Amazon offers Whole Foods discounts to Prime members(reuters.com)
reuters.com
Amazon offers Whole Foods discounts to Prime members
https://www.reuters.com/article/us-amazon-com-whole-foods/amazon-cuts-whole-foods-prices-for-prime-members-in-new-grocery-showdown-idUSKCN1IH0BM
101 comments
Amazon is so convenient and has such good customer service that they've made me care less about pricing.
On the other hand, they've made me care more about counterfeit goods. I've received a few this year already. What's scary is that on some health items - like vitamins - if you're ordering for the first time, how would you even know what the real thing is supposed to look like?
I now try to order items directly from the manufacturer or authorized distributor whenever possible, simply to avoid counterfeit risk. Kohl's for clothing and LifeExtension for vitamins. Ironically I have more faith in these retailers because their traditional single-source supply chains are less efficient than Amazon's crowd-sourced/FBA model. Less efficient and therefore more trustworthy. Maybe this is one of the few ways David can beat Goliath.
There also seems to be broader opportunities in this area around supply chain integrity that's transparent to and verifiable by end consumers.
On the other hand, they've made me care more about counterfeit goods. I've received a few this year already. What's scary is that on some health items - like vitamins - if you're ordering for the first time, how would you even know what the real thing is supposed to look like?
I now try to order items directly from the manufacturer or authorized distributor whenever possible, simply to avoid counterfeit risk. Kohl's for clothing and LifeExtension for vitamins. Ironically I have more faith in these retailers because their traditional single-source supply chains are less efficient than Amazon's crowd-sourced/FBA model. Less efficient and therefore more trustworthy. Maybe this is one of the few ways David can beat Goliath.
There also seems to be broader opportunities in this area around supply chain integrity that's transparent to and verifiable by end consumers.
> On the other hand, they've made me care more about counterfeit goods.
This is the one that's starting to really surprise me. You generally expect there to be counterfeit versions of items that are expensive or easy to replicate, but I've now received counterfeit:
* Burts Bees face wipes
* 3M command strips
* Curad alcohol prep pads
... and quite a few others. The alcohol prep pads were the most unexpected, but also the easiest to spot because I buy them all the time at Costco and other stores.
This is the one that's starting to really surprise me. You generally expect there to be counterfeit versions of items that are expensive or easy to replicate, but I've now received counterfeit:
* Burts Bees face wipes
* 3M command strips
* Curad alcohol prep pads
... and quite a few others. The alcohol prep pads were the most unexpected, but also the easiest to spot because I buy them all the time at Costco and other stores.
Yeah me too. I got knockoff shoes last month. And they rejected my review saying so
Did you file an A-z claim?
This is the best way to trigger the suspension of a fraudulent seller and the review of an ASIN.
This is the best way to trigger the suspension of a fraudulent seller and the review of an ASIN.
oh interesting. Didn't know this exists. thank you.
You are correct, but that model is hardly unique to Amazon. Costco, Walmart, Grocery stores... they all do the same thing. If you want to save money, you need to be an educated consumer, at any store.
Costco doesn't do this as far as I'm aware. I think their only profit comes from their membership fees, they intend to break even on everything else.
That doesn't mean they are always the cheapest option, but they aren't messing with prices to gain customers and then making a profit, since they aren't pricing things to make a profit in the first place.
That doesn't mean they are always the cheapest option, but they aren't messing with prices to gain customers and then making a profit, since they aren't pricing things to make a profit in the first place.
Last I read, memberships were like half their profit or something. It's certainly not like CostCo makes no more profit if people buy twice as much. Setting prices to that level would be insane.
CostCo doesn't do weird pricing scheming, but they have higher-profit items and getting people in the stores with memberships does get people to buy more stuff there, even stuff people might have not bought at all otherwise.
Don't get me wrong, CostCo does a better ethical and consumer-respecting business than most, but they DO profit on sales, it's just slim enough profit that they couldn't get by well without the member fees.
CostCo doesn't do weird pricing scheming, but they have higher-profit items and getting people in the stores with memberships does get people to buy more stuff there, even stuff people might have not bought at all otherwise.
Don't get me wrong, CostCo does a better ethical and consumer-respecting business than most, but they DO profit on sales, it's just slim enough profit that they couldn't get by well without the member fees.
> Last I read, memberships were like half their profit or something. It's certainly not like CostCo makes no more profit if people buy twice as much. Setting prices to that level would be insane.
You're wrong.
> Through two quarters of its fiscal 2017, Costco has reported $1.06 billion in income (profit). That number is slightly smaller than the $1.26 billion it collected in membership fees.
> If you examine the company's sales, it brought in $56.59 billion in net sales with a merchandise cost of $50.21 billion and sales expenses of $5.92 billion. That's a small loss when it comes to actually selling goods,
https://www.fool.com/investing/2017/05/05/how-costco-wholesa...
You're wrong.
> Through two quarters of its fiscal 2017, Costco has reported $1.06 billion in income (profit). That number is slightly smaller than the $1.26 billion it collected in membership fees.
> If you examine the company's sales, it brought in $56.59 billion in net sales with a merchandise cost of $50.21 billion and sales expenses of $5.92 billion. That's a small loss when it comes to actually selling goods,
https://www.fool.com/investing/2017/05/05/how-costco-wholesa...
Thanks for the update. While it may be true that they'd be losing money overall without the membership fees, I doubt they sell most products at a direct loss. There's overhead for managing everything, but they surely don't set things up so that each sale of a washing machine or patio furniture or whatever is actually a net loss. I'd be shocked if having all members increase their spending would decrease rather than increase CostCo profits.
