly with profit margins than anything else.


As a paying Prime customer, I've never asked for Amazon to restrict Prime Video to only tablets, phones, and specifically Sony Bravia Android TVs. They eventually added AppleTV support, I guess? But I have a friend who doesn't have an AppleTV and so she can't watch Prime Video on her TV.

If Amazon is trying to use Prime Video as a bonus selling point, I don't see any point in restricting their own 'TV' shows to 'anything except a TV'. Pretty sure my friend didn't ask for that.


I haven't seen a major brand smart TV made in the past ~4-5 years without an Amazon Prime Video app. My LG, Samsung, and Sony TVs have it.

Apple is an Apple problem, they usually want a cut of all sales, since Amazon Prime Video offers subscription, pay per view rental, and digital purchase of content it would mean that Amazon would have to pay Apple a share of the proceeds which might be a problem since the margins are already pretty low.

Also last time I've checked Amazon Prime Video works on any device that can accept Chromecasts so this means any Android TV even if it's doesn't have an Android app (I don't know if these even exist) if you have an Android phone, tablet, or laptop can be used to watch the content.

And lastly lets not forget that a Fire TV stick costs 40$....


> Amazon would have to pay Apple a share of the proceeds which might be a problem since the margins are already pretty low.

Not true. Amazon can still have an app on Apple TV, and Apple won't get a cut, if Amazon sells subscriptions through their website instead of the app. That's what they're already doing on iOS at least.

> And lastly lets not forget that a Fire TV stick costs 40$....

This is the problem, not the solution. Nobody wants one device per service. I don't want an Apple TV for Apple stuff, a Fire stick for Amazon, a Roku for something else, and so on. It's annoying, and my TV doesn't have that many HDMI ports.


It's not about the subscriptions it's about the rentals and the purchases, it could've changed since then but Prime Video doesn't support purchasing on mobile which makes it irrelevant for the TV.

>This is the problem, not the solution. Nobody wants one device per service. I don't want an Apple TV for Apple stuff, a Fire stick for Amazon, a Roku for something else, and so on. It's annoying, and my TV doesn't have that many HDMI ports.

Isn't it funny that this is an Apple problem always?


Yup. I have a fire stick, it's fantastic. It does everything, and if there's something it doesn't do then I can likely make it do it somehow, because it's just an android device that I'm free to sideload regular APKs on to.

I love the damn thing, best £30 I've spent in a long long time. It does Prime video, it does netflix, it does spotify, it does plex, kodi, it does sonic 2 for fuck's sake.


Whoa, I have two FireTV sticks and didn't know it had Kodi or Sonic 2 apps. Going to have to look at that when I get home


Yup, you can get Sonic 1, 2 and CD on the amazon store, IIRC you'll have to sideload kodi though, not a massively difficult task. It's as simple as turning on developer mode in the settings and then using an app on your phone to adb install the kodi APK to the fire stick. You can also just use adb in a terminal on your PC or whatever, up to you - but there's some apps on the play store that make it super easy.


I watch all my video over Chromecast. Making the TV just a screen controlled by my phone is a model that works really well for me. Alas, I've never watched any Amazon video because of that. You'd think Amazon would be more interested in really hooking me on prime instead of pushing their fire products.


Does the Prime Video app support the Chromecast protocol now? Or are you referring to a full screen cast from an Android device, that's just mirroring the device screen?

Newer Vizio TVs use what's essentially an embedded/modified Chromecast as their smart tv OS, which works really really well. But since Prime Video on iOS (last time I tried) doesn't support the Chromecast protocol, I can't watch anything from Prime Video on my TV.


No chromecast support. I don't own a smart tv so my chromecast is the life of my living room TV. It's kind annoying since I can only watch it on computer or tablet.


You have to cast it from Chrome or Android (screencasting). Any android TV/TVbox has built in Chromecast.


LeEco androidtv, and any other AndroidTV box that isnt Sony.


My NVIDIA Shield Android TV box has the App. I don't know what LeEco even is, I've googled it and it's a chinese brand do they even operate outside of China/India?....


I have a number of HD displays in my house. Some hooked to computers, some to cable boxes and Fire sticks... What are these TVs you speak of?

Sarcasm aside, my Samsung TV has an Amazon app which streams Prime Video just fine...

