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 Go, and so on.
But is this really Amazon's play here? Seems to me this is just the superficial and obvious rationale, and these analysts completely missed the bigger implications.
Since Amazon said they're not renaming the stores, how can this be about Amazon's brick-and-mortar expansion?
Seems more likely that Amazon's strategy is actually the opposite of this.
Instead, maybe the bigger opportunity is to "Amazonify" a good brand, good people, good merchandising and thousands of relationships with good suppliers.
Customers already trust Whole Foods and they like the assortment, but (1) only a small percentage of the population has access to a store, and (2) an even smaller percentage of the population can afford it.
What if this is about taking the Whole Foods concept online in a big way ... make it dramatically more efficient, aggressively lower prices, and deliver all this goodness to a far larger percentage of the population?
Whole Foods market share is less than 2%. Amazon could turn this $13 billion business into a $130 billion business by plugging WF into Amazon's existing apparatus for merchandising, pricing, inventory control, online sales, logistics, and direct-to-consumer delivery.
Taking WF market share up from 2% to 20% is a much bigger opportunity than going the other direction, and just using WF stores to sell Amazon's grocery assortment.
Amazon market cap went up 3.5% as of the current tick, roughly $15.5B. The market effectively rewarded AMZN for the transaction far beyond the actual $13.7B tender offer!
This of course pales in comparison to the 478 million outstanding shares, so, you are correct: their shares don't appreciate nearly enough from the $15 billion surge in market cap to pay for the $13.7 billion purchase. However, to say "whatever the stock does has no impact on the company" is also inaccurate.
They do not, either in theory or in practice, own the assets of the corporation while it exists.
"effectively free" is a strange label to give this.
It means there's an opportunity cost: all other things being equal, it would cost Amazon two billion dollars in market capitalization to NOT do whatever the hell Wall Street THINKS they're going to do with Whole Foods.
Maybe the market thinks they're going to use them as bases for grocery distribution: reward, the cost of acquisition plus a bonus two billion. Maybe the market thinks they're going to gut the company, fire everybody, and then there's one less competitor for what Amazon means to do with groceries! Maybe the market thinks they'll take the existing Amazon grocery stuff and rebrand it Whole Foods and the rabble will buy into that for a time.
The point is that this money really isn't free: it's conditional on whether Amazon does what the investors think they're gonna do, with the acquisition. If Amazon fails to do that, the market capitalization can evaporate.
My own hunch is that the market thinks Amazon is super efficient and acquisitive, and that Whole Foods is weak and inefficient and misguided. As such, the expectation of greedy and amoral investors is that Amazon will take over and whip Whole Foods into shape, maybe even fire everybody and replace 'em with Amazonians, and that will make Whole Foods 'better' and justify the exercise. They certainly aren't buying into Whole Foods' 'enlightened' memes: that has no place on Wall Street.
So I'm guessing it's BECAUSE Whole Foods has been 'enlightened' that the prospect of wrecking that so motivates investors. They figure that the Amazon way is clearly the winning way, and they figure there will be a BIG difference in how things are done, and it's a difference they characterize as 'good for capital', so there's a synergistic effect that makes it 'free' for Amazon plus a bonus. And then Amazon is obligated to do what's expected of them, which I think is probably kinda predictable.
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.
The only reason I know about Aldi is that I spent a couple of years working in Chicago (and living further out), and even there I had to drive a long ways out of my way to find an Aldi. I think I went once in the 2 years I was there.
Whole Foods is everywhere.
EDIT: apparently I was effectively wrong, different Aldis:
> What if this is about taking the Whole Foods concept online in a big way ... make it dramatically more efficient, aggressively lower prices, and deliver all this goodness to a far larger percentage of the population?
Efficiency and cheapness would go against the Whole Foods brand.
For their existing customers, yes, but WF has become an aspirational brand.
What if the play is to gain a large number of less affluent customers by WF-labeling lots of inexpensive things?
Search Amazon for some commodity like corn meal, or rolled oats. There's a huge price difference between Quaker brand and Bob's Red Mill. Amazon could insert Whole Foods brand right in the middle and skim customers from both ends while maintaining handsome margins.
I don't know what this means. The WF experience has nothing to do with these things. The price (cheap or less-than-expensive) and efficiency (I think you mean availability?) aren't really important, other than they are successful in the same way Trader Joes is successful, in fewer locations.
Sure they say that now...
Just calling this out to try to counter the tendency of U.S. folks to assume that there is only one, unchanging form of capitalism. In fact, ours is increasingly a weird outlier.
Makes hard decisions easier since the union and employees can see why decisions are made.
Lest you think this makes the country uncompetitive, Germany still makes cars, and the UK (which doesn't have this legal system) has vastly de-industrialised and doesn't make cars.
It'll be interesting to see what bezos does with it for sure.
[1] https://en.wikipedia.org/wiki/Migros [2] https://en.wikipedia.org/wiki/Coop_(Switzerland)
https://en.wikipedia.org/wiki/Mondragon_Corporation
Oneida is (was) the closest US analogy I can think of, though much smaller.
There are some very successful Kibbutzim spinoffs in Israel, into 100s of millions US$ (I don't know how ownership was structured).
From Agriculture To High-Tech: Meet Five Kibbutzim That Became Global Powerhouses http://nocamels.com/2016/03/successful-israeli-kibbutzim-ind...
Are they essentially large family-run houses of commerce much like tradesmen guilds of the past?
Comparing the wikipedia sidebar shows Publix with more stores, revenue, and over twice the number of employees.
https://en.wikipedia.org/wiki/Publix https://en.wikipedia.org/wiki/Whole_Foods_Market
I'm not going near Amazon, though.
But, if your just mean billion plus dollar orgs then something like : https://en.wikipedia.org/wiki/United_Farmers_of_Alberta is an interesting comparison. Further, measuring the success of such organizations is hard especially when they are not trying to make a profit. I mean how do you measure something like the US Democratic and Republican parties?
Whole foods is a good employer IN SPITE of being capitalist.
Even Walmart has started realizing this. It turns out that when you hire unmotivated people, pay them as little as possible, screw them on medical benefits, pay them too little to get their own apartment and in general work them harder than everyone else in that job sector that you get people who don't do a good job. In the past several years, Walmart has instituted new wage plans, better medical benefits, productivity goals from corporate that are still unreasonable but not insane and they think it is worth the money.
I don't know if Amazon has learned this expensive lesson, but a business can run with high employee turnover and dissatisfaction for a long time before it catches up to them. Once it becomes apparent it is often too late to fix without losing heavily in the marketplace.
Simply put, human welfare is directly in contest with maximization of profits. This occasionally can result in being paid well—it's cheaper than hiring two people at a lower rate.
And looky there, other commenters supplied a bunch more (actual) examples. I'll throw in: The Catholic Church. The nation of Yugoslavia. What the heck: the Hell's Angels. Far outstripping Amazon's "scale" in terms of heads smacked with wooden fenceposts, that's for sure, or maybe not.
Which is my next point - adjust the "scale" appropriately (and unfortunately you left no indication RE: scale of what, whether it be dollars in sales, people involved, people served, ham sandwiches set aflame, heads smacked, or dogs painted blue) in proportion to the amount of money/wealth existing in the world at that time. in history. or to the number of people alive at that time. in history. and that'll probably turn up a bunch more examples.
There's also the question of "successful at what"? At providing for its employees/members? At serving its customers? At enriching its shareholders? At painting dogs blue?
Also we should really make passing mention of the waxing and waning support for capitalistic enterprises vs. other types of communes in various places and times. in history. Is it a valid comparison between a company like Amazon, operating in one of the most capitalism-friendly sociopolitical environments (post-Reagan America) seen in some time, vs. another type of organization operating in the same environment that doesn't support that organization or even actively suppresses it?
Your comment reflects an overabundance of confidence in things that are by no means simple or certain.
Look at airlines--exec bonuses used to include metrics such as "customer satisfaction" and today those metrics are gone and only profits count. Nothing changed with capitalism, though. It's the asshole MBAs that changed.
The logic of trench warfare era militarism is even more depressing than the normal logic of war. It's mind-boggling to think leaders figured it was appropriate to just throw demographically significant numbers of 16-20 year old boys into a meat-grinder just to keep the machinery of colonialist industry well greased.
The few engineers who care to engage in the negotiations which yield their true market value end up making several times that of the average. Yes, some of them are exceptional engineers, but some are not, and the only real distinction is being able to find and negotiate optimal market rates for their work.
If wasn't supporting a whole raft of people who aren't my kids I could get by on 10 hours a week. Most of these people will be self sufficient in the fall. Then we will see I can get fewer hours.
Charge hourly, produce good work(actually work those hours you charge) and spend enough time learning to stay proficient in your niche of the craft. This recipe won't make you a millionaire quickly, and it won't get you a house in the bay area, but it has given me great financial freedom in the Midwest.
Last year I had a consulting gig in a Europe based company, with offices next to a big airport. As summer was slow anyway I'd work 30h weeks (invoicing four 7.5 hour work days) Tuesday - Thursday, and spend the other 4 days at a beach in Ibiza, Bulgaria or Cape Verde (with occasional remote login to take care of emergencies).
That's something a worker's organization would help with, even if I don't feel like I need them in wage negotiation.
Not that I disagree that it was a huge deal, it's hard to gather greater sympathy/empathy from people that tend to make less than half of those aggrieved.
So if you don't want to work 40 hours, don't. I have much less sympathy for a software engineer who has better leverage than a kid who works at McDonalds and couldn't earn a living wage working 60 hours.
The fact that you could strike and not really sacrifice much; and if it failed find another job, puts you in a great position. Unions are good for protecting those that can't afford to protect themselves and are at a disatvantage. SE is not IMO a vocation that needs to organize.
The games industry disproves your theory.
I have read several stories of people leaving game deve for a nice boring job writing insurance software for more money and fewer hours. Many could be doing it the other way around, write software for a lame, but lucrative, insurance company, then make a small lifestyle business writing indie games with a few friends.
First of all, "sub-prime wages" is not a thing I've ever heard of. Absolutely nothing on Google so I'm assuming you mean below market wages, which game industry wages are by definition not.
Secondly, and perhaps most importantly, paying people what they are willing to earn does not make game studios assholes. Everyone developing software for game studios knows they could make more writing software for a bank or some YC CRUD app.
> I have read several stories of people leaving game deve for a nice boring job writing insurance software for more money and fewer hours.
With the right skills, you can leave any industry and go to any other industry and make more money. Not sure what your point is here.
I agree there is the romantic factor in play as well. You have a lot of supply of devs and a random walk of success stories.
Most people who are super excited to make games are gamers themselves, and it seems to me that most gamers are pretty open minded. In my own research it seems to me that most indie titles that "don't suck" turn at least a modest profit. Don't suck needs to be defined objectively, but not being riddled with bugs (unless that's the point [Goat simulator, Desert Bus]), having a consistent even if primitive art style and being fun to at least some gamers is a reasonable definition.
The breakaway successes like Minecraft and Super Meat Boy should not be examples. Better example are Rovio's 50 games before Angry Birds. They made enough money to live on and make the next title while having a decent but not affluent lifestyle.
The unions also provide other benefits. For example, most of them own summer houses that any member can reserve to go spend a weekend away. You rarely hear the average Icelander on either side of the worker/manager divide complain about them at all. Everyone more or less views them as beneficial.
Once or twice a year they make headlines when one group of workers or another feels aggrieved and it escalates to a brief strike in some small sector of the economy, but on the whole, I don't think many Icelanders would trade their system of employment for ours.
Like so many other areas, I think the problem is that we in the US are just so very much worse at running our society and country than most other comparable countries. Look at health care. No one liked the ACA; no will will like the AHCA or whatever the Republicans pass. The problem isn't that it's impossible to do a decent job at a health care system. The problem is that we specifically suck. Put us in charge of anything, and we'll turn it into something awful that doesn't work, but provides some brief period of outsized shareholder value.
Actually, it's 1000x.
So while the EU plugs away making incremental improvements each year we keep jumping around in fits and spurts forward and backward. There is still a strong belief of American Exceptionalism even in fields where we are clearly inferior. Look at Healthcare Europe figured something out that we didn't and their is cheaper and better.
As you "scale up" in diversity, population, and geographic distribution the set of things people can agree on falls off dramatically.
Iceland has a very divisive political system at the moment. The ruling government has been a coalition of the Progressive and Independence parties, roughly the european versions of the social conservative and pro-business factions of the Republican party respectively. Though it should be said that no one in Iceland really touches quite how regressive American social conservatives are. And, of course, being (sort-of) Scandinavian, there's a massively strong Social Democrat/Pirate/Left-green contingent in the Reykjavik area that can't stand the agenda of the main ruling parties.
Iceland doesn't function because they manage to get people to agree more than Americans do. There are something like 13 political parties in an average election, and they stand in bitter opposition to one another across a huge variety of issues. Iceland functions because they make their government function anyway. Nothing about being small makes it easier for two opposing parties to somehow figure out a way to get the damned bills paid. You could replace the entire American republic with Donald Trump and Barack Obama, and we'd get no more done than we do today, because the government isn't trying to solve problems. They're trying to preserve whatever problem is most plausibly the fault of the other party.
We need new political platforms focused on consensus-based policies. Not distinguishing our groups from "the other"
Go look at the film industry, and the Writers / Directors / Screen Actors Guilds. The WGA doesn't stop screenwriters from negotiating their own terms. Do you think someone like JJ Abrams is getting paid the WGA set fees? That Tom Cruise works SAG and Equity rates? Of course not.
The point of the guilds in these industries is to set minimum standards for pay and benefits. It is designed to stop studios from exploiting people desperate to work in the industry. I majored in film and many of my classmates have gone on to work in Hollywood - I don't know anyone of them who would say their unions aren't a good thing.
Would you say that it works?
My understanding is that these unions make it more difficult for new people "desperate to work in the industry" to actually break into the industry.
* Association of Educational Psychologists
* British Air Line Pilots’ Association
* FDA ("The union for senior public sector managers and professionals")
* Hospital Consultants and Specialists Association
* Prospect, the professionals' union
There are a lot more listed here: https://www.gov.uk/government/publications/public-list-of-ac...
Unions are important in many industries, including software development. You and your employer may have a good method of negotiating your pay, but that doesn't make it universal
Belittling the presumed intelligence is completely unnecessary
Are there warts? Sure there are. Nothing is perfect.
Isn't that equally true for collective undertakings?
Another example of this is Wegmans -
http://www.cbsnews.com/news/could-this-be-the-best-company-i...
https://www.washingtonpost.com/news/wonk/wp/2015/05/13/why-w...
http://www.adweek.com/brand-marketing/why-do-so-many-people-...
http://m.csmonitor.com/Business/The-Bite/2016/0225/Why-is-We...
“Our employees are our number one asset, period,” Kevin Stickles, the company’s vice president for human resources, told Reuters in 2012. “The first question you ask is: ‘Is this the best thing for the employee?’ That’s a totally different model.”
Ha, I think that's one of the most ringing endorsements of a business I've ever read.
There was also an article that talked about the brilliance of Amazon biz organization. Business units are set up like API interfaces, ones that serve both internal needs as well as external customers. The author's claim is that it helps trim the fat, with what was normally internal services being exposed to market forces. It makes me also wonder about WF's fate from that perspective.
Groceries are not APIs.
TJ is a good deal for some things but it only somewhat overlaps.
What you will see is a relationship between Amazon Prime and WF. But, as with the case with Twitch, it will be Amazon that deals with that and WF will likely continue to do its thing while Amazon generates MORE customer loyalty and a new customer base.
If money weren't a matter, I would love to shop at whole foods: shopping for groceries seems more of an experience there than at other places. Maybe using Amazon's superior operations management would let them lower prices even further attracting more regular customers.
When I airbnb'd in someone's Portland home once, The host worked for another local alr grocer chain, proudly telling me it is like WF but better.
Just a tangent: the downtown Seattle WF has a fantastic eatery ... and in the months before I moved, it turned into a major Amazon employer hangout, after the Amazon HQ moved there. Now I marvel at the irony it is effectively an externalized company cafeteria.
https://techcrunch.com/2017/05/14/why-amazon-is-eating-the-w...
Flip side is that, according to this: http://www.bizjournals.com/seattle/news/2017/03/27/amazon-go...
There are a lot of troubles with the logistics around distributing produce. The models Amazon has for managing non-perishable goods is not working well for things like bananas. It would be stupid of Amazon not to try to learn from logistics experts from Whole Foods, and Amazon has a good track record for not being stupid.
Side note: just yesterday, my wife and I went to our local Fry's for our normal shopping. They are testing hand-held devices to scan items while you shop and then just settle at the self-checkout line; this was fairly new. We gave it a try just to see what the experience is like (and likely, by the time my step-daughter comes to age, something like this will be normal). I remarked to my wife that Fry's isn't sitting still, waiting for Amazon to take over grocery shopping with Amazon Go, either.
Trader Joe's has limited selection and is mostly on the cheap side, often even cheaper than Ralph's in SoCal. Its the place I go for cheap produce that just happens to be organic/natural/etc... (though I don't really care about the latter).
Here in the Bay Area I'm really happy with Draeger's. Haven't really been back to WF much since I started going there. Unlike Trader Joe's it does have a reasonably complete selection of meats (and for specialty cuts there are local butchers).
We had WF delivery for a couple of years. It was great for us. But, you could tell they were trying (unsuccessfully) to monetize it. When they curtailed it they offered a pickup service as replacement: Instacart is the app for placing orders. On the whole, the