I didn’t know that Costco broke even on most sales— that was interesting to learn.
It sounds like Costco also makes a profit of Kirkland Signature sales, though. I suppose if you didn’t like generic drugs you could apply a similar argument here.
Costco’s loss leaders (e.g. the hot dogs) are also arguably instances of “messing with prices to gain customers.”
https://www.investopedia.com/articles/investing/070715/costc...
It sounds like Costco also makes a profit of Kirkland Signature sales, though. I suppose if you didn’t like generic drugs you could apply a similar argument here.
Costco’s loss leaders (e.g. the hot dogs) are also arguably instances of “messing with prices to gain customers.”
https://www.investopedia.com/articles/investing/070715/costc...
> Costco’s loss leaders (e.g. the hot dogs) are also arguably instances of “messing with prices to gain customers.”
Except the article was a bit confusing on this point:
However, as a consumer, I do agree with you in principle that they are messing with things, including pricing and placement of products, mostly to get people to buy more (possibly even to get customers in the doors), just to a lesser degree.
OTOH, the magnitude of that lesser degree is so great that it makes a difference. I know I'm not always getting the best deal if I buy any particular item at Costco, but I can be reasonably confident I'm not paying a huge markup.
In fact, I find Costco so reliable for fair pricing, I consider them my benchmark for seeing if other stores' discounts are really deals or just borderline scams like doubling the base price but offering an evergreen "sale" that's around 50% off. (Mostly only relevant to items with widely fluctuating prices or ones I buy so infrequently inflation is a factor).
Except the article was a bit confusing on this point:
The biggest Costco loss leaders in America right now are rotisserie chicken, the hot dog & soda combo and gas. A Bloomberg article has calculated that Costco earns only $14 million in profit a year on its sale of 70 million chickens.
However, as a consumer, I do agree with you in principle that they are messing with things, including pricing and placement of products, mostly to get people to buy more (possibly even to get customers in the doors), just to a lesser degree.
OTOH, the magnitude of that lesser degree is so great that it makes a difference. I know I'm not always getting the best deal if I buy any particular item at Costco, but I can be reasonably confident I'm not paying a huge markup.
In fact, I find Costco so reliable for fair pricing, I consider them my benchmark for seeing if other stores' discounts are really deals or just borderline scams like doubling the base price but offering an evergreen "sale" that's around 50% off. (Mostly only relevant to items with widely fluctuating prices or ones I buy so infrequently inflation is a factor).
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Unless I’m saving at least 10% off or at minimum $20 by not buying an item at Amazon, I don’t really give a shit if I pay more. It’s just too convenient.
I always laugh when people say “It’s cheaper!” somewhere else and then it turns out it’s only by like 4 bucks.
I always laugh when people say “It’s cheaper!” somewhere else and then it turns out it’s only by like 4 bucks.
On top of the convenience, I don't have to risk putting my credit card information into random websites. My parents dislike online shopping because they're fearful of getting credit card information lost or stolen online. Amazon is one of the few places they trust online.
Ever since I bought fraudulent eclipse glasses I pretty much dont buy any high margin products on amazon and Im canceling prime this July. It has been a fun 7 or 8 years, but if they can't sell real merchandise, it is not interesting to me.
I'll shop at wholefoods, but goodeggs is also about the same price (post delivery) and is better quality.
I'll shop at wholefoods, but goodeggs is also about the same price (post delivery) and is better quality.
Lots of retailers accept payment via PayPal. (PayPal has its own negatives, but it protects against this particular scenario).
I don’t understand this. You’re never liable for fraudulent credit card transactions, therefore this is irrational behavior.
The time, anxiety, and exhaustion of dealing with fraudulent charges outweighs the abstract concept of liability in this case.
You laugh?
I guess it seems strange, but that’s quite a lot of money to some people. Totally justifiable that you wouldn’t find it worth the time... but some have to economize or came from a background where they have to count every penny.
If someone says they chose a particular supplier because it was 4USD cheaper, that’s a reasonable decision and not reason to ridicule them.
I guess it seems strange, but that’s quite a lot of money to some people. Totally justifiable that you wouldn’t find it worth the time... but some have to economize or came from a background where they have to count every penny.
If someone says they chose a particular supplier because it was 4USD cheaper, that’s a reasonable decision and not reason to ridicule them.
Amazon are also really great for returns. I've sent quite a few items back and as long as you have a legitimate reason (you haven't just decided you don't want it) they normally cover return shipping too.
#1 is great for customers. #2 may not be possible, since Amazon still has lots of competition. They'll have to stop doing #1 or subsidize it with money from elsewhere.
Read the story of Henry Dow about how price dumping can fail.
https://www.investopedia.com/ask/answers/09/dow-chemical-bro...
Read the story of Henry Dow about how price dumping can fail.
https://www.investopedia.com/ask/answers/09/dow-chemical-bro...
This is, in effect, an exploit against vulnerabilities in US anti-trust law. Using dominance in online commerce and computing infrastructure to undercut food sellers is exactly the kind of problem anti-trust laws are meant to stop.
Amazon isn't actually monopoly in any industry, yet, but it's difficult to see how this is different to the approach a monopolist takes in entering a new market.
Amazon isn't actually monopoly in any industry, yet, but it's difficult to see how this is different to the approach a monopolist takes in entering a new market.
I suspect the most interesting side effect of Amazon’s move to buy Whole foods is the potential impact to transportation.
Quote from the Washington Post[0]:
“while Winn-Dixie and Harvey’s are far from mom-and-pops, a number of those stores slated for closure are in areas where it’s a 15- or 20-minute drive to the next-closest grocery store.”
