The Amazon-Ification of Whole Foods

Whole Foods gave Amazon a high-end, nationwide, yet arguably &quot;mainstream&quot; grocery store to enter into the US grocery market. It&#x27;s an aspirational brand, yet not so specialty to be ostentatious. It&#x27;s a nationwide chain, unlike other top-rated grocery stores -- Wegmans and Publix come to mind. And it&#x27;s a store that, through savvy and market timing, has located its sites in areas that are experiencing growth in upper-middle-class households: Amazon&#x27;s preferred demographic.<p>They can likely cut Whole Foods&#x27; margins on many items and, through the magic of the warehouse club nature of Prime, offer further discounts to Prime members, incentivizing the choice of Amazon over their competitors. Not all people will we swayed, but some will.<p>This will shake up the grocery market in many metros, where margins are tight and incumbents are often saddled with tight margins, concerns about real estate, and preexisting debt. Some will spend more to retain customers with extra features like free at-store pickup or cheap delivery, but they won&#x27;t be able to outmatch Amazon&#x27;s warchest. The most vulnerable among their competition will fold, allowing customer bases to re-align.

When I was a kid, mom would do the grocery shipping once every 2 weeks. She&#x27;d load the five kids into the van and we&#x27;d trek over and fill 2 shopping carts with 10 boxes of breakfast cereal, 2 gallons of milk, 2 pounds of bacon, 8 pounds of hamburger, 24 cans of Campbell&#x27;s soup...<p>Flash forward to 2018 and my wife is buying things online to the point that we&#x27;re getting 4-6 items delivered per week. I&#x27;d guess that&#x27;s not exceptional.<p>With &#x27;free delivery&#x27; for under $35, I can see her increasing that to on average one delivery item per day.<p>Kind of like the milk man used to do.<p>What concerns me is that the amount of energy that goes into getting all that stuff into my home seems to have substantially increased, and, will continue to increase as more businesses incorporate low cost or free delivery.<p>So it makes me wonder where this ends. It seems we&#x27;ll wind up with delivery trucks, perhaps autonomous electric vehicles, combing the suburbs throughout the day.<p>I keep contemplating the extremes: 149 items acquired in one trip the way my mom used to operate, vs.149 items delivered to my home one at a time over a 2 week period. What are the trade-offs?

If Amazon is smart, they will keep their brand out of Whole Foods, at least until they rehabilitate it some. Neither media or public sentiment towards Amazon is great right now for a variety of reasons, many of which have been posted on HN. Some people are getting disturbed that it seems like they can only get important goods from one company; indeed, this is basically the monopoly future that Amazon wants. Personally, I don&#x27;t want to feel like I&#x27;m being stalked or &quot;optimized&quot; by Amazon at my local Whole Foods.<p>I don&#x27;t think we&#x27;ve seen the end of non-Amazon retail yet. When almost every transaction is conducted through Skinnerian workflows developed by MBAs in Seattle and neural networks running in Virginia data centers, doing all your shopping at Walmart is an act of radical physicality.

It&#x27;s sort of funny. Amazon now does is doing the same thing Walmart did back in the day.<p>If you were a supplier for Walmart, you _had_ to adopt their business practices in order to stay competitive in the market. They would demand that so you could constantly lower prices.<p>Amazon is sort of the same in that if they enter a vertical shopping market, if you don&#x27;t provide the same level of service, you&#x27;re kind of sunk. And to get to that level of service, the insidious thing is that you either let them take care of logistics and pay them a cut, or you adopt their business practices which have been honed for years.<p>I don&#x27;t think Amazon-Ification is necessarily a bad thing. Amazon runs a tight ship and companies would do well to learn.

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

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

Amazon Prime Now... Is that the thing where delivery is &quot;free&quot; but where we are supposed to &quot;tip&quot; the driver ?

I used to use Instacart, but it was a hassle to manage the people doing the shopping. They would get bad produce. They would mistake zucchini for cucumber. They would make nonsensical replacements. Constant screw-ups. Sure if you&#x27;re buying toilet paper or some other generic commodity then it&#x27;s fine, but you can already do that with Amazon.

Datapoint: Prime Now in Los Angeles has quite a few Whole Foods branded products already (just got some coconut milk this morning!), although it&#x27;s not part of this launch.<p>Prime Now is really a fantastic service, but it seems like not many people really know about it; Amazon seems to never promote it on their site.<p>If Amazon buys IKEA, my life will be complete.

