Amazon is buying Whole Foods

by on June 16, 2017 at 9:39 am in Current Affairs, Food and Drink, Web/Tech | Permalink

Matt Yglesias: “A big city daily newspaper, physical bookstores, a supermarket chain. Bezos’ futuristic vision is all coming together.”

Alex T. tweeted: “I already do 80% of my shopping at Amazon and Whole Foods. I am beginning to get worried.”

Ross Douthat: “What if Bezos intends to turn Whole Foods into a Mormon-style charitable storehouse …”

Me: “Perhaps preserving my favorite brands of Whole Foods dark chocolate is Jeff Bezos’s plan for short-run public charity.”

@JesalTV: Jeff Bezos: “Alexa, buy me something from Whole Foods.” Alexa: “Sure, Jeff. Buying Whole Foods now.” Jeff Bezos: “WHA- ahh go ahead.”

Here is an earlier Conor Sen piece on Amazon acquisition strategy.

And Stratechery on Amazon.

And above all else: “Dow opens down 10 points. Amazon jumps 3% after deal to buy Whole Foods. Walmart slumps 7%, Kroger plunges 16%”

Here are more retail share price declines.

1 Hadur June 16, 2017 at 9:44 am

Last I heard, Whole Foods was circling the drain because other, cheaper grocery stores were incorporating organic food (or other food that white people believe, often with no basis, to be healthier than regular food) into their offerings at a lower price.

Then again, I had also heard that the Washington Post was circling the drain before Bezos acquired it. Perhaps these are his charity cases.

Reply

2 Axa June 16, 2017 at 10:05 am

Indeed, the people selling “organic” products got really angry that an alternative organization started with the “non-gmo” label, this one https://www.nongmoproject.org/product-verification/

Reply

3 mskings June 16, 2017 at 10:19 am

be careful little brodillas, grocery stores are not something u get.

Pump ur breaks verily. Watch ur step. Be weary.

Reply

4 Hazel Meade June 16, 2017 at 1:11 pm

You would think Johnathan Haidt would have something to say about some peoples obsession with the physical and therefore moral (at least in their heads) purity of organic food.

Reply

5 GoneWithTheWind June 16, 2017 at 3:09 pm

It isn’t a surprise that Whole Foods was over priced just as their groceries are. Their business model depends on convincing people that there is such a thing as “health foods” or magic food or good carbs, bad carbs. AND that it is worth paying three times as much to buy the magic foods.

Reply

6 CD June 17, 2017 at 1:31 pm

I’m not sure WF is *convincing* people of this stuff. I’d suggest they spotted a business opportunity selling to people who have already convinced themselves that food can have magic properties. One of the less-studied social phenomena of our time is the way the affluent and apparently well-educated turn to quackery and charlatanism.

A related dimension is class, and growing U.S. class division as measured by income. The supermarket is one of the few remaining spaces where the affluent might have to rub shoulders with the lower 80%. WF’s high prices are a feature, not a bug: they send the proles to Safeway.

Reply

7 Ted Craig June 16, 2017 at 9:47 am

“I already do 80% of my shopping at Amazon and Whole Foods. I am beginning to get worried.”

Not the DOJ would have held this up anyway, but owning the local paper might make this go more smoothly. If Bezos sees acquisition as the future for his company, then buying the WaPo has a whole new sinister aspect to it.

I’m not saying that’s why he did it, but my cynical side sees it that way.

Reply

8 EverExtruder June 16, 2017 at 9:55 am

Bezos we have a problem. I made a comment in the “charitable” post yesterday…this is getting beyond cornering the market. This is cornering economies, all eggs in one basket etc. etc. etc.

FAAMG needs to be put under anti-trust scrutiny at this point.

Reply

9 Believe it! June 16, 2017 at 10:03 am

More-or-less according to Tyler Cowen and Alex Tabarrock, Monopoly Analysis doesn’t really apply to Silicon Valley businesses because the People who run them are super smart and cool and therefore beyond repproach.

Reply

10 dan1111 June 16, 2017 at 11:19 am

According to a quick Google, Amazon has 43% market share in online sales. Doesn’t seem like monopoly territory to me–and a lot of that 43% is just other sellers using Amazon as a platform. Whole Foods is a drop in the bucket–not going to change this much.