[0] https://www.washingtonpost.com/news/wonk/wp/2018/03/22/the-a...
Edit: typo
Quote from the Washington Post[0]:
“while Winn-Dixie and Harvey’s are far from mom-and-pops, a number of those stores slated for closure are in areas where it’s a 15- or 20-minute drive to the next-closest grocery store.”
[0] https://www.washingtonpost.com/news/wonk/wp/2018/03/22/the-a...
Edit: typo
I would say that they mainly focus on 1). Best analogy I have heard is think of the surface of the ocean as the equilibrium price for a good or entire market. Amazon forces their competition to dive down underneath the surface. The difference is Amazon has 10X as much oxygen (capital) as the rest. They simply wait for their competition to drown. They don't necessarily care about profit or raising prices, just market share at this point. Their stock price being so high makes it that much easier for them to have cheap access to capital.
> I stopped trusting Amazon at step 3 and only shop there if they actually have the cheapest option.
This should be the default whenever/wherever possible.
This should be the default whenever/wherever possible.
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1a) Not charge sales tax ( Which I'm not complaining about.. but it does seem unfair to brick and mortar )
4) Pollute the world over with cardboard boxes and single serving deliveries
4) Pollute the world over with cardboard boxes and single serving deliveries
The pollution aspect for online shopping is tough to calculate, because it avoids the environmental cost of running a retail outlet.
I think that much is clear but I would take it one step further and ask: how to counter this effort so less businesses and customers fall victim to Amazon’s game?
1) Cancel Prime membership, which is their hook on customers, since customers feel obligated to use Amazon even if it's not the cheapest option.
2) Find online retailers that focus solely on the item categories you need, and shop those specifically. I find General Stores (aka Amazon) have less breadth of selection than online retailers who focus on a single domain.
3) Buy in bulk from Costco. I describe Costco's product sourcing as providing 90% of the items that 90% of the population needs for daily living. The rest can be purchased from specialty stores. And since Costco prices items to break even, you have a pretty good indication that you're not getting "screwed" on most of your purchases.
2) Find online retailers that focus solely on the item categories you need, and shop those specifically. I find General Stores (aka Amazon) have less breadth of selection than online retailers who focus on a single domain.
3) Buy in bulk from Costco. I describe Costco's product sourcing as providing 90% of the items that 90% of the population needs for daily living. The rest can be purchased from specialty stores. And since Costco prices items to break even, you have a pretty good indication that you're not getting "screwed" on most of your purchases.
Lately I've been buying things from non-amazon stores. price difference has been negligible for me.
Then you distrust grocery stores, too?
one of capitalism's greatest hits
At least in capitalism you have choice and stores full of items. Beats living in Venezuela any day.
wasnt passing judgement, just waxing poetic
At least we don't have to spend lots of time worrying about different economic and political systems since the only choices are capitalism or Venezuela. /s
Seriously, the idea that capitalism = choice is bullshit, as is the idea full stores is a capitalist quality or that the problems with Venezuela are all caused by being non-capitalist (implied that Venezuela is the inevitable outcome of any non-capitalist approach).
Seriously, the idea that capitalism = choice is bullshit, as is the idea full stores is a capitalist quality or that the problems with Venezuela are all caused by being non-capitalist (implied that Venezuela is the inevitable outcome of any non-capitalist approach).
You did not mention the consequences of Amazon’s actions which are a net positive for people.
Amazon underprices and offers a better service like Prime with 2-day delivery. Competitors start freaking out and begin launching responses to tackle this. Industry changes for the better.
So yes. Capitalism at its finest. Offer a better price or a better product to compete in a marketplace.
Without Amazon, the brick & mortars would have never begun to think about such things like a better online experience, online-to-store pickup, etc.
Amazon underprices and offers a better service like Prime with 2-day delivery. Competitors start freaking out and begin launching responses to tackle this. Industry changes for the better.
So yes. Capitalism at its finest. Offer a better price or a better product to compete in a marketplace.
Without Amazon, the brick & mortars would have never begun to think about such things like a better online experience, online-to-store pickup, etc.
From personal experience a decade or so ago, Kroger charged much higher prices for substandard goods in poor/minority, transit-dependent communities, and used the result to subsidize stores in well-to-do areas. This helped them gain market share in competitive neighborhoods.
Amazon certainly engages in price discrimination, but I’d bet its algorithms weigh race much less than the incumbents.
Also, the studies I’ve seen suggest amazon charges rich people more, which is a lot less slimy than systematically overcharging poor minority groups.
Amazon certainly engages in price discrimination, but I’d bet its algorithms weigh race much less than the incumbents.
Also, the studies I’ve seen suggest amazon charges rich people more, which is a lot less slimy than systematically overcharging poor minority groups.
>Kroger charged much higher prices for substandard goods in poor/minority, transit-dependent communities
Kroger isn't a monopoly. If Kroger was truly price gouging as you're alleging, then any other company can just sweep into that neighborhood and take all of Kroger's business.
As Black economist Thomas Sowell notes: "despite higher markups in prices in low-income neighborhoods, there is a lower than average rate of return for businesses there — one of the reasons why businesses tend to avoid such neighborhoods."
In other words, the cost of doing business in poor neighborhoods is higher. You can attribute this to higher taxes in urban areas, higher cost of transporting goods to the area (increased traffic leading to longer duration supply routes, higher insurance requirements for transporters), higher cost of securing the business due to higher crime levels.
Kroger isn't a monopoly. If Kroger was truly price gouging as you're alleging, then any other company can just sweep into that neighborhood and take all of Kroger's business.