&gt; when a dad says to the smart speaker on his counter, “Alexa, I need brown rice and pork,” the product that arrives is an Amazon-branded box containing Amazon–Whole Foods–branded rice and pork.<p>I question whether the author here has ever cooked a meal, much less shopped for ingredients. There&#x27;s no way this style of interaction can produce the desired result here.

I live in the Virginia Beach metro, which alongside Austin, Dallas, and Cincinnati, is one of the four test locations announced for their new Whole Foods Prime delivery service. My theory is that the Virginia Beach location was chosen as their &quot;stress test&quot;, as it&#x27;s the one where this service is most likely to fail. If it can work there, it can probably work anywhere.<p>The metro has some positive attributes: high proportion and large number of military families who are mostly concentrated in the suburbs. But it also has many complicating factors:<p>- A difficult metro for logistics. It&#x27;s essentially a routing cul-de-sac: not enough local demand to serve as a large distribution node, and it&#x27;s ~100 miles from the Richmond metro that&#x27;s typically used for this instead. Getting product in by rail is easier, but difficult to do just-in-time, and most rail freight traffic flows the other way: out.<p>- Low growth. Incomes in the metro grew slower than the US average [1]. Employment growth has been well below US average [2]. The region isn&#x27;t quite stagnant, but recovery after the recession has been markedly slower than Northern Virginia, Raleigh-Durham, or the region&#x27;s arch-rival Richmond. Most population growth that is occurring [3] in Virginia Beach&#x27;s vicinity is in suburban areas beyond the single Whole Foods&#x27; delivery range [4].<p>- Grocery saturation. In the past year, German-style chains Aldi and Lidl have expanded, Publix has been rumored to be eyeing the area, and Wegmans has been confirmed to be coming [5]. This is in addition to local incumbents owned by Supervalu, Kroger, and Ahold Delhaize. Local press and commentators have been noting that the area seems to now be overprovisioned with grocery stores [6].<p>Meanwhile, Cincinnati is close to major trucking corridors and is adjacent to Amazon&#x27;s old freight hub in Ohio and its new one at Cincinnati&#x27;s Kentucky airport. Dallas and Austin are both major markets with high levels of growth.<p>[1] <a href="https:&#x2F;&#x2F;www.bea.gov&#x2F;regional&#x2F;bearfacts&#x2F;pdf.cfm?fips=47260&amp;areatype=MSA&amp;geotype=4" rel="nofollow">https:&#x2F;&#x2F;www.bea.gov&#x2F;regional&#x2F;bearfacts&#x2F;pdf.cfm?fips=47260&amp;ar...</a> [2] <a href="https:&#x2F;&#x2F;www.bls.gov&#x2F;regions&#x2F;mid-atlantic&#x2F;news-release&#x2F;areaemployment_virginiabeach.htm" rel="nofollow">https:&#x2F;&#x2F;www.bls.gov&#x2F;regions&#x2F;mid-atlantic&#x2F;news-release&#x2F;areaem...</a> [3] <a href="https:&#x2F;&#x2F;pilotonline.com&#x2F;news&#x2F;local&#x2F;article_8e17f21e-2180-5c14-beae-80ce3a8b97c9.html" rel="nofollow">https:&#x2F;&#x2F;pilotonline.com&#x2F;news&#x2F;local&#x2F;article_8e17f21e-2180-5c1...</a> [4] <a href="https:&#x2F;&#x2F;pilotonline.com&#x2F;business&#x2F;consumer&#x2F;article_db7fe221-4b4b-5b63-8255-f722c8e434df.html" rel="nofollow">https:&#x2F;&#x2F;pilotonline.com&#x2F;business&#x2F;consumer&#x2F;article_db7fe221-4...</a> [5] <a href="https:&#x2F;&#x2F;pilotonline.com&#x2F;business&#x2F;consumer&#x2F;article_610b32b7-6cf7-5050-9b07-26516cd75120.html" rel="nofollow">https:&#x2F;&#x2F;pilotonline.com&#x2F;business&#x2F;consumer&#x2F;article_610b32b7-6...</a> [6] <a href="https:&#x2F;&#x2F;pilotonline.com&#x2F;business&#x2F;consumer&#x2F;article_8b636301-ffd0-5750-9793-15d63fda8f0b.html" rel="nofollow">https:&#x2F;&#x2F;pilotonline.com&#x2F;business&#x2F;consumer&#x2F;article_8b636301-f...</a>

I&#x27;ve been living in Austin for the past two years, and shopping mostly at the Whole Foods world headquarters. I&#x27;m not sure what the big deal is about this place - overpriced for the quality, service is ho-hum, prepared foods are nothing special, etc.<p>Wegmans absolutely crushes it.