5 ms·

Meh. This deal is about expansion, not about tapping into 431 measly location. Amazon knows they can set up satellite warehouses a lot faster and cheaper than

by steego 9y ago

Meh. This deal is about expansion, not about tapping into 431 measly location. Amazon knows they can set up satellite warehouses a lot faster and cheaper than they can create a store. Let's be clear. Whole Foods is not a commodity food supplier. They enjoy high margins because they have cultivated quality and consciousness into their products. They did to food what Apple did to computers. They added the right mix of intangibles with a sense of mission and purpose that people can many buy into. Add on top of that, and Whole Foods adds an expertise procuring a catalog of high-end suppliers for both packages and fresh foods and the safe handling of those foods. This deal should significantly improve Amazon's food delivery offerings. As a food snob and target demographic, I can say this will significantly improve my chances of using Amazon's food delivery service. I've used it in the past, but wasn't satisfied because I was disappointed with the quality and selection. It wasn't bad, it just wasn't great. I suspect most people will not be willing to buy the high-end products, but that's not the point. The point is the high-end/high-margin products will be available so shoppers won't have to go out and do supplementary shopping to get the "good stuff". If online grocery shopping is going to become viable, they need to make sure they reduce the need for supplementary shopping as much as possible. Having a leg and data from a real grocery store will help them figure out what they need to do to improve.

petra 9y ago
That surely makes a lot of sense. But in theory at least, Amazon's fulfillment platform is supposed to be the solution for retailing the "long tail", and it had worked very well in regular e-commerce. So why did it fail with food ?
- steego 9y ago
  I can't emphasize enough how food is a fundamentally different business in so many ways. First, to say the product is evaluated and experienced in a much more visceral way than most other industries is a huge understatement. Our bodies, like most other animals, dedicate so many resources and features to the quality detection and digestion of food and our second largest concentration of nerve cells exists in our gut. Eons before we could comparison shop, we and our evolutionary ancestors were foraging, testing and evaluating what we can eat. How we evaluate this product is based on an innate system that been shaped over countless years. When you eat something bad, that nervous system goes out of its way to tell your brain not to eat that thing again. You may try to ignore it, but the brain has some pretty coercive methods to make sure you never forget what made you sick. For me, it turned me off goat cheese for about 5 years, even though I knew I had come down with a stomach bug. It didn't matter. My brain didn't give a shit. All it knows is I felt like shit after I ate goat cheese, so it's going to tell me to stay away from fucking goat cheese. (Fortunately, I can now enjoy it again.) Needless to say, food borne illness is a huge concern with the industry because a handful of incidents (Think Chipotle) can have a devastating effect. Want to prevent it? You have two options: The first option, you can go the preservation route with additives and refrigeration. This is what we did in the 20th century. We basically created conditions to make it hard for bacteria and pathogens to eat our food before we ate it. Either this meant you kept it cold, or you made it inedible. For example, one reason bleached white bread lasts longer than old fashioned sour dough recipes is because you've effectively stripped all the nutrients out of it. Old fashioned bread is nutrient rich. You can live off it. The bleached bread was so nutrient poor that people started suffering from malnutrition diseases like rickets until some clever person realized you can fortify bread with flower. Needless to say, most preservation systems take away something. It could be nutrients, texture, flavor, or a host of other things. The second option is to source fresh ingredients, handle it well, and eat it as soon as you can. This is what Chipotle tried to do and what virtually no other fast food joint tries to do because it requires organizational and operational disciple. The stakes are high and people have long memories when it comes to making people sick. Even as adults, once you've associated doody with someone or something, that stuff sticks in your head. I'm pretty sure when people started inventing verbal language, one of the first words that was uttered was something equivalent to the word "yucky". Now that we've got that illness and yuckiness are a huge part of this industry, you have to remember that food is also an artistic expression and part of people's sense of identity, way more than most things you might buy on Amazon. We have holidays that celebrate food bounties. We use it to commune with friends and family. Explorers set out expeditions and discovered entire fucking continents because they wanted better access to spices to make their food taste better. Food is trendy, the customers are fickle and easy to scare and they have long memories. As a company, you can't just stumble into that industry and make it work robots and good operations procedures. It takes inside knowledge and expertise that is cultivated by an organization. This is why it was important for Amazon to buy a company that worked hard to try to figure out how to procure and provide fresh, health conscious, and sustainable foods. They're buying Whole Food's reputation and expertise because they know reputation and expertise is everything in the food business.
  - dsmithatx 9y ago
    They are about as different as running an online book store is to running one of the largest clouds on earth.
    - steego 9y ago
      I don't care to argue whether this is true or not, but I will highlight that the cloud business was nascent enough that Amazon had the opportunity to define it and they were able to bootstrap quickly because running a large data center was already part of their core competency. Granted, building a global scale infrastructure was an amazing accomplishment, but you have to concede it's easier when you're starting with a team who already knows something about the business.
BurningFrog 9y ago
I think the stores could become a modern version of the Post Office, where you can pick up and/or return your Amazon packages.
- TranquilMarmot 9y ago
  They already have this with Amazon Lockers. I get a majority of my packages shipped to the locker that's in the grocery store next door.
  - BurningFrog 9y ago
    Exactly. At minimum this is a lot of new locker locations. But you can have so much more than lockers when you own the place.
- styfle 9y ago
  Or to use the Apple analogy, Whole Foods is basically the Apple Store. Maybe they'll just call it the Amazon tore?
deleted 9y ago
[deleted]
aiyodev 9y ago
> Having a leg and data from a real grocery store will help them figure out what they need to do to improve. This. I've worked for Whole Foods and my wife currently does. They find small, local companies that make natural products. They work with them to market their products and test them in their stores. They collect a lot of data on how customers respond to the products, improve them, and then distribute them nationally. The reason Whole Foods has been suffering is because they're not big enough. Once these companies have a valuable product, they want to sell them at Walmart, Kroger, HEB, etc. But Amazon is big enough that they could make deals with these companies. I believe Amazon wants Whole Foods so that it can generate new, popular, high-margin food products that can only be bought in a Whole Foods store or on Amazon.
- deleted 9y ago
  [deleted]