As Black economist Thomas Sowell notes: "despite higher markups in prices in low-income neighborhoods, there is a lower than average rate of return for businesses there — one of the reasons why businesses tend to avoid such neighborhoods."
In other words, the cost of doing business in poor neighborhoods is higher. You can attribute this to higher taxes in urban areas, higher cost of transporting goods to the area (increased traffic leading to longer duration supply routes, higher insurance requirements for transporters), higher cost of securing the business due to higher crime levels.
> 2) then increase prices higher than competition
The most ludicrous thing is people falling for the Prime membership. Why lock yourself in their system? It only encourages abuse.
The most ludicrous thing is people falling for the Prime membership. Why lock yourself in their system? It only encourages abuse.
Is it really “ludicrous” that I want to pay less for shipping than I otherwise would have? I think you’re being very uncharitable with your assumptions about other people’s rationality.
Are Prime memberships valuable for Amazon? Certainly.
Do they lock you in? Not really; that’s assuming you could have spent less without a Prime membership, which might be true for many people but is certainly not true for all people.
Is it “the most ludicrous thing”? Not at all.
Are Prime memberships valuable for Amazon? Certainly.
Do they lock you in? Not really; that’s assuming you could have spent less without a Prime membership, which might be true for many people but is certainly not true for all people.
Is it “the most ludicrous thing”? Not at all.
The price of Prime goods is higher to build in the cost of "free" shipping.
Most websites either have free shipping and higher prices, or non-free shipping and lower prices. Take your pick. But with Amazon, you're giving an extra $120 per year for the privilege of paying a higher price for that "free" shipping.
Most websites either have free shipping and higher prices, or non-free shipping and lower prices. Take your pick. But with Amazon, you're giving an extra $120 per year for the privilege of paying a higher price for that "free" shipping.
You’re oversimplifying—Amazon definitely has higher prices on many items, and I know this because I comparison shop, but in the end it appears to me that I am still saving money.
You’re making a lot of uncharitable assumptions about other people.
You’re making a lot of uncharitable assumptions about other people.
Paying for a Prime membership doesn't change the experience of using any other website at all. It costs the same amount as an HBO subscription. Does an HBO subscription lock you in to their channel?
Because it's cheap enough nobody is actually locked in. The membership price is easily made up within 10-20 small purchases - since shipping is so expensive from many other sites (unless you order more than $50 or whatnot).
Don't forget two things: there's a monthly option, and Prime Video.
It's a bit inaccurate to talk about "lock in" when a consumer can choose a modestly more expensive month-to-month membership.
For me (plus two roommates), Prime Video adds enough additional content on top of Netflix and Hulu that it would justify the ~$10/mo all on its own.
It's a bit inaccurate to talk about "lock in" when a consumer can choose a modestly more expensive month-to-month membership.
For me (plus two roommates), Prime Video adds enough additional content on top of Netflix and Hulu that it would justify the ~$10/mo all on its own.
I still fail to understand why people shop at Whole Foods. Whole foods store are smaller, have lesser choices and are significantly more expensive. Every grocery store sells organic food. Even with 10% discount, their prices will be higher than Trader Joe's / Star / Kroger.
It’s a good question (Sorry you’re getting downvotes).
I’ve shopped almost exclusively at WF now for about 6 years. In those six years I’ve lived in four separate locations, and in all but one the WF was within walking distance of my home. My current home has one about .5 mike away.
So, proximity is a nice factor for me. Then once I’m inside, the quality of the fruits and vegetables is noticeable. I don’t go out of my way to buy organic (not a priority for me), so the prices can be quite reasonable. I find that I can get an extra day or two of refrigeration with whatever I buy at WF, which saves me a trip compared to buying from, say, Star Market or Ralph’s.
Next up is their pre made deli counter. I absolutely LOVE their selection of ready to reheat / deli selections like their rosemary chicken, or tuna / chicken salad. They are pricey by the pound, but when I tried out the other supermarket near by which had cheaper options, the quality and taste weren’t even close.
Also, for additional context, I’m the primary cook in the family. When I quit my job to start my startup 1.5 years ago I started cooking to help save money. I make breakfast, lunch, and dinner for my wife and myself 6 days a week. So, I’m definitely a “frequent flier” with my WF.
I’ve shopped almost exclusively at WF now for about 6 years. In those six years I’ve lived in four separate locations, and in all but one the WF was within walking distance of my home. My current home has one about .5 mike away.
So, proximity is a nice factor for me. Then once I’m inside, the quality of the fruits and vegetables is noticeable. I don’t go out of my way to buy organic (not a priority for me), so the prices can be quite reasonable. I find that I can get an extra day or two of refrigeration with whatever I buy at WF, which saves me a trip compared to buying from, say, Star Market or Ralph’s.
Next up is their pre made deli counter. I absolutely LOVE their selection of ready to reheat / deli selections like their rosemary chicken, or tuna / chicken salad. They are pricey by the pound, but when I tried out the other supermarket near by which had cheaper options, the quality and taste weren’t even close.
Also, for additional context, I’m the primary cook in the family. When I quit my job to start my startup 1.5 years ago I started cooking to help save money. I make breakfast, lunch, and dinner for my wife and myself 6 days a week. So, I’m definitely a “frequent flier” with my WF.
Here are 3 reasons:
- Some items at WF aren’t at a standard grocery store
- Excellent, vast selection of cold / hot ready to eat food
- Locations
- Some items at WF aren’t at a standard grocery store
- Excellent, vast selection of cold / hot ready to eat food
- Locations
Let me throw in their excellent cheese selection.