If her box really can't get Amazon video natively, a fairly cheap Fire stick will do the job nicely.


I can even use my raspberry pi to stream it in a pinch.


Works fine on my Vizo and Samsung TV (nether are Android - heck the Vizo is ~6 years old) so I am not sure what you are talking about?


> I've never asked for Amazon to restrict Prime Video to only tablets, phones, and specifically Sony Bravia Android TVs

It plays fine for me in ubuntu's chromium browser...


only 720p if i remember correctly.


I can watch it on my laptop, my roku, my fire tv, and my chromecast. Three of those play on my tv. What device are you unable to play it on?


How do you get it working on chromecast?


I presume, by using screen mirroring: https://support.google.com/chromecast/answer/6059461


I hit the chromecast icon in the upper-right corner of my chrome browser while streaming on my laptop.


They said it plays on three of those devices which probably means the laptop, fire TV and Roku


No, it plays on all 4 devices. I said three of them played on my TV. Those three were the chromecast, fire tv and roku. Although I guess the laptop could display on my tv with an hdmi cable, so all 4 methods should work.


Works fine with a 30 dollar roku. I think you are inventing problems. Not everything interacts, specifically walled gardens.


A $50 roku plays Amazon prime video just fine.


> But I have a friend who doesn't have an AppleTV and so she can't watch Prime Video on her TV.

It was recently announced that Prime video is coming to the AppleTV.


https://www.theverge.com/2016/5/31/11826362/amazon-acceptabl...

basically Apple would have wanted a cut of revenue and Amazon wanted none of that


I have an Amazon Video app natively on my LG OLED.


Yeah... but that sweet 2 click refund on prime auto billing if you didnt use it past the trial period.


I have to question the morality of a corporate ethos like this. It sounds like the flip-side of "in the interest of shareholder value", which can result in collateral damage to the environment, communities, politics, etc.

Amazon has arm-twisted competitors like Zappos into sub-optimal acquisitions by selling goods at a loss, and it's a fair question to ask if less or no competition really benefits consumers in the long-run.

I'm starting to wonder if all large successful corporations are just a type of legal sociopath, driven to crazy extremes via corporate zealotry.


> I'm starting to wonder if all large successful corporations are just a type of legal sociopath, driven to crazy extremes via corporate zealotry.

Yes, in the same way that feudal lords and slave-owners are legal sociopaths. Capitalism is inherently exploitative.


Capitalism is a pretty organic and free system. I think its just people who are exploitative. It the economy were even more free, it would be even worse.


Given that freer markets are associated with massive reductions in poverty and increased standards of living around the world, what makes you think a freer economy would be "even worse"?


Even worse as in "more exploitative". I was arguing that people, not the economic structure, are exploitative. So an economy where people are more free, there will be more exploitation (which isn't a fault of capitalism but of people). I'm very pro-free-market.


I agree they do that in many ways, but the pervasive issue of counterfeits on Amazon greatly erodes my trust of buying from Amazon, and has made me buy a lot of things off Amazon, even if it's a higher cost.


> 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.

This seems like one of those "warm and fuzzy" things to frame and put on a wall somewhere, but I don't believe (based on my experience) that Amazon is far superior in this respect compared to others (though there are many companies with absolutely pathetic customer service). As an external observer, I see Amazon's primary and foremost principle as one to grow market share at almost any cost (to anyone) and crush competition through that route.


I wish Amazon would obsess over my shipping experience a little more. Where I live, they're beat by just about everyone.

With the problem of counterfeit merchandise that they have, there's virtually no reason for me to continue being a customer there, other than the convenience factor--and for that, eBay provides the same service.


It's a shame that leadership principals doesn't include a little bit of Obsession for many of their workers.


My only question about the anytime number and worker treatment: with all the smart people working on the fire phone, how come nobody felt comfortable calling that number to say the phone was going on the wrong direction?


Someone (who worked on the phone) commented here the other day (sorry, I cannot remember which article it was on) that the phone was praised for it's technology, and bunch of those went into other products (I think the camera was called out specifically). They also said the phone's OS drives all their devices now.

I can believe that a lot of these engineers worked on a smaller thing, and some of them did call out that the phone wasn't going well. Just because they called it out doesn't mean they can override PMs gunning for a big promotion :) (or Bezos set on having his pet idea in the market).