Reply

11 Believe it! June 16, 2017 at 11:47 am

I know that. Don’t you think I know that? I find it so funny that you think that I don’t know that. So funny.

Reply

12 dan1111 June 16, 2017 at 3:32 pm

My implied point is that the monopoly talk seems unwarranted when Amazon has less than half of the market. This doesn’t depend on you knowing or not knowing the market share.

13 Dick the Butcher June 16, 2017 at 10:11 am

Some day Amazon will report two consecutive profitable quarters.

Seen on Bloomberg TV yesterday afternoon: commercial real estate capitalization rates are at 2006 bubble lows: approximately 4% for multi-family and 5% for office properties. While this reflects near-zero rates everywhere, likely it is unsustainable.

Much of the post-election rally is concentrated in a small number of super-hot corporations.

From June 12, 2017 Barron’s: June 9, Friday – NAS down 1.8%. Facebook, Amazon, Apple, Microsoft, Google/Alphabet = 56% of NAS 100 YTD gains, and 43% of aggregate value; also 40% of S&P 500 YTD gain. Google was down 3.4%; Facebook down 3.3%; Amazon down 3.2%; Microsoft down 2.3%. Before Friday sell-off, tech was up 22% YTD.

A major problem with asset bubbles is that no one knows they exist until they crash.

Reply

14 msgkings June 16, 2017 at 12:05 pm

Amazon has continually been profitable since the beginning of 2015. It’s just a small profit compared to their market cap.

Reply

15 Ann Ominous June 16, 2017 at 1:36 pm

GAAP does not appropriately measure the value R&D assets. About two-thirds of Amazon’s gains over the past year have been converted to technology. It’s hard to estimate a dollar value for the technology. But GAAP essentially treats “software developed internally for R&D activities” as though it’s used once and set on fire, even though it’s clearly still valuable and we’ll probably see Amazon rent some of it out.

Reply

16 mulp June 16, 2017 at 2:36 pm

Very little of Amazon “technology” is unique or proprietary or controlled by Amazon.

However, the billions invested in buildings and their contents and the workforces running them are so costly that Walmart loses money trying to build it’s own.

Walmart sources and sells 4 times as much as Amazon, so it’s warehousing and shipping system is obviously far higher in capacity. Plus Walmart makes use of its customer labor in order picking and last mile distribution.

Walmart only handles distribution of 3% of US gdp. Even if Walmart value add is 25%, Walmart is responsible for less than 1% of gdp.

Amazon is much smaller than Walmart.

Sears was the biggest in mail order and retail stores when I was growing up in the 50s and 60s. Sears abandoned mail order based on pressure to become more like it’s department store competitors which became Kmart and Target as surviving names before Walmart spread out of its rural niche which the department stores and their discount department store avoided.

The most interesting thing about Whole Foods in the stormy ocean of food retailing is it has built on higher prices while Walmart has focused on lower prices and is being hurt by even lower price dollar stores with European Aldis announcing moves to expand, and one of its competitors planning entering the US in a big way.

Amazon has taken 20 years to become 25% of Walmart at 55 years. But just for perspective, Sears, Target, Walgreens, and Kmart were founded circa 1900 in Chicago, Minneapolis, and Detroit. Sears and Kmart were each seen at times as being dominant and unstoppable.

17 Carlito Brigante June 16, 2017 at 12:13 pm

They now they exist. But everyone dances when the music is playing. If you are managing OP’s money, being right about the market at the wrong time is functionally still being wrong.
http://desertoftherealeconomicsanalysis.blogspot.com/2017/06/etfs-on-road-to-serpentdom.html

Not to crow. Well, to crow. If I had bought a few more Costcos puts I could write one check for that Ducati 1199 Paginale and the Lotus Evora I have been pinning for. Costco and grocery stores got pounded with the news.

Reply

18 EverExtruder June 16, 2017 at 1:35 pm

“A major problem with asset bubbles is that no one knows they exist until they crash.”