by steego 9y ago

petra 9y ago

That surely makes a lot of sense. But in theory at least, Amazon's fulfillment platform is supposed to be the solution for retailing the "long tail", and it had worked very well in regular e-commerce. So why did it fail with food ?

steego 9y ago
I can't emphasize enough how food is a fundamentally different business in so many ways. First, to say the product is evaluated and experienced in a much more visceral way than most other industries is a huge understatement. Our bodies, like most other animals, dedicate so many resources and features to the quality detection and digestion of food and our second largest concentration of nerve cells exists in our gut. Eons before we could comparison shop, we and our evolutionary ancestors were foraging, testing and evaluating what we can eat. How we evaluate this product is based on an innate system that been shaped over countless years. When you eat something bad, that nervous system goes out of its way to tell your brain not to eat that thing again. You may try to ignore it, but the brain has some pretty coercive methods to make sure you never forget what made you sick. For me, it turned me off goat cheese for about 5 years, even though I knew I had come down with a stomach bug. It didn't matter. My brain didn't give a shit. All it knows is I felt like shit after I ate goat cheese, so it's going to tell me to stay away from fucking goat cheese. (Fortunately, I can now enjoy it again.) Needless to say, food borne illness is a huge concern with the industry because a handful of incidents (Think Chipotle) can have a devastating effect. Want to prevent it? You have two options: The first option, you can go the preservation route with additives and refrigeration. This is what we did in the 20th century. We basically created conditions to make it hard for bacteria and pathogens to eat our food before we ate it. Either this meant you kept it cold, or you made it inedible. For example, one reason bleached white bread lasts longer than old fashioned sour dough recipes is because you've effectively stripped all the nutrients out of it. Old fashioned bread is nutrient rich. You can live off it. The bleached bread was so nutrient poor that people started suffering from malnutrition diseases like rickets until some clever person realized you can fortify bread with flower. Needless to say, most preservation systems take away something. It could be nutrients, texture, flavor, or a host of other things. The second option is to source fresh ingredients, handle it well, and eat it as soon as you can. This is what Chipotle tried to do and what virtually no other fast food joint tries to do because it requires organizational and operational disciple. The stakes are high and people have long memories when it comes to making people sick. Even as adults, once you've associated doody with someone or something, that stuff sticks in your head. I'm pretty sure when people started inventing verbal language, one of the first words that was uttered was something equivalent to the word "yucky". Now that we've got that illness and yuckiness are a huge part of this industry, you have to remember that food is also an artistic expression and part of people's sense of identity, way more than most things you might buy on Amazon. We have holidays that celebrate food bounties. We use it to commune with friends and family. Explorers set out expeditions and discovered entire fucking continents because they wanted better access to spices to make their food taste better. Food is trendy, the customers are fickle and easy to scare and they have long memories. As a company, you can't just stumble into that industry and make it work robots and good operations procedures. It takes inside knowledge and expertise that is cultivated by an organization. This is why it was important for Amazon to buy a company that worked hard to try to figure out how to procure and provide fresh, health conscious, and sustainable foods. They're buying Whole Food's reputation and expertise because they know reputation and expertise is everything in the food business.
- dsmithatx 9y ago
  They are about as different as running an online book store is to running one of the largest clouds on earth.
  - steego 9y ago
    I don't care to argue whether this is true or not, but I will highlight that the cloud business was nascent enough that Amazon had the opportunity to define it and they were able to bootstrap quickly because running a large data center was already part of their core competency. Granted, building a global scale infrastructure was an amazing accomplishment, but you have to concede it's easier when you're starting with a team who already knows something about the business.

BurningFrog 9y ago

I think the stores could become a modern version of the Post Office, where you can pick up and/or return your Amazon packages.

TranquilMarmot 9y ago
They already have this with Amazon Lockers. I get a majority of my packages shipped to the locker that's in the grocery store next door.
- BurningFrog 9y ago
  Exactly. At minimum this is a lot of new locker locations. But you can have so much more than lockers when you own the place.
styfle 9y ago
Or to use the Apple analogy, Whole Foods is basically the Apple Store. Maybe they'll just call it the Amazon tore?

deleted 9y ago

[deleted]

aiyodev 9y ago

> Having a leg and data from a real grocery store will help them figure out what they need to do to improve. This. I've worked for Whole Foods and my wife currently does. They find small, local companies that make natural products. They work with them to market their products and test them in their stores. They collect a lot of data on how customers respond to the products, improve them, and then distribute them nationally. The reason Whole Foods has been suffering is because they're not big enough. Once these companies have a valuable product, they want to sell them at Walmart, Kroger, HEB, etc. But Amazon is big enough that they could make deals with these companies. I believe Amazon wants Whole Foods so that it can generate new, popular, high-margin food products that can only be bought in a Whole Foods store or on Amazon.

deleted 9y ago
[deleted]