Another famous Bezos tidbit which seems relevant to this WH decision: “There are two kinds of companies: those that try to charge more and those that work to charge less. We will be the second.”


>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.

This is nonsense. Whole Foods made a killing by convincing consumers that what they are buying is somehow magically "better" than regular grocery store items with clever marketing and presentation creating a false dichotomy between "natural" food and the rest. I've yet to see a single shred of evidence to back this up. I'd expect Amazon to do nothing less.


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


Not only do they have such a number, but at least the last time I called that number, there wasn't even a voice menu where I had to "press 0" to talk to an operator. I dialed the number and a human picked up the phone.



They do, and they'll even redirect you to aws if you call the wrong one.


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.


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!


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.


Yep I would never do it but just wanted to give an example on how Amazon values customers, even to a fault and hurting sellers.


They do, actually.


Yep: 1-866-216-1072 is the general line. You can find this by signing in, clicking on customer service and going through the menu options where they try to route you to a specialized call.


I know who I am! I'm a dude playing the dude, disguised as another dude!

Just a nit though on your last one: Amazon bought Whole Foods, not Bezos, so that's "run by" or something.


Amazon = Bezos...even more so than any other company.


We are back to the golden times (not so golden for most) of the steel, oil and railroad tycoons. The ability to assemble and run such disparate enterprises may be a function of wealth distribution.


True. I predict that in 20 years he'll be the richest man in the world many times over, things are just getting started.


I’ll check back in 20 years and hold you to your word.


Use the http://longbets.org/ platform. Oh wait. Another Bezos project. :)


I'd doubt that these links will work in 20 years.


I started thinking but all comments are available on firebase as if firebase will continue to exist in twenty years.


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.


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


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.


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.


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


I wonder which one you're talking about. The Whole Foods adjacent Alewife has a large parking lot and it's often nearly full.


I am talking mainly about the one in Beacon St, Somerville. Also about others in the area.


Yeah maybe it's just my location every time I've been to Whole Foods it hasn't really been that busy but the inside has seemed insanely packed because the aisles are so small and the displays are laid out poorly. It's hard to get through.


My whole foods are also much much smaller than my local Hy-Vee, or price chopper super markets.


Good lord I miss Hy-Vee. I used to live in that area of the midwest and I moved a few years back... I miss nothing more than Hy-Vee. It might sound weird to be so attached to a grocery store, but Meijer is just not the same.


They really make fantastic bread.


Sure, but it seems like they have their own niche market. Aka a supermarket for people who aren't trying to save pennies and would pay a little more for a less crowded and high quality shopping experience. It's the same thing as restaurants ranging anywhere from 5$ meals to 50$+ meals.


It isn't the "shopping experience" for us. It's the organic produce. It's crappy everywhere else and good at Whole Foods, so we shop there. Meat share for, well, meat, and Wegmans for everything else. But the vegetables on our table come from Whole Foods.


My experience is that the organic produce variety is slightly better at WF, but the quality no better than the local organic coops or the better coventional grocers.

But that's going to be highly variable by location and who the local competitors are.


The produce is insanely overpriced.


If you compare it to the same product code somewhere else, perhaps. Your parent is stating they perceive the quality at Whole Foods to be substantially better, and worth the price premium. Perhaps they lack alternative reliable sources of high-quality organic produce you might have access to?


That's about the size of it. When you factor in that we've had to discard as much as half of the produce we purchased from other sellers due to it already being spoiled, the actual value for the price at Whole Foods is higher.


This is over a 3 month period; total amounts (in dollars) are for produce only:

    Store      | Total| #| Avg
    -----------+------+--+----
    Luckys     | 91.86|51|1.80
    Publix     |133.09|58|2.30
    Whole Foods|181.58|76|2.39
We tend to buy more specialty-type produce at Whole Foods in addition to the staples (apples, bananas). We tend to only buy staple produce items at Publix and at Lucky's.


In my market Wegmans came in and demonstrated higher quality and better pricing. I'll give Wegmans my business first.


Ok


> If their stuff becomes cheaper, that’ll drive demand way up, at which point they’ll need to have more ways to buy

Or resolve the bottlenecks.


I have a nice spot on my roof for the Whole Foods drone!


Most people are pretty set in their habits when it comes to groceries; I'd be surprised to see that happen.