I have to disagree. People, lots of them, see them all the time but can’t do anything until the cost of changing is less than the cost of staying the same. There is “motivation” cost.

We are in a major bubble right now. Lots of people can see it. Lots of people are preparing for its collapse. Lots of people are also refusing to see these things for what they are because their shares must go up up and up. Animal spirits, not enlightened self-interest.

Reply

19 mulp June 16, 2017 at 3:23 pm

Well, economists since Reagan believe inflation creates wealth, not labor. Capital assets are inflating in price thanks to both the private business elites and the conservative elites buying academics to push the idea of inflating asset prices instead of building new assets by paying workers.

The number of firms listed on stock markets is less than the number when Reagan was elected in the wake of buying the theory wealth comes from not paying workers to create scarcity price inflation. And there were still privately held firms, but the push to liberate wealth resulted in so many IPOs that the number of listing more than doubled in his first term, followed by even more frantic M&A that shrank the number listed.

While the impression is the late 90s was the age of IPOs, the number of firms listed shrank as M&A continued to contract the supply of stock on the market to inflate their prices.

It’s classic supply and demand. Get government to push more cash into buying a shrinking supply oof shares derived from capital assets that policy works to limit by branding, patent, and most important, Wall Street elites focusing capitalists on cutting labor costs with building capital the easiest and fastest place to cut labor costs.

Before Reagan, all major businesses had research units that employed the top scientists doing everything from basic research to applied research. Almost all of them have been shutdown to cut labor costs as demanded by Wall Street elites focused on inflating asset prices.

Who on Wall Street calls for CEOs to build more factories to flood the market with goods?

Many have complained Amazon was building too many warehouses and server farms and hiring too many workers wiping out all potential profits. The growth in revenues and impact on many other parts of the economy made buying shares desirable inflating it’s asset prices rapidly. That has overridden the objections of Wall Street elites who see Bezos destroying wealth elsewhere to inflate his wealth. Inflate Amazon, deflate Walmart.

Inflate Tesla, deflate Ford, GM. Inflate SpaceX, deflate Lockheed and ULA.

Note, Wall Street is booting Ford’s CEO for paying too many workers doing R&D to compete with Tesla. They are thinking about the wealth destruction by inflated fossil fuel asset prices crashing.

Reply

20 Ted Craig June 16, 2017 at 3:56 pm

“Note, Wall Street is booting Ford’s CEO for paying too many workers doing R&D to compete with Tesla. They are thinking about the wealth destruction by inflated fossil fuel asset prices crashing”

WTF are you talking about? They just promoted the tech guy:

http://money.cnn.com/2017/05/22/news/companies/ford-ceo-jim-hackett/index.html

21 AlanW June 16, 2017 at 8:46 pm

In Mulp’s defense, Ford seemed to be trying to have it both ways. Not sure what they were trying to accomplish beyond saying, “we’re really serious!”

22 Brian Donohue June 16, 2017 at 5:03 pm

I also see bubbles everywhere, all the time. The trickiest bubbles are the ones that never pop. But they’re bubbles all the same. This has nothing to do with faulty human pattern recognition software.

Reply

23 Dick the Butcher June 16, 2017 at 6:24 pm

Baron de Rothschild’s Secret – “I always sold too early.”

Reply

24 Bob June 16, 2017 at 9:31 pm

Amazon has crazy levels of investment in areas that have nothing to do with retail or distribution at all, so they are a very hard company to evaluate for someone that isn’t very familiar with everything they are doing.

People that see Amazon as an online retailer of physical goods are as wrong as the people that 10 years ago saw them as an online bookseller: Bezos’ ambitions aren’t just about retail.

For those of you not following, the place where Amazon is most dominant is not selling its own products, or even being a marketplace for their parties: It’s their rental of computer power. They are the most popular cloud provider by a country mile. A large percentage Fortune 500 are renting some of their servers in Amazon, and many are planning to go all in on Amazon’s offering, instead of running their own data centers. Most Silicon Valley upstarts are completely dependent on Amazon on their infrastructure. The companies might succeed or they might fail, but Amazon is selling the pickaxes in this gold rush. It’s not just that they are dominant in the space, but that the market is growing so fast that they’d not even have to be this good to be heading in a good direction.

