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Amazon to Acquire Whole Foods for $13.7B

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Re: Amazon to Acquire Whole Foods for $13.7B

#661
post #10

Oof. I wonder what this means for Whole Foods culture and employees. If you don't know, John Mackey, the CEO / founder, is a major believer in conscious capitalism and of empowering his employees. Whole Food employees get paid pretty darn well with some crazy good benefits for their industry and line-of-work (UNION FREE most of the time too!). WF banks on them being true believers and motivators of the cause - includ…

Having worked for a retail software company that was purchased by Oracle, I can assure you Grocery retail is the most difficult retail supply chain to execute well. The margins are razor-thin. The products have myriads of stubborn problems: short life checking, long life checking, mix of delivery types (direct, warehouse, corporate and 3rd party), very complex planograms, composite units of measure, challenging shrin…

>But this nut is the Everest of retail. It will be a challenge to get it to fit into their model.

Looking at it the other way: Amazon knows it's bad at this, so it's acquiring the expertise.

Re: Amazon to Acquire Whole Foods for $13.7B

#662
post #150

Earlier quoted context omitted.

I know that there are some stories about bad experiences in the fulfillment centers, but keep in mind that those positions are temporary seasonal work by unskilled labor. The tone of your writing suggests that you are OK with treating these people badly. If a company treats some set of its workers badly, what stops them from treating other employees the same way? In this case, they may treat SW engineers well because…

Have you ever worked a minimum wage food service or warehouse job before? I have, and believe me, it's hell. I spent my high school years working as a cook at KFC. Hot summer days spent making $3.35 an hour standing over pressure cookers full of 400 degree hot oil and lifting 50 pound baskets of deep fried chicken out of them. You get a 15 minute paid break every 4 hours, and a mandatory 30 minute unpaid break for lu…

What the hell is your point? That amazon treats unskilled labor in fulfillment centers less badly than KFC? Amazon has earned itself a reputation for being frugal/fostering a poor work life balance. You countered by saying that those stories only apply to seasonal "unskilled labor" in fulfillment centers. I am of the opinion that amazon should treat all of their employees well. OP is concerned about the impact amazon's culture will have on WF, which is apparently known for treating its employees really well (these employees would fall under the "seasonal unskilled labor" under your definition).

Re: Amazon to Acquire Whole Foods for $13.7B

#663
post #113

Earlier quoted context omitted.

Kroger has some weak points: Only US, expensive store concept, many products. ALDI and Lidl are famous for their highly efficient lean store concept. Amazon will capture the premium/delivery segment. ALDI and Lidl will capture the discount segment. Kroger is right in between, a very, very tough position to hold.

Except for the majority of middle class people like somewhere in between. They can't afford premium, but want a little more assistance than ALDI. Basically, there's three market segments, not two.

I agree. How could a store that has a full range of products, with many organic options, at reasonable prices not succeed as well.

Whole Foods is too pricy for me for a full grocery shop but I can afford and like to eat better than discount stores.

Re: Amazon to Acquire Whole Foods for $13.7B

#664

I wouldn't say obviously. From my perspective Obamacare is fascist even as I support it compared to the alternatives save single-payer national healthcare. What other ideology than fascism best describes government coercion of its citizens to engage in business relationships with the insurance companies to ensure their profits remain at certain levels?

It's not to ensure their profits remain at certain levels, the profits are capped, not floored. The reason for this particular market is because health care costs in this country have gone out of control, and a major factor in that was people without insurance not paying bills, resulting in higher costs. That's not facist simply because you don't like it.

I specifically said I like Obamacare more than any alternative other than single payer.

And the profits are guaranteed by the individual mandate on young people.

Re: Amazon to Acquire Whole Foods for $13.7B

#665
post #573
post #304

Earlier quoted context omitted.

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…

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 ?

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.

Re: Amazon to Acquire Whole Foods for $13.7B

#666
post #96

Earlier quoted context omitted.

Treating them above market or not, Amazon acquired the company for billions and not because Whole Foods was doing badly.

Whole Foods stock has been down for years. Their year-to-year same store sales fell last year. The entire grocery industry is in a slump: https://www.google.com/search?q=whole+foods+stock&oq=whole+f... http://www.chron.com/business/article/Kroger-s-darkening-out... Amazon buying WF will likely have two results: 1) As long as Mackey can run the company WF employees will stay. Once he leaves (likely soon), they will le…

Amazon is simply too much - time for the monopoly-busters to break them apart.

What exactly does Amazon have a monopoly on?

Selling books? Nope, Barnes & Noble and Walmart and others compete there.

Cloud computing? Nope, check Google, Microsoft, IBM, Racksapce, Linode, etc.

Selling other random stuff on the net? No, Target, Walmart and a bazillion specialty sites also do that.

Groceries? Obviously not.

The idea behind anti-trust / monopoly law is generally to prevent a company from leveraging a monopoly in one area to gain excessive control in another area. I don't see how anyone can argue that Amazon are doing anything like that.

Being big and successful is not, in and of itself, wrong.

Re: Amazon to Acquire Whole Foods for $13.7B

#667
post #289

Earlier quoted context omitted.

In the 1880s Bismarck increased the modern welfare state (it was called State Socialism https://en.wikipedia.org/wiki/State_Socialism_(Germany) ). The idea was that, if the poor people can get some form of social welfare from the existing state, they're less likely to support a proper socialist/communist revolution. Sounds like that. People won't unionise when they don't think they need to.

This is a great discussion of company culture, treatment of employees, worker cooperatives, etc., but I hoped HN would go deeper into the business and technology implications. What is the strategic logic behind this move? NYT, WaPo, WSJ, Bloomberg all take the same line: this is about Amazon's expansion into brick-and-mortar retail. They need a physical footprint, knock out Instacart for delivery, accelerate Amazon G…

To me I fail to see the value because Aldi is here and expanding and now Lidi is following. while they may be on the opposite end of the market from Whole foods I do think they are where the market will truly end up. The middle to higher end grocery stores are going to face a tough time with the discounters and we have yet to see if the European model of grocery can covert a large number of shoppers.

with regards to the purchase I can imagine cobranding or in store only advertising. perhaps they can use it let people pick up orders themselves? Online grocery ordering but only where a Whole Foods store is available.

Re: Amazon to Acquire Whole Foods for $13.7B

#668
post #638

Earlier quoted context omitted.

Any job that would cause a good percentage of people to 'burn out and quit within a couple days', would fall into the category of inhumane for me.

Fair enough, but keep in mind that in the 1800s, parents often made their young children work 16 hour days in the sun farming for them. Child labor, under harsh conditions. We've grown accustomed to a much easier life now, but it was not always like this.

Is there a point you are trying to make that's relevant to this discussion? I have read a few of your comments on this thread and I just can't for the life in me figure out what point you're trying to make.

Re: Amazon to Acquire Whole Foods for $13.7B

#670

Earlier quoted context omitted.

It's not to ensure their profits remain at certain levels, the profits are capped, not floored. The reason for this particular market is because health care costs in this country have gone out of control, and a major factor in that was people without insurance not paying bills, resulting in higher costs. That's not facist simply because you don't like it.

I specifically said I like Obamacare more than any alternative other than single payer. And the profits are guaranteed by the individual mandate on young people.

You also said it's facist which is wrong. And the profits are not guaranteed by the individual mandate, ALL that's guaranteeing is a slow-down in healthcare costs that are spiraling out of control. Young people use healthcare. Everyone uses healthcare. When it goes unpaid, those of us that have insurance pay for those that don't.

I'd rather have single payer too. But that doesn't make an "okay" alternative to it facist.

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