You probably only go during peak hours.


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.


What's your personal rule of thumb for how the food source affects the likelihood of your purchase? Do they always include the source on the packaging?


>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.


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.


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

http://itre.cis.upenn.edu/~myl/languagelog/archives/001715.h...


As a language nerd you should know that the don't-end-a-sentence-with-a-preposition "rule" is a total hoax perpetuated by latinists who thought English grammar was too impure. Well, English is not Latin. English has always ended sentences with prepositions -- Chaucer, Shakespeare, and the King James all do it. And you shouldn't be ashamed of doing it either.


I know it's not inherent to the English language, that's why I want to not care about it. But it's also something that was ingrained into me early in my education, so it's something I care about a little. Like multiplication tables. No one cares about multiplication tables but they're hard to forget when you're drilled on it from 4th grade to high school.


That seems like a bad example, since those tables are objectively correct and do have quotidian use, rather than being a falsehood of which knowledge is actually harmful.


Yeah - I'm old, and I guess that syntax became habit.


WF has a long way to go before their salmon is loss-leading. Often selling for over $20/lb, when it should be $8.99...


> Other foods that will be cheaper beginning next week: Bananas, eggs, ground beef, rotisserie chicken, butter and apples.


> from where they're sourcing the food

Is this even valid English syntax? It doesn't sound grammatical to me; it reads more like German than English. Did you move “from” to the head of the phrase just to avoid ending a sentence with a preposition?


It's fine.


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.


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.


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.


> 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.


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.


> Consumers have no appetite for delivery fees

Do we have evidence for this? Restaurant and grocery delivery fees in e.g. New York City as passed along without too much trouble.


NYC is a transit city. Car cities, which are the majority of the USA I think, are very different.


Isn't the entire existence of Instacart proof that some consumers do have an appetite for delivery fees?


> I don't see that happening though as it'd be cheaper for them to do it from scratch in house.

Why? I don't think most grocery stores have a ton of IT resources or talent. I used Kroger's home delivery service off and on for years, and the UX was first horrible and then only slightly less horrible. And, in 2017, as far as I can tell, still has no mobile client.

An instacart acquisition, where you get the whole infrastructure, would seem pretty appealing.


They could move into the b2b space - be a delivery service provider for grocery stores. Contract with the grocery chains to provide delivery service, allowing the grocery store to hide the delivery fee.


It could also mean that other grocers will need to bring delivery in-house to compete or instacart will have to start white labeling delivery.


Instacart thrived on price-insensitive markup-insensitive Whole Foods crowd. Remains to be seen if they can convince the price-sensitive coupon-clipping clientele to pay the delivery fee and disregard the random product markups within the app. The average check also drops significantly at the lower end of the market - a dude stopping at 7-11 for a bag of chips, a Big Gulp Slurpie and a lotto ticket is unlikely to be their prime customer in terms of unit economics.


Fighting amazon means giving little to no money to shareholders and reinvest it in expanding business.

It's close to fighting google on the "pay with your data instead of money because we are the largest ad network".


Sure in the short term this hurts Instacart but wouldn't this deal put more pressure on other retailers to have a delivery service? If there was pressure, wouldn't that help Instacart?


I think they have a strategic partnership with Whole Fooods.


how long will that last?


"Your margin is my opportunity."

- Jeff Bezos

Seems like they are continuing to follow this ethos.


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).


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... 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.


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.


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


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


Where does this put them in relation to Wal-Mart? Are they becoming the new Wal-Mart?

There is a cost to low prices.


Agreed. Whole Foods' reputation is a high-end one. If quality drops or the typical assortment of goods becomes more like a lower-end chain, then I'll likely lose any reason to go.


Honestly Whole Foods could drop their prices by quite a bit, increase their efficiency in some areas such as no more blanket allowance for returns, and still make tons of money.


Whole Foods is the only place I've ever returned food. Once, I returned some clams and muscles, because when I got home, it was obvious they were bad. I also returned some produce that literally wasn't eatable the next day.


I've returned food to many stores over the years. 100% quality control isn't achievable, especially with products where the difference between "perfect" and "forbidden weapon of war" is measured in days.


I've bought steaks there that were spoiled when I unwrapped them 24 hours later. A lot of their stuff is really not worth the price.