Their advantage is so large in this space that their largest competitors, Google and Microsoft, who have far superior access to technical talent (mainly because they treat their employees like human beings), are still far behind. Anyone that can compete with those giants in tech is scary, but most people think they are just an online retailer.

And once you are at the top of expertise in running huge, complicated hardware and software infrastructure systems, you can take all that expertise and leverage against some other market. Just like Google, they are taking their gigantic moat and leveraging it in other arenas. Bill Gates’ era Microsoft wishes they had this growth potential.

Could all tech stocks be overvalued? Sure, anything is possible. But seeing how much trouble traditional enterprises are having to acclimate themselves to a more tech centered world, mostly thanks to broken organizational structures and pay scales, I’d not bet against them, even after another recession. Let’s remember the previous tech boom: Companies like AOL sank like rocks, but the failure of many exuberant companies from that era let even bigger companies raise from the ashes.

Look at it this other way: If tech is greatly overvalued, that means that even Tyler’s less optimistic views of our growth are too optimistic, and we should start looking at medieval rates of economic growth, as it’s not as if we have any other sectors looking good.

Reply

25 dan1111 June 16, 2017 at 11:39 am

Amazon has only 43% market share as I noted above, and they got where they are by providing groundbreaking services that are beneficial to people. There is no monopoly here, and this would be a classic case of punishing a company for success.

Reply

26 Ted Craig June 16, 2017 at 1:05 pm

General Motors never exceeded 50 percent market share, but the Nixon administration was about to break up that company prior to the oil crisis.

The legal definition of monopoly is more complicated than market share.

Reply

27 EverExtruder June 16, 2017 at 1:31 pm

43% of the online market is huge and Amazon is clearly stifling competition within the space causing downward pricing pressure across the online and physical spectrum. Their market cap is also ludicrous.

This is the 21st century. You can’t wait until you have a JP Morgan or Standard Oil standing in front of you for what it is. The FAAMGs are gunning to be the only game in town. Everything they do suggests it. It’s time to dust-off and perhaps review some provisions, but also put them under a microscope.

Reply

28 ex-P.F.C. Wintergreen June 16, 2017 at 2:31 pm

“Amazon is clearly stifling competition within the space causing downward pricing pressure”

Lowering prices is competition.

Reply

29 EverExtruder June 16, 2017 at 3:02 pm

There are 2 sides to that economic coin.

30 Nick June 17, 2017 at 1:24 am

It *can* be competition. Or it can be dumping or limit pricing to discourage other competitors out of the market. And if lower price also comes with lower quality, it can be about pulling the market to a low-level equilibrium where everybody offers low price, low quality versions of the product. Call price Legion, for it is many things.

31 mulp June 16, 2017 at 3:29 pm

I heard the same about Sears, Kmart, Walmart.

Remember, Sears owned about the same share of mail order that Amazon owns of mail order today around 50 years ago. Plus it was the biggest department store.

Sears was both Walmart and Amazon in one.

Reply

32 ABV June 16, 2017 at 3:42 pm

Isn’t creating downward pricing pressure the opposite of what a monopoly would do?

Reply

33 Ted Craig June 16, 2017 at 4:00 pm

Standard Oil was broken up due to “predatory price cutting.”

34 msgkings June 16, 2017 at 4:12 pm

The idea is you slash prices so low you drive all the competitors out, THEN you raise them. OPEC just tried to do it to the frackers.

35 Per Kurowski June 16, 2017 at 10:03 am

So now we are going to see Amazon robots restocking the shelves in Whole Foods?

You Robots… They Tax Humans, Don’t They?

Reply

36 Carlito Brigante June 16, 2017 at 12:22 pm

The EU decided not to tax robots. http://newatlas.com/eu-robot-law-proposal-passes-parliament/47971/

The “rights and responsibilities” of Robots and AI is an interesting topic;

Reply

37 KWebb June 16, 2017 at 10:20 am

This is what Walmart has been doing, but in reverse.

Walmart sucks at online merchandising, especially in high margin areas. So they went out and bought some online merchandising experience.