All grocery stores sell what you refer to as organic food (what I would call organic and health foods). Whole Foods carries more of them than a typical grocery store like Kroger.
There are products available at one and not the other, which is why I at least sometimes shop there.
There are products available at one and not the other, which is why I at least sometimes shop there.
Some people (not me) want to avoid certain types of foods. Every item in the store is free of "any hydrogenated fats or artificial flavors, colors, sweeteners or preservatives" (https://www.wholefoodsmarket.com/about-our-products/organic-...).
If those specific things are important to you, WF offers two advantages:
(1) Wider selection because everything in the entire store meets your criteria.
(2) It's way less tedious than going to a regular store and checking the labels of every single item.
If those specific things are important to you, WF offers two advantages:
(1) Wider selection because everything in the entire store meets your criteria.
(2) It's way less tedious than going to a regular store and checking the labels of every single item.
I find the produce at Whole Foods significantly better. If I buy oranges, tomatoes, apples, peaches, berries, etc at other stores including those you mentioned they are often flavorless and seem to lack juice. It’s as if they are picked when unripe and treated with ripening agents https://en.m.wikipedia.org/wiki/Ripening
I've been to a few whole foods and I agree. I might shop at one if it were my only option - for instance if I lived near one. Now that Amazon owns it, however...
While I agree with smaller and less choice, WF is the same or cheaper than other local decent grocery stores for food staples like produce, meat, cheese, even beer and wine. It doesn't compete with Walmart price wise, but the perishables at Walmart are always terrible.
It really depends where you live, I have lived in several cities/neighborhoods where whole foods was the largest grocery store nearby.
Agree. I shop at the world HQ here in Austin, and even it has not sated my longing for the Wegmans of my homeland.
The local WF is right between two Wegmans where I live and there's no comparison. Wegmans is probably the single most impressive grocer I've ever encountered.
I went to a wedding in Williamsport, PA last summer and ended up at a Wegman's. Amazing grocery store. Would love to see one here in NH.
How is this being implemented? A Whole Foods card tied to Amazon, Amazon Credit Card or an app. In other words how do they know in Whole Foods who has Prime?
I wonder if we'll still be able to call it Whole Paycheck after the discount?
Fortunately, in Texas, we have HEB - Amazon will have to work pretty hard to beat their prices + convenience of being everywhere.
Fortunately, in Texas, we have HEB - Amazon will have to work pretty hard to beat their prices + convenience of being everywhere.
and if you want an upscale atmosphere we have Central Market (which is like a whole foods but better in every way :] )
With correspondingly higher prices than HEB (it's owned by HEB).
I've been to the central Central Market. The lack of products is kinda off-putting. Better to go hit the HEB at Mueller, which has a huge selection from upscale to downscale products.
And beer in growlers.
I've been to the central Central Market. The lack of products is kinda off-putting. Better to go hit the HEB at Mueller, which has a huge selection from upscale to downscale products.
And beer in growlers.
It's Sam's Club vs Jeff's Club vs Covetton House
Pick your unique curated lifestyle today.
Pick your unique curated lifestyle today.
I am not overly worried and while news sites like to make it out as possible doom and gloom for the existing retailers the key is, they have 463 locations nation wide.
that isn't enough to disrupt but it is enough with a pliant press to make it seem you can. ALDI has 1600+ stores in 35 states and while its expected customers are more limited by means the appeal of ALDI does cover a lot of income levels.
that isn't enough to disrupt but it is enough with a pliant press to make it seem you can. ALDI has 1600+ stores in 35 states and while its expected customers are more limited by means the appeal of ALDI does cover a lot of income levels.
I agree. Plus, I think most people shop at grocery stores based on convenience first, and then everything else. I have a WF that I could easily visit during the week, but it is also so busy that I end up going to a different store that is in my neighborhood.
At some point though, these discounts are going to get deep enough to get me to put up with the WF crowds.
At some point though, these discounts are going to get deep enough to get me to put up with the WF crowds.
> convenience first
This is definitely a huge factor in the equation and just due to proximity. We live in close proximity to 6 grocery stores, 3 are the same brand. The store we choose to shop at comes down to selection because even among the 3 same branded stores the stock varies.
This is definitely a huge factor in the equation and just due to proximity. We live in close proximity to 6 grocery stores, 3 are the same brand. The store we choose to shop at comes down to selection because even among the 3 same branded stores the stock varies.
In terms of default narratives in the press, the interesting thing about Amazon's Whole Foods play is that the small fraction of the US grocery market cost Amazon almost as much (~$13b) as Walmart's recent acquisition of Flipkart (~$16b) giving it a prominent position in Indian eCommerce. Walmart was seen as overpaying and the business press is still breathless over Whole Foods...even when Amazon is basically replicating Sams Club.
True. And the real story in grocery is that Walmart owns digital shopping(via grocery pickup) , with something like 60% market share vs ~5-10% for Amazon(if I'm not mistaken , they are fourth in market share).
And that Kroger, just this week, did a partnership with ocado, which is the world leader in automation for grocery deliveries.
And that Kroger, just this week, did a partnership with ocado, which is the world leader in automation for grocery deliveries.
I think delivery is over-rated. Amazon's disruption was more a product of access to the long tail than delivery. Delivery was just a byproduct of that access. It was important because the choice was not between local shopping and delivery but between delivery and not having it (Amazon's price also played a role in "not having it").
Groceries are like pizza. Pickup is a viable option because sometimes it is more convenient...twenty versus sixty minutes (hopefully) before eating.