Really though, their profit margins are like 34%, when compared to amazon whose margins are like 4% this is huge.


Or they could do their online store strategy and silently let fake goods fill up their inventory.


Whole Foods is owned and operated by Amazon. If they were caught selling, for example, counterfeit DVDs, there would be an FBI investigation.


Amazon itself is also (of course) wholly owned and operated by Amazon and they've had a major problem with letting counterfeit goods into their inventory. (Most of the discussion on HN seem I have disappeared):

http://www.cnbc.com/2016/07/08/amazons-chinese-counterfeit-p...

https://news.ycombinator.com/item?id=12061288

I'm confused ... this was all over HN and now I can't even seem to search for it and people have forgotten about it.


> Jeff Bezos

And Walmart, and literally every other business else that does high volume low margins sales.


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.


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


Yes, but it will talk about the new grocery-store robots and the efficiency of self-service scanning.


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.


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?


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


He need not. The control need not be explicit, it might be as simple as admin isn't so hot about A's application for a promotion over B's because of that critical article, they may not realize it but it can be there. And, from B's perspective, s/he knows that A's critical article is a strike against them, hence why they refrained from writing it.

Not trying to draw a false equivalency, I'd say the ordering in terms of worseness is

    explicit censure >> reporters anticipate implicit bias
                     == admin shows implicit bias
                      > full journalistic freedom


Perhaps a reporter, contemplating his next promotion, would reconsider writing headlines or articles that were critical of the owner. In this way, even unintentional censorship could still happen.


Given the source as posted, probably.


Yes, in the same press release that indicates how much money it also saved people who shopped and bought there that either previously didn't shop there or bought less because the prices were higher.


It will be posted as soaring profit.


Bezos is really a socialist. Instead of focusing on profits - he passes on the efficiency gains to customers. The investors in AMZN are funding discounts to consumers.

He doesn't need to cut wages or layoff workers.He could hire every worker laid by retail and still want more.


I think you are confusing “capitalist that has a long-term, broad monopolization strategy” with “socialist”.


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.


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.


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


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


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.


It really depends where you live.

WF in Portland, OR is a fair bit cheaper than WF in SF, for example.

As an ex-pat I honestly can't shop anywhere else. WF is basically comparable to a normal sort of non-discount supermarket chain in Australia (Coles, Woolworths). I've checked out Trader Joes a couple of times but I'm not sure if I can do all my shopping there.

Everything at Safeway is really low quality (?) and/or overly "American" (not really sure how to describe this :).


> not really sure how to describe this

filled with sugar


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.


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.


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.


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?


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.


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).


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).


I buy non-organic vegetables and meat from my grocery store at a significantly lower price than whole foods and to be honest I don't notice a quality difference.


>established themselves as the place to grocery shop on a weekly basis.

Not really for me and other family members/friends.

Usually it's Safeway or Trader Joes (in the Bay Area at least).


Same for my family. My wife added this local farms produce delivery startup thing a month ago. Seems to work well. For meat we go to Schaub (a proper butcher). There are also very good farmers markets every Sunday in PA, Menlo and Los Gatos.

Next project is to get an extra freezer and buy a whole cow and pig from a local farm.


I know of no one personally who shops at Whole Foods for anything other than specialty items. Hell, my last 10 trips in the past 2 years were nothing but falafel, hummus, and beer.


It depends what you consider specialty. Things I eat regularly, like tofu, almond butter, and coconut water are much cheaper at whole foods than my local grocery store. I think trader joes could be cheaper than wf for those things, but last time I checked (which was admittedly long ago) wf was much cheaper for steel-cut oatmeal than tjs.


If Whole Foods was in financial trouble before the acquisition, I don't imagine they'll be able to cut prices and maintain their quality. Something's got to give and I think it's going to be that "nice idea" you mention.


On the other hand, Amazon has deep pockets and is okay losing money for a while. So who knows?


Amazon could optimize the supply chain. The could also bring their technology expertise to minimize overhead (such as replacing all the cashiers with their "no checkout" system).


> Amazon could optimize the supply chain.

I see this idea thrown around but why can Amazon do a better job than Whole Foods has already done?

Can they combine the supply chain with their Amazon Pantry and get more cost sharing or something?


Amazon ships a whole lot more stuff than Whole Foods. They have a fleet of trucks and even their own planes. Amazon is really a logistics company.

Basically, they have a whole lot more experience moving things around than Whole Foods.


> I don't imagine they'll be able to cut prices and maintain their quality.

So you think when someone buys them with lots of money, they can't cut prices? Um, what?


I hear this a lot, but for basic groceries (veg, etc) WF was never that expensive.

The trouble is that everything else was, and they are masters of the upsell.


WF sells many items at cost. Like fresh oysters. Many others at higher margins. Just like any other grocery store. What I like about WF is you can find organic of just about anything.


Depends on the location, I guess. In Houston, WF is about twice as expensive for many common meat, produce, deli, and bakery items compared to stores like Central Market.


Meat they’ve always been pretty pricy for, that’s true. Mostly because it’s all the more expensive types (grass fed, organic, unusual types, etc).

It’s good value for what it is but more expensive overall.


> horribly expensive

Where I live WF is cheaper than the Safeway next door for any items that are carried by both. The rest might be more expensive but higher quality (hence worth it for some people).


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.


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.


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.


First, you might be interested to know that a lot of Whole Foods' products are not particularly ethical or organic. They carry that stuff, true, but they don't have any kind of total commitment to it store-wide.

Second, everyone I know who has ever worked at whole foods could talk for hours about their internal inefficiencies, food waste being a huge one. Their pricing was also almost whimsical, the most extreme example being their $4.99 "asparagus water".

My guess is that Amazon took one look at the books and saw that they could easily lower prices without suffering much in the way of profit loss. This doesn't necessarily imply there will be sweeping changes in quality.


> My guess is that Amazon took one look at the books and saw that they could easily lower prices without suffering much in the way of profit loss.

Well, I hope you're right, but I think you're wrong. Here's why:

Amazon wants to dominate the world of retail, and Whole Foods currently targets a specific and smaller demographic than "The World". Amazon needs to expand the demographic to reach everyone else. The way they do that is by removing most of the expensive things Whole Foods carries, and replacing them with cheap, less ethical alternatives.

This means we'll eventually lose a lot of the things Whole Foods carries. For a lot of vegan and ethical suppliers, Whole Foods is the vast majority of their sales, and they'll just be shut down.


Amazon paid 13.7 billion for Whole Foods, which has 470 stores.

If their interest was in low quality, inexpensive supermarket locations, why wouldn't they purchase something like Publix, with its 1,154 stores, for a much cheaper price?

Furthermore, if you want guaranteed ethical, organic and fair trade goods, Whole Foods was always more about branding than reality on that front, anyways. Their stuff is better than most supermarket chains, but the independent stores still have them beat by a far margin.


Publix, while it has over 1,100 stores, operates them all in only seven states in the southeast US. Whole Foods, although relatively small, has a nearly national footprint.


Publix is actually employee-owned, so it may not have been possible to broker such a deal. (Your general point still stands though; there are lots of large chains out there, and many would likely welcome a large buyer.)


I don't know Amazon's plans but what you're saying don't make much sense to me.

If Amazon wants to target low end grocery retail, why do they acquire Whole Foods?

It makes business sense for them to let WFM stay high end, and start a Amazon Basics store to go down market.


Whole Foods has a gross margin around 35%

https://ycharts.com/companies/WFM/gross_profit_margin

Bezos is famous for his mantra around "your margin is my opportunity" Amazon has a lot of margin available here for price reductions.

The economic signaling of WF's higher prices is a different topic entirely.


Gross profit margin is not an appropriate indicator, you need to look at actual profit margin here: https://ycharts.com/companies/WFM/profit_margin

It's closer to ~3%.

When Amazon cuts costs, something about the way Whole Foods does business has to give.


Now you won't have to pay extra? What's your indication that the quality or sourcing of the food is changing?

> "Everybody should be able to eat Whole Foods Market quality -- we will lower prices without compromising Whole Foods Market's long-held commitment to the highest standards," Jeff Wilke, CEO of Amazon Worldwide Consumer, said in a statement.


Do you have a source for that? Hopefully they'll lower prices by introducing operational efficiencies, and not by lowering ethical standards.


ethical meats and dairy?


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

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


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


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).


Don't know why you're being downvoted.

I try not to think about the topic too much because I like the occasional spot of cheese, but the number of calves that get slaughtered each year to enable milk production is mildly disturbing. Even worse, some countries have regulations against selling animals under a certain age, and the milk's worth more to a farmer than the month-old calf, so you end up getting piles of male calf carcasses thrown into pits for composting.


> mildly disturbing

That's if you merely think about the concept for a moment. If you bother considering it any further or make any effort to consider the cow's (mother's) experience, you should (if you're not a sociopath) find it far beyond mild disturbance.

Death itself is wasteful but isn't as tragically unethical as the specific aspect of taking a mother's offspring away, which hits perhaps the most powerful low-level aspect of mammalian experience. That we then go kill them is appalling in a human principle (in that we understand the whole picture). Killing them in front of the mother would be a further level of horror that I assume doesn't typically happen (Aside from the gratuitous torture, I bet that would increase cortisol levels in the milk).


That's what the label says, so it must be true.


Your sarcasm implies that you prefer we just abandon any attempt to do right by the animals (or their products) that we eat.

Is that what you want?


> Your sarcasm implies that you prefer

His sarcasm does nothing of the sort, nor does his statement imply anything similar. I would really check that nerve he seemed to touch.

The only interpretation is about the weakness of labeling laws and ethical gerrymandering of commercial interests in the ethical treatment of animals (ie Lip Service).


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


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


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


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.


I agree. So far my grocery experience with Amazon has been awful. Two items were returned by the shipper due to damage before they even got to my house. Another was crushed when it got to my house because Amazon's packaging was terrible. They kept trying to give me a refund instead of a replacement and all I could say was "I ordered this food because I wanted to buy it and eat it, why would I just want my money back?". So if that's how they manage to run Whole Foods, then I guess I'm all-in on Trader Joe's.


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


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.


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


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


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...


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


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%?


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.


Amazon accounts for 43% of all online sales last year. They have a market cap 10x the largest than kroger's and costco. You would have to be incredibly naive to think they arent going to easily go scorched earth and put dozens of companies out of business. That sounds pretty anti-competitive to me.


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)


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.


I bet WaPo headline writers had some esoteric reason for it, but our inner pedants agree, so have an 's'.


Reports the news outlet owned by Jeff Bezos


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...


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.


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


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


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


And the remedy for a conflict-of-interest is disclosure, which is done as early the second paragraph.


> the remedy for a conflict-of-interest is disclosure

In what arena is disclosure a remedy for conflict of interest? Recusal is the remedy.


Your quip implies some conflict of interest or nefarious intent, however:

1. They disclose that like they do in every article that mentions Amazon.

2. Many other outlets are reporting this. (Another one is on the front page of HN as I write.)

3. Do people honestly believe that Jeff Bezos exerts much, if any, editorial control over The Post?


As much as Rupert Murdoch. I saw someone else on HN comment. The editor is competent enough to figure out the owner's views without asking.


That assumes quite a simplistic management structure.


It's also reported by WSJ earlier in the day. Standard PR engine in action.


That gives me even more confidence the story is correct.


"Correct?" I'm sure any numbers in it are accurate. But these stories are essentially press releases.

> “The two companies will together pursue the vision of making Whole Foods Market’s high-quality, natural and organic food affordable for everyone,” they said in a joint statement. “Whole Foods Market will offer lower prices starting Monday on a selection of best-selling grocery staples across its stores, with more to come.”

and

> “Everybody should be able to eat Whole Foods Market quality — we will lower prices without compromising Whole Foods Market’s long-held commitment to the highest standards,” Jeff Wilke, chief executive of Amazon Worldwide Consumer, said in a statement. “There is significant work and opportunity ahead, and we’re thrilled to get started.”

Some hard-hitting journalism here, especially considering the first thing Amazon is doing is leveraging their juggernaut status to lower prices and undercut competitors. Sure, we'll see "blistering competition" now, but when these other businesses falter and only Amazon is left standing, there won't be any news stories trumpeting the fact. Amazon is being particularly serious about PR on thsi one since they've gone so deep into anti-trust territory, and because they know that the false signifier of price that has been used in anti-trust cases for the last few decades is their shield against claims that they're a monopoly.


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


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.


Until someone makes an antipaywall browser extension


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-...


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


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


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"


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...


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


I prefer "whole paycheck"


>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.




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