Amazon doesn’t have much grocery experience, so they went out and bought some grocery experience.

Walmart, a low, but consistent, profit company is trying to improve in a high margin area.
Amazon, a no profit company is trying to improve in a razor thin margin area.

Reply

38 msgkings June 16, 2017 at 12:07 pm

Amazon is profitable, but this deal is accretive since WF is more profitable (significantly lower PE ratio). So Amazon is up, which is rare for the acquirer.

Reply

39 dan1111 June 16, 2017 at 12:15 pm

I suspect it’s more about Amazon’s expected ability to be an online grocery juggernaut, rather than Wholefoods’ current profitability.

Reply

40 msgkings June 16, 2017 at 12:20 pm

Probably both. Accretive deals are good.

Reply

41 Brett June 16, 2017 at 10:23 am

It’s fitting that Kroger stock went down. Amazon pays sales tax now, so there’s no legal reason for them to minimize a physical presence in retail anymore. They’re free to move towards being a full service retail conglomerate, with physical stores integrated into its online service and (eventually) private delivery service. Whole Foods makes sense as a purchase, too – it moves them closer to doing grocery deliveries, and allows them to charge a slightly higher premium on price for it.

Reply

42 dan1111 June 16, 2017 at 12:16 pm

Kroger is a competitor with Amazon (and Whole Foods) in the online grocery delivery service.

Reply

43 Alex June 16, 2017 at 10:35 am

I was going to say my charity idea is giving away free Jalapeno hummus.

Reply

44 Tom T. June 16, 2017 at 10:43 am

I don’t get it. Whole Foods occupies an entirely different market niche from Wal-Mart. In what sense are they competitors?

Reply

45 kevin June 16, 2017 at 11:02 am

Does Wal-mart occupy a different market niche then amazon though? I already buy plenty of crap from amazon that I could from wallmart. Now I can by bananas and save myself a trip to wall-mart’s grocery dept.

Reply

46 msgkings June 16, 2017 at 12:08 pm

Food. Walmart sells a ton of food. Different clientele though.

Reply

47 dan1111 June 16, 2017 at 12:18 pm

Wal-mart, Kroger, Amazon, and Whole Foods are all competitors in online grocery delivery.

Reply

48 Tom T. June 16, 2017 at 6:55 pm

Not at all the same groceries, though.

Reply

49 Moo cow June 16, 2017 at 11:12 am

There’s already a grocery price war in the Seattle area. I imagine it will heat up.

I like Kroger. Here thats QFC and Fred Meyer. It’s well run. But Safeway has been giving away money for months now so I’ve been shopping there.

Whole Foods was done for either way.

Reply

50 msgkings June 16, 2017 at 12:09 pm

It’s not done for, they are even keeping Mackey in charge and not changing the branding.

Reply

51 mskings June 16, 2017 at 12:13 pm

Be careful brophelia, long island is not a place u understand.

Reply

52 Moo cow June 16, 2017 at 12:20 pm

For now.

Will the selection change? Will prices become more competitive? Will they sell Jiff and take coupons? Will they still be selling gross looking organic “hamburger” for $7.99 a pound?

The Whole Paycheck model was interesting for a while. But in a year, I think it will be unrecognizable.

Reply

53 Daniel Weber June 16, 2017 at 1:05 pm

TIL Fred Meyer and Fred Meijer were both grocery stores.

Reply

54 Mark Thorson June 16, 2017 at 11:24 am

Trader Joe’s would have been a smarter move. The stores are smaller and more numerous, so a good place for synergies with the parent company, like free shipping to your nearest Trader Joe’s. I shop at both Whole Foods and Trader Joe’s, but I probably spend 5 times more at Trader Joe’s.

Reply

55 Daniel June 16, 2017 at 12:00 pm

Maybe, but Trader Joe’s wasn’t for sale and Whole Foods was cheap.

Reply

56 Daniel Weber June 16, 2017 at 1:06 pm

Whole Foods was cheap.

First time those words have ever been spoken.

Reply

57 nick June 16, 2017 at 9:52 pm

+1

Reply

58 Mabuse June 17, 2017 at 1:01 pm

Trader Joe’s is owned by the Aldi conglomerate, so it probably isn’t for sale.

