August 28th, 2017

Amazon takes over Whole Foods and cuts prices

I figure that when Amazon was founded by Jeff Bezos and he chose the name of the company, he must already have had big plans. You don’t call something “Amazon” and expect to stay small.

Sure enough:

On July 5, 1994, Bezos incorporated the company as Cadabra, Inc. Bezos changed the name to Amazon.com, Inc. a few months later, after a lawyer misheard its original name as “cadaver”. In September 1994, Bezos purchased the URL Relentless.com and briefly considered naming his online store Relentless, but friends told him the name sounded a bit sinister. The domain is still owned by Bezos and still redirects to the retailer. The company went online as Amazon.com in 1995.

Bezos selected the name Amazon by looking through the dictionary; he settled on “Amazon” because it was a place that was “exotic and different”, just as he had envisioned for his Internet enterprise. The Amazon River, he noted, was the biggest river in the world, and he planned to make his store the biggest in the world.

“Relentless” would have been nicely descriptive as well.

Now Amazon has swallowed Whole Foods whole. And somewhere in the process of digesting the meal Amazon decided to cut prices, at least some prices, in an effort to make Whole Foods more accessible to those people who may not want to walk out of the store with quite as big a hit in their wallets.

I use Amazon a fair amount myself. It’s tremendously convenient. You can find just about anything there, and if you’re a Prime member (I’m not right now, but I have been at times in the past) you can have nearly-instant gratification of every desire in the material world you can afford, and on Amazon the prices are such that you can afford quite a bit. These things drive Amazon’s sales, because most people appreciate comprehensiveness, convenience, speed, and savings.

And yes, I’ve got those Amazon widgets on the blog, too, and so I’m an Amazon promoter as well. I get a small percentage of everything you buy through my blog when you click on one of those widgets or an Amazon link in the body of a post. Small, but it adds up, and every little bit helps.

But I confess to having mixed feelings about the homogenization of the marketplace and the dominance of huge companies over the local ones which can’t compete in terms of prices. Whole Foods was already a huge company, of course. And Whole Foods’ prices used to be so high that that fact was a joke with most people: “Whole Paycheck” and all that. But it seemed to me that Whole Foods knew what they were doing with those prices, which was to appeal to the (mostly liberal) urbanites who didn’t mind paying a premium for a shopping experience that was not only esthetically and gustatorially pleasing but that made them feel vaguely virtuous and “clean.”

That was Whole Foods’ niche, at least as I saw it. Trader Joe’s—which has a smaller selection of products but with good quality and lower prices—has had its foot firmly in the middle-of-the-road everyone-is-welcome door, whereas Walmart (and locally Market Basket, my own favored supermarket) has the reputation of being for the proles among us (I shop at Walmart for quite a few things, although not usually groceries).

Will Whole Foods now attract more people, lured by the lower prices (which are dropped for some items, but my guess is that Whole Foods will remain on the expensive side)? Or will the special appeal of Whole Foods—that je ne sais quoi—be lost?

15 Responses to “Amazon takes over Whole Foods and cuts prices”

  1. vanderleun Says:

    Lost! Lost forever will be the Whole Foods raison d’etre:

    “Whole Foods: Why Pay Less?”

  2. Simon Says:

    I am glad Amazon are doing this, Whole Food prices are absurd. I don’t think I would buy from there even if I could afford it. It just seems obnoxious. In England, where I am from originally, you can buy products as good as Whole Food’s for prices closer to Walmart. Trader Joe’s is the closest we have over here to this at the moment. It will be nice to see Whole Foods become competitive. Good quality food should be available to everybody at a reasonable price.

  3. blert Says:

    Napoleon invaded Russia.

    Bezos invaded the grocery business.

    Dropping their price point is a strategic error of the first magnitude.

  4. Richard Aubrey Says:

    The market for je ne sais quoi is stable. Somebody else will make money from it.

  5. Richard Saunders Says:

    We shop — more accurately, my wife shops – at what is possibly the most “echt” Whole Foods in the country, the one in Beverly Hills. I have no doubt that as soon as the denizens of that store find out that the prices have been reduced, they will abandon the store in droves. Somebody will have to open a more expensive store.

  6. TommyJay Says:

    The other facet of this corp. merger is that it is “forcing” (?) Walmart into the arms of Google/Alphabet. Walmart’s leadership has been moving leftward rapidly for many years, but they started from the very conservative position of Sam Walton.

    I had been shifting many of my previously Amazon type purchases to Walmart’s web system. Soon I will have the choice of supporting either the Bezos/Marty Barron empire or the Goolag.

  7. GRA Says:

    I’m too poor to afford Whole Foods and Trader Joe’s so I tend to shop at local chains. Walmart also gets my money due to budget.

  8. neo-neocon Says:

    GRA:

    If you visit a Trader Joe’s you might be surprised to find that some things there are very reasonably priced compared to supermarkets, and competitive with Walmart.

  9. AesopFan Says:

    Richard Saunders Says:
    August 28th, 2017 at 8:36 pm…
    Somebody will have to open a more expensive store.
    * * *
    This.
    I am continually amazed at what people will pay for things that are no better (and sometimes actually worse) than cheaper alternatives, simply because they cost more and are in the “better” store.

    Many years ago, I listened to a suit salesman on a radio program admitting that the suits sold at “Men’s Wearhouse” were just as good as the “big name brands” — you couldn’t tell them apart without looking at the labels — but people would pay hundreds of dollars more for the labels.

  10. Richard Aubrey Says:

    Went to a seriously, very seriously upscale kitchen store. As in $3k for a home coffee pot.
    You could get an organic, free-range turkey for Thanksgiving for about $125. My daughter wondered how much for the table notes reassuring the guests they weren’t eating Butterball.

  11. Richard Aubrey Says:

    Which gives mea TERRIFIC idea. Those feral hogs besetting Texas….
    Free Range Organic. Go for $60 a pound at Whole Foods.
    That’ll be the end of the hogs.

    “Free range organic” is code for we have no earthly idea what these things have been eating.

  12. AesopFan Says:

    Read something recently asserting that most of the “organic” meat sold in the posh stores, isn’t. The label is supposed to mean that the animals were fed only organic vegetation, but the bulk of the feed was imported and definitely NOT in compliance with the rules for being “organic”.

    Wild hogs is about as organic as it gets, though.

    Makes me want to go read some old Asterix comix.

    What do you know — it was at the WaPo (probably cited elsewhere: I only go there when I have to).
    https://www.washingtonpost.com/business/economy/the-labels-said-organic-but-these-massive-imports-of-corn-and-soybeans-werent/2017/05/12/6d165984-2b76-11e7-a616-d7c8a68c1a66_story.html?utm_term=.2b8bc196d49e

    “A shipment of 36 million pounds of soybeans sailed late last year from Ukraine to Turkey to California. Along the way, it underwent a remarkable transformation.

    The cargo began as ordinary soybeans, according to documents obtained by The Washington Post. Like ordinary soybeans, they were fumigated with a pesticide. They were priced like ordinary soybeans, too.

    But by the time the 600-foot cargo ship carrying them to Stockton, Calif., arrived in December, the soybeans had been labeled “organic,” according to receipts, invoices and other shipping records. That switch — the addition of the “USDA Organic” designation — boosted their value by approximately $4 million, creating a windfall for at least one company in the supply chain.”

    IF there is money involved, there will be fraud.
    If the government is involved, raise the fraud exponentially.

  13. Tim Turner Says:

    No doubt Amazon is testing the waters to see if reducing prices increases volume enough to make up the profit margin. If it does, prices will drop across the board, if not, prices will go back up.

  14. Ymar Sakar Says:

    This seems rather risky and much of a fishing expedition. If Amazon wanted to do selective tests, they could have chosen a few stores, and then after 6 months of data input, decided what the final prices for everyone would be.

    It looks like they need a cash influx from their investment, instead.

  15. Ymar Sakar Says:

    It is very likely Amazon, Netflix, and Google are running into bandwidth problems with their services. Meaning, no bandwidth means no users. No users, no content. No content, no profit.

    Google has the liquid assets to put up 5g and fiber optics, but Amazon might be in a lot of trouble if they don’t merge with Netflix on infrastructure investments. They can’t just be leeching off Comcast and ATT forever.

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