Groceries are like pizza. Pickup is a viable option because sometimes it is more convenient...twenty versus sixty minutes (hopefully) before eating.
What you say about the value of the long tail is definitely true.
But I would underestimate the value of pickup: from a point of view of a busy mom with 2 small kids, doing a grocery pickup is a much better experience, enough to be the differentiator that will determine to which store to go.
But I would underestimate the value of pickup: from a point of view of a busy mom with 2 small kids, doing a grocery pickup is a much better experience, enough to be the differentiator that will determine to which store to go.
I'm not sure I was as clear as I intended. I meant pickup might be a viable option versus delivery for groceries in the same way that pickup can be a viable option to delivery for pizza.
This was actually a big problem for me because Amazon Fresh was available pre Whole Foods acquisition, and now its gone.
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Ugh, WF was one of the remaining anonymous, non-loyalty places. Damnit
At most grocery stores you can just hit 'forgot my card' then enter a random area code followed by 867-5309 for the phone number and then pay with cash
What's your complaint, though?
You, personally, will still be able to opt-in to the old model by not using the loyalty program and paying the old Whole Paycheck prices, right?
You, personally, will still be able to opt-in to the old model by not using the loyalty program and paying the old Whole Paycheck prices, right?
as if the concept of "old prices" has any reality in the world going forward… Prices will continue to change and the idea of what they would have been becomes nothing more than a counter-factual speculation.
There's always been a tension if avoiding loyalty-systems means paying extra, whether going to a more-expensive store or simply refusing to participate in the system.
These are systematic things.
You didn't consider for a tiny second that my complaint was about the way the system works and affects people overall rather than being a personal complaint as though I was one of those delusional libertarian folks seeing myself as some totally isolated individual actor… I'm complaining about loyalty systems and tracking and its effect overall on, yes, even individual anonymity and liberties etc.
There's always been a tension if avoiding loyalty-systems means paying extra, whether going to a more-expensive store or simply refusing to participate in the system.
These are systematic things.
You didn't consider for a tiny second that my complaint was about the way the system works and affects people overall rather than being a personal complaint as though I was one of those delusional libertarian folks seeing myself as some totally isolated individual actor… I'm complaining about loyalty systems and tracking and its effect overall on, yes, even individual anonymity and liberties etc.
> as if the concept of "old prices" has any reality in the world going forward
So.. you're saying that the answer to my second questions is "no"? If loyalty programs routinely distort pricing that much, then the opt-out I suggested doesn't exist.
> Prices will continue to change and the idea of what they would have been becomes nothing more than a counter-factual speculation.
Still, I don't think we have to speculate. When loyalty cards first came out, there were some chains that slow to implement or, for whatever reason, decided their implementation needed cancelling and ended up trumpeting their failure in their ads as a feature to consumers "no card needed for discount!". How'd the pricing work out then?
> You didn't consider for a tiny second that my complaint was about the way the system works
That's a pretty huge counter-factual speculation (to use your words), considering I was merely asking questions. In point of fact, I did consider it.
> affects people overall
OK. So, if I understand correctly, you're worried about WF jumping on the loyalty bandwagon because of the implications for society/other-people, not for yourself. In that case, no opt-out strategy would be good enough, be it paying the non-discounted price or some version of 867-5309. That's fair.
So.. you're saying that the answer to my second questions is "no"? If loyalty programs routinely distort pricing that much, then the opt-out I suggested doesn't exist.
> Prices will continue to change and the idea of what they would have been becomes nothing more than a counter-factual speculation.
Still, I don't think we have to speculate. When loyalty cards first came out, there were some chains that slow to implement or, for whatever reason, decided their implementation needed cancelling and ended up trumpeting their failure in their ads as a feature to consumers "no card needed for discount!". How'd the pricing work out then?
> You didn't consider for a tiny second that my complaint was about the way the system works
That's a pretty huge counter-factual speculation (to use your words), considering I was merely asking questions. In point of fact, I did consider it.
> affects people overall
OK. So, if I understand correctly, you're worried about WF jumping on the loyalty bandwagon because of the implications for society/other-people, not for yourself. In that case, no opt-out strategy would be good enough, be it paying the non-discounted price or some version of 867-5309. That's fair.
Thanks for the reasonable reply, and sorry for assuming things in your initial question.
I definitely see everything in a much more social context. I rarely make any decision thinking merely about the immediate short-term individual costs and gains. I can only technically but not sympathetically grasp how people can have self-centered, myopic mindsets, but obviously enough people do. I frequently fund myself having to bring up the idea that pro-social thinking is even a concept to consider.
Understanding that everything I personally experience is colored by my pro-social mindset, I feel really differently (positively) about places like Trader Joe's that refuse not only to have loyalty cards but even to have loss-leader discount sales and other such bull crap. The relationship between Trader Joe's and their customers is fundamentally more respectful and honest than these other stores.
Incidentally, I don't mind the sale discounts at places like Grocery Outlet because they are actually based on overstock and so actually pricing to supply-and-demand as opposed to playing some game with prices. Their highlighting of how much you "saved" over "other stores' prices" is annoying though.
Finally, I happen to know that many of the discount sales at other stores are actually forced upon them by outside brands. Brands are pushing their names and provide product at a discount to the store with the requirement that they promote a sale, all to drive the brand recognition etc. and that's part of why Trader Joe's is free from that crap (by not emphasizing outside brand names).
I definitely see everything in a much more social context. I rarely make any decision thinking merely about the immediate short-term individual costs and gains. I can only technically but not sympathetically grasp how people can have self-centered, myopic mindsets, but obviously enough people do. I frequently fund myself having to bring up the idea that pro-social thinking is even a concept to consider.