Reply

59 rayward June 16, 2017 at 11:31 am

Bezos has succeeded by failing, failing to generate much in the way of profits. Amazon is a cult, enjoying an ever increasing stock price not in spite of not generating profits but because of it. The problem with companies operating in reality (Walmart, Kroger) is they are expecting to generate profits. Down is up, up is down, an ignoramus and likely traitor in the Oval Office. These are interesting times.

Reply

60 Axa June 16, 2017 at 12:18 pm

You’re right…….until 2014.

Have you seen the recent numbers? http://financials.morningstar.com/income-statement/is.html?t=AMZN

Net income(million USD)
2015 – 596
2016 – 2371

Profit margin
2015 – 0.55%
2016 – 1.74%

For context, Walmart had profit margin went down from 3.62 to 2.8% from 2012 to 2016 with stagnating revenues. Amazon revenue grew 122% from 2012 to 2016. Amazon stock can be considered expensive but it’s a working business anyway.

Reply

61 rayward June 16, 2017 at 2:13 pm

Most of the profits are generated by the cloud service; Amazon’s core business, online sales, continues to run at a loss or near break even. Operating Whole Foods at a loss not only won’t hurt Amazon’s stock price, it may increase it!

Reply

62 msgkings June 16, 2017 at 2:42 pm

Why would they operate Whole Foods at a loss? WF is quite profitable right now. Are you suggesting they will slash prices at WF to Kroger levels now?

Reply

63 rayward June 16, 2017 at 3:07 pm

Why would Bezos operate Amazon at a loss? If I paid a premium for Fresh Market last year I’d be worried.

64 msgkings June 16, 2017 at 3:26 pm

Bezos doesn’t operate Amazon at a loss, and Whole Foods doesn’t either. So stop being stupid, if you can.

65 oo-ee-oo-ah-ah-ting-tang-walla-walla-bing-bang June 16, 2017 at 11:33 am

Cheap prime for recipients of govt benefits and buying Whole Paycheck- Bezoz is telling you what you already know: the only viable market segments left are ppl receiving gov’t benefits and 1%ers. The middle class is dead

Reply

66 mulp June 16, 2017 at 3:48 pm

Walmart is the biggest redeemer of food stamps.

Reductions in SNAP thanks to Republican welfare cuts was big enough to be attributed to poor Walmart results several years back. The press from that probably ensures that even a 5% hit to revenues due to welfare cuts will be buried in future Walmart reports.

And Walmart worst competitors are the dollar stores which gained once they qualified to redeem food stamps.

Amazon has recently qualified to redeem food stamps with Pantry in select areas. Amazon is offering discounted (sub) Prime to welfare qualified customers.

Reply

67 A Definite Beta Guy June 16, 2017 at 11:44 am

Grocery is about to become brutal, particularly in the anti-science organic sector. Hardly seems like a smart move to me.

Reply

68 kevin June 16, 2017 at 12:40 pm

I don’t care about “anti-science” GMO’s, I just don’t want hormones and pesticides in my food (and I guess I’d like my Chickens to be able to stand up). Unfortunately, there’s no label for that, so I’m stuck overpaying for non-GMO organic too. Hopefully, someone realizes this and can segment the market appropriately based on what people actually want. Amazon has done this with other markets–here’s to hoping they can do that here.

Reply

69 Steve S June 17, 2017 at 10:33 am

+1 There’s one brand of milk at my grocery that’s not organic but it’s also not hormone-pumped factory dairy cows (I don’t mind drinking the cheapest stuff but I make enough money to exercise caution with my kids). It’s priced right in the middle of each. More products need a player in that space.

Reply

70 mulp June 16, 2017 at 4:07 pm

If GMOs are so great, why do farmers need farm subsidies to stay afloat?

The crops that get little to no farm subsidies do not see GMOs introduced.

The lone GMO tomato failed in the market because it cost too much for first the seed, and then in the picking and processing/distribution and even in the grocery (Flavr-Savr). Non-GMO tomatoes grown locally using heirloom seeds blow away anything Monsanto, et al can cook up in labs. If not grown locally and picked early ripe, better to use canned and cook the tomatoes. Canned tomatoes were picked ripe at peak flavor.

