The world I envision: Amazon WholeFoods (AMF).
AMF will kill the supermarket. Let's be very clear about that. The supermarket as we know it is dead.
That's the obvious. That happens in the next five years. Walmart teams up with Google, TJ's either finds its own internet star or goes alone. Who knows.
I live four blocks from a WFM. It's an easy walk. I figure within 6 months, I'll be able to get whole foods products delivered on a particular day, and extra for within-the-hour delivery. A variety of amazon products will be deliverable this way, and all WF products will be purchaseable on Amazon.
The variety of foods in the store will shrink, as Amazon will target only the most profitable. Prices will go down by 10-20% within the first few months.
Whole Foods typically have a restaurant sort of thing. This will expand, largely as other things disappear from the shelves. If you want something not on the shelf, there will be kiosks to order it.
With WF products available on Amazon, the notion of a food desert must change to one where Amazon cannot deliver.
Within ten years (dang it, this is taking too long), the delivery will be by self-driving car.
That's about as far as I can see. What can you see that I miss?
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The food desert is not where Amazon cannot deliver, but among shoppers who cannot place an order. Unless AMF replaces Kroger in nearly the same density, much of Atlanta becomes a food desert for the very poor.
ReplyDeleteIt's all about that gallon of milk that got a bad review on Amazon and made headlines a few years ago. They were humiliated... this way they can have milk that gets positive reviews....
ReplyDeleteI don't see AMWF going away. I don't see it changing that much.... I'm more worried about AMWF strangling out Trader Joes (who get about 70-80% of my food budget money).
ReplyDeleteBrandes Stoddard Banking has gotta be the next big hurdle for Amazon and Alphabet and Paypal and ...
ReplyDeleteYeah. Actual bank accounts, with actual regulations. I expect google to find some way to make it free for everyone, because they want the eyeballs/data. I expect it to be free with Prime membership, like everything else in the Amazon ecosystem.
I pretty much agree with this. But like Joseph Teller, most of my concern is for venture-backed, smaller companies that have done a really incredible job of evolving UX for online food shopping (e.g., FreshDirect) and will be shouldered aside by this behemoth as it steals all their good ideas and then implements at scale. I won't, of course, miss the half-baked attempts, like PeaPod, or the unpleasant UX behemoths, like Jet.
ReplyDeleteOh, I forgot: Blue Apron is dead, of course. Amazon can provide recipes (they already do this!), and have AWF have fully ready recipees -- everything gathered together -- ready to go.
ReplyDeleteIf I worked at BA or HF or any of the others? I'd be calling my friends at Amazon, blind sending resumes, or finding other ways to jump ship.
How optimistic are we talking in what I'm seeing here?
ReplyDeleteWhat do you mean, Vivian Paul?
ReplyDelete"Prices will go down by 10-20% within the first few months."
ReplyDeleteThis I don't understand. First off, Whole Foods prices are already WAY above normal grocery store prices. Second, this delivery stuff is going to add to their costs, not magically subtract from them.
So how is this Whole Foods delivery stuff supposed to get 10-20% below normal grocery store prices within the first few months?
There have been a lot of attempts at grocery delivery services over the last half century. The have remained a niche because of the higher prices and those prices add up very quickly for groceries.
Obviously, there are enough people with more money than average to keep places like Whole Foods going. But this isn't really going to affect whether or not normal grocery stores still exist because people with average or lower than average incomes are more sensitive to price. And like it or not, that expensive car is part of the sunk costs required to hold a job.
Isaac Kuo Amazon says prices will be down Monday. Which I know, sounds like bullshit.
ReplyDeleteIt's not the delivery to the door that'll reduce the prices. It's leverage the Amazon delivery infrastructure to the store.
Hey look, an article:
ReplyDeletehttps://www.recode.net/2017/8/24/16198716/amazon-whole-foods-lower-prices-prime-discounts-benefits
Well, I mean as a provider of variety of specialty products Whole Foods has quite the foot print in prison labor from its produce to its dairies. Is it in the spirit of what you're asking for me to talk about that? I don't want to knock the thread if it's a more optimistic take on a technocratic solution to food distribution.
ReplyDeleteI want to read about that, Vivian Paul. But not here. I do not trust myself to be responsible for moderating such a discussion, in particular as my own insights and knowledge are ... lacking to say the least.
ReplyDeleteIf you have such a thread, I'd appreciate it if you plussed me in. I could learn something, and I am for sure always up for that.
That is entirely fair William Nichols and why I wanted to ask before bringing it up.
ReplyDeleteWhat about poor people. Where do they get their food?
ReplyDeleteI appreciate it, Vivian. While it is a damper on my enthusiasm, reality sometimes does that. And I hope that by asking you to moderate and host that I have not inappropriately sent emotional labor your way.
ReplyDeleteJason Morningstar The way things are going? Google Walmart, using a free Alphabet WIFI phone to access free Alphabet checking.
ReplyDeleteIt's not a ... perfect ... solution, but solving the problem of the underbanked isn't a thing our technocratic overlords have yet done.
Ah, here';s why:
ReplyDeleteAmazon’s operating margin is about 2 percent compared to Whole Foods’ operating margin of 5 percent.
Oh, well if they're just talking about reducing Whole Foods prices compared to Whole Foods, then sure. Amazon knows how to do cutthroat business - soak up massive losses for years to get consumer acceptance, while putting in the work to make the numbers eventually balance. Whole Foods is way over priced, so it's not going to be hard to make those numbers eventually balance even while reducing Whole Foods prices and adding delivery costs.
ReplyDeleteBut that model isn't going to work for Walmart, which is already bottom scraping. Personally, I think it would be more viable for places like Walmart to reduce staff costs by automating checkout. There are already security cameras everywhere. They just need to develop a system which tracks what everyone is putting in their shopping carts, so the only thing most customers have to do is confirm on the way out that the bill is correct.
They would have to come down quite a bit to get cheaper prices on Eggs (Most weeks Trader Joes has them for 99 cents a dozen, cheapest in the area where I am.... and eggs from Whole Foods are three times or more than that).
ReplyDeleteOn the other hand Whole Foods does delivery now where I am so them adding to the Amazon delivery footprint and stealing some of the regional warehouse space that are currently used for groceries by dropping some of the things that are slower sellers I could see them doing (but then they will lose customers to other sources of non-food items here like household paper goods and the like).
I dunno, this feels... overly optimistic. Or... is that the point?
ReplyDeleteBecause the food desert thing, it's not where "amazon can deliver" it's where "amazon can deliver /food/". They will need to have more climate controlled warehouse spaces to house the food, and the locations of those will determine how much area they can cover. I mean, your Whole foods is 4 blocks away, mine is 3.6 miles, with the next closest being 16 miles, across at least one bridge and through the tunnel which will kill delivery times cause of traffic.... They will need climate controlled delivery vehicles. People will need to be home to receive deliveries, which will cause there to be prime delivery windows and backups for that... and Whole Foods is /expensive/ as compared to other grocery stores, so saving money on that doesn't necessarily mean it's saving money on food in general. And they'll need to figure out how to accept food stamps, which will require them to work with state government agencies...