Understanding that everything I personally experience is colored by my pro-social mindset, I feel really differently (positively) about places like Trader Joe's that refuse not only to have loyalty cards but even to have loss-leader discount sales and other such bull crap. The relationship between Trader Joe's and their customers is fundamentally more respectful and honest than these other stores.
Incidentally, I don't mind the sale discounts at places like Grocery Outlet because they are actually based on overstock and so actually pricing to supply-and-demand as opposed to playing some game with prices. Their highlighting of how much you "saved" over "other stores' prices" is annoying though.
Finally, I happen to know that many of the discount sales at other stores are actually forced upon them by outside brands. Brands are pushing their names and provide product at a discount to the store with the requirement that they promote a sale, all to drive the brand recognition etc. and that's part of why Trader Joe's is free from that crap (by not emphasizing outside brand names).
I get the impression from long-time Whole Foods shoppers that the quality of the store has definitely gone down since the acquisition. There's a new one not too terribly far from where I live so we decided to check it out and came away deeply unimpressed.
- Maybe 7 different kinds of fruit and vegetables. And I'm stretching this. Most in two varieties, organic and not. There was virtually no selection of fresh produce and what was there wasn't highly impressive in its freshness. The homeopathy section of the store was larger and better stocked.
- All of the meats were vacuum sealed and prepackaged. No fresh fish or butcher. And I don't mean "butchered in the shop and plastic wrapped". I mean packaged at like a factory god knows where. Some of the meat was past the sell-by date.
- An extraordinarily large section of milk and milk-alike products. I remember years ago (the last time I shopped at a WF) there being different kinds of milk from different mammals (goat, etc.), but not like 4 different kinds of cow milk and then a dozen different varieties of vegetable-based "milks".
- The hot food bar was flavorless and in some cases bad...also very expensive.
- A quarter of the store was turned over to some kind of bar.
- A definite feel from the employees of not wanting to be there.
I thought it might just be this store, so I went to another one near my work for lunch and the same problems. The organic wine selection is fantastic I guess.
Keep in mind that this store is not far from a couple Wegmans (absolutely fantastic top-tier grocers who's organic produce section alone is the size of the entire WF's produce section) and in the middle of a ring of large ethnic and South/East Asian grocery chains (read:they all have local fresh fish markets where you can get fresh fish filleted on demand right next to a giant wall of fresh butchered and wrapped meats and animal parts from an entire menagerie of fauna).
The local regular old grocery I can walk to was a better experience tbh. It felt very much like a very expensive Aldi in terms of selection and quality.
- Maybe 7 different kinds of fruit and vegetables. And I'm stretching this. Most in two varieties, organic and not. There was virtually no selection of fresh produce and what was there wasn't highly impressive in its freshness. The homeopathy section of the store was larger and better stocked.
- All of the meats were vacuum sealed and prepackaged. No fresh fish or butcher. And I don't mean "butchered in the shop and plastic wrapped". I mean packaged at like a factory god knows where. Some of the meat was past the sell-by date.
- An extraordinarily large section of milk and milk-alike products. I remember years ago (the last time I shopped at a WF) there being different kinds of milk from different mammals (goat, etc.), but not like 4 different kinds of cow milk and then a dozen different varieties of vegetable-based "milks".
- The hot food bar was flavorless and in some cases bad...also very expensive.
- A quarter of the store was turned over to some kind of bar.
- A definite feel from the employees of not wanting to be there.
I thought it might just be this store, so I went to another one near my work for lunch and the same problems. The organic wine selection is fantastic I guess.
Keep in mind that this store is not far from a couple Wegmans (absolutely fantastic top-tier grocers who's organic produce section alone is the size of the entire WF's produce section) and in the middle of a ring of large ethnic and South/East Asian grocery chains (read:they all have local fresh fish markets where you can get fresh fish filleted on demand right next to a giant wall of fresh butchered and wrapped meats and animal parts from an entire menagerie of fauna).
The local regular old grocery I can walk to was a better experience tbh. It felt very much like a very expensive Aldi in terms of selection and quality.
Supply chains take time to stabilize.
Understand, I am in no way defending amazon, i hope it all burns, but in the interest of fairness I must say that six months is too short a time to evaluate whether Amazon can run grocery stores well.
I worked in a piggly wiggly in Alabama during high school, and maybe three years later I was the produce manager, that whole side of the store was my responsibility.
20yo me was not ready for how much shit there is. Keep in mind, this is in alabama, not exactly an overregulated state, and definitely some of the regs were imposed by PW corporate. Anyways there were irrigation cleanings, audits, temperature sheets on the hour, display audits and secret shoppers, knowledge integrity audits where secret shoppers ask you about fruitveg factoids and you're supposed to know and love and worship that info, there's all the inventory sheets, fifo+backstock alleviation, backroom cleaning, etc. There's more I've forgotten probably.
My point being, there is a lot of variables in those stores. Some from the state, some from corp, and on top of all that the business itself is an organism. It changes and adapts with the seasons. I had a whole separate routine for stocking watermelons, I even rearranged the displays in the store per the PW rules. All sorts of shit like that takes time to learn and marinate in people's heads.
The grocery store that some ninety year old geezer has had open for fifty years will have a completely different logistics profile, because he got tired of dealing with the these problems forty years ago and fixed them. He has a tremendous advantage in that regard over a large corp doing groceries in unstable stores.
It's upsetting that even things like groceries are becoming millenialized. I shouldn't need a prime membership to get good groceries, the whole point of grocery stores is for them all to compete to get EVERYBODY good grocery prices.
It's too late for Amazon to put WF back. They will most likely find ways to make them little profit factories where oblivious young people shop there semireligiously, ignoring all the benefits of small biz groceries.
Understand, I am in no way defending amazon, i hope it all burns, but in the interest of fairness I must say that six months is too short a time to evaluate whether Amazon can run grocery stores well.
I worked in a piggly wiggly in Alabama during high school, and maybe three years later I was the produce manager, that whole side of the store was my responsibility.
20yo me was not ready for how much shit there is. Keep in mind, this is in alabama, not exactly an overregulated state, and definitely some of the regs were imposed by PW corporate. Anyways there were irrigation cleanings, audits, temperature sheets on the hour, display audits and secret shoppers, knowledge integrity audits where secret shoppers ask you about fruitveg factoids and you're supposed to know and love and worship that info, there's all the inventory sheets, fifo+backstock alleviation, backroom cleaning, etc. There's more I've forgotten probably.
My point being, there is a lot of variables in those stores. Some from the state, some from corp, and on top of all that the business itself is an organism. It changes and adapts with the seasons. I had a whole separate routine for stocking watermelons, I even rearranged the displays in the store per the PW rules. All sorts of shit like that takes time to learn and marinate in people's heads.
The grocery store that some ninety year old geezer has had open for fifty years will have a completely different logistics profile, because he got tired of dealing with the these problems forty years ago and fixed them. He has a tremendous advantage in that regard over a large corp doing groceries in unstable stores.
It's upsetting that even things like groceries are becoming millenialized. I shouldn't need a prime membership to get good groceries, the whole point of grocery stores is for them all to compete to get EVERYBODY good grocery prices.
It's too late for Amazon to put WF back. They will most likely find ways to make them little profit factories where oblivious young people shop there semireligiously, ignoring all the benefits of small biz groceries.
WF changed their supply chain recently and has been a source of problems as well:
https://www.usatoday.com/story/money/2018/02/08/empty-whole-...
https://www.usatoday.com/story/money/2018/02/08/empty-whole-...
It's worth noting WF did this before the Amazon purchase. Timing wise people tried to blame it on Amazon, but they really had nothing to do with it.
Yeah, this was a classic pump and dump scam.
If the victim weren’t a giant, ruthless megacorp, I’d probably be outraged instead of amused.
The context here is that WF used to use their back rooms to hold excess inventory, but transitioned to a just in time delivery model. This had two primary effects:
For a few quarters, their numbers looked better than they should, since they were juiced by selling down a bunch of inventory that had been stranded in the supply chain.
The second effect hit after the acquisition: The JIT supply chain they setup was an unreliable disaster, so the availability of goods at the stores plummeted after the buffer of backroom stock was depleted.
If the victim weren’t a giant, ruthless megacorp, I’d probably be outraged instead of amused.
The context here is that WF used to use their back rooms to hold excess inventory, but transitioned to a just in time delivery model. This had two primary effects:
For a few quarters, their numbers looked better than they should, since they were juiced by selling down a bunch of inventory that had been stranded in the supply chain.
The second effect hit after the acquisition: The JIT supply chain they setup was an unreliable disaster, so the availability of goods at the stores plummeted after the buffer of backroom stock was depleted.
I shop at Whole Foods every week in Santa Cruz and haven’t noticed anything you’re describing. We still have a good selection of fruit/vegetables and meat/bread/cheese sourced from local farms.
At first glance I read "prime members" as "prime numbers," which was intriguing but confusing.
Elitists club on the way. Actually from the business perspective that's a smart move.
I'd love to know what are the churn numbers of Amazon Prime program.
I would imagine is comes down to how many of the benefits you use.
No particular benefit of Prime solidifies my decision to subscribe but collectively a handful do.
I would imagine most long term members don't take advantage of all the Prime benefits but rather a select few that align with their habits.
The problem Amazon has to juggle is profitablity with members. I would guess if you used all of the benefits then Amazon might lose money on you. So Amazon has to price Prime such that it is appealing to as wide enough audience as possible to offset the loss incurred from people who maximize their benefit and at the same time offer benefits that are niche enough that not all members utilize them while at the same time perceived at potentially beneficial to all members.
No particular benefit of Prime solidifies my decision to subscribe but collectively a handful do.
I would imagine most long term members don't take advantage of all the Prime benefits but rather a select few that align with their habits.
The problem Amazon has to juggle is profitablity with members. I would guess if you used all of the benefits then Amazon might lose money on you. So Amazon has to price Prime such that it is appealing to as wide enough audience as possible to offset the loss incurred from people who maximize their benefit and at the same time offer benefits that are niche enough that not all members utilize them while at the same time perceived at potentially beneficial to all members.
It's like 100 bucks a year, not all that different price-wise from a Costco membership. Amazon overall has been trying to make Whole Foods less elitist than previously
> It's like 100 bucks a year, not all that different price-wise from a Costco membership.
Its $120, the same as Costco Executive membership, and twice Costco Gold Star membership.
Its $120, the same as Costco Executive membership, and twice Costco Gold Star membership.
With cashback on Executive membership, it always ends up being free (and then some) for me. On the other hand, Amazon was just not worth the aggravation of having to deal with their customer "service".
120
1) under price to get market dominance,
2) then increase prices higher than competition
3) before customers realize they're actually more expensive than the competition.
I stopped trusting Amazon at step 3 and only shop there if they actually have the cheapest option. They act like grocery stores: advertise a low price on one item to get you in the door, but profit off the other items.