Food should be about the flavor. GMOs have done nothing to improve flavor.

And I’d love to see GMO tech bring back Gros Michel which are reportedly superior to Cavendish bananas.

Reply

71 mikeInThe716 June 16, 2017 at 12:24 pm

As long as Bezoz stays away from Wegmans, I’m fine.

Reply

72 Tom Warner June 16, 2017 at 12:40 pm

I don’t know about the rest of the country, but in NY the Whole Foods stores’ main problem is they can’t move people through the store quickly enough. I tried them a few times and there were always horrendous check-out lines, so I stopped trying. So the NYC stores at least seem a very good fit with the grab-and-go technology Amazon has been testing in Seattle.

Reply

73 Mark Thorson June 16, 2017 at 4:27 pm

Nobody goes there anymore. It’s too crowded.

Reply

74 Brian Hollar June 16, 2017 at 12:48 pm

Bezos must have liked my tweet yesterday: https://twitter.com/BrianHollar/status/875451275105542145

Reply

75 Daniel Weber June 16, 2017 at 1:08 pm

There are no such things as food deserts. There are places where people don’t want vegetables.

Reply

76 clamence June 16, 2017 at 1:17 pm
77 Milo Minderbinder June 16, 2017 at 2:10 pm
78 Daniel Weber June 16, 2017 at 2:25 pm

Exactly the quality of content we’ve come to expect from WaPo. “Who cares if it’s true, we need clicks.”

79 clamence June 16, 2017 at 6:55 pm

Of course I know about that SSC post but some of the other results in that article exceeded lizardmen. My personal experience is also consistent with high levels of food knowledge ignorance.

80 Milo Fan June 16, 2017 at 7:05 pm

+1

Reply

81 Gimlet June 16, 2017 at 2:51 pm

Makes a whole lot of sense if AMZN isn’t going to give up on the grocery biz (which since they hadn’t by now I don’t think anyone would have expected them to do so). It’s pretty obvious why they would want a national grocer with existing infrastructure and food distribution. High-end, too (which is a good match for online grocery). Plus, Whole Foods is (I think?) the only big grocer that isn’t unionized. And Instacart has been a big Whole Foods partner…

Reply

82 DanC June 16, 2017 at 4:31 pm

Perhaps Amazon can go after the upscale, higher margin, grocery items. Many, a majority, of communities can not support groceries that offer a full line of exotic or ethnic items. Much as Sears was once able to offer rural areas big city goods, Amazon can deliver niche items to any community.

Why Amazon needed to buy a brick and mortar store to do this is less certain. Perhaps to order perishable goods online and pickup locally. While customers are there upsell high margin items (wine, bakery, prepared meals etc.).

Kroger is in trouble because they are in a growing price war to get people in the door. Perhaps Amazon thinks they can generate foot traffic (or eyeball traffic) without a price war. Good luck with that.

I’m not sure that Amazon is spending their cash in the best way possible. Does Amazon really have a competitive advantage to get into a rather low margin, high volume business? Can an online business compete in a business where physical location was often a competitive advantage?

Reply

83 msgkings June 16, 2017 at 4:36 pm

Low margin, high volume is kind of what Amazon is about.

Reply

84 Gimlet June 16, 2017 at 6:26 pm

McSweeney’s for the win with a satirical Bezos letter on the acquisition: https://www.mcsweeneys.net/articles/jeff-bezos-email-to-employees-on-amazons-purchase-of-whole-foods

Reply

85 Eastside June 16, 2017 at 8:29 pm

So, at least now we know why Bezos became an altruistic philanthropist yesterday – didn’t want to kill the Whole Foods brand by buying it, I suppose.

Reply

86 carlospln June 17, 2017 at 12:04 am
87 Mark Thorson June 17, 2017 at 1:22 am

If you don’t have Whole Foods Prime, the bread will be day old and the meat will have an iridescent sheen.

https://www.quora.com/Has-Amazon-slowed-down-their-free-shipping-speed-intentionally

Reply

Leave a Comment

Previous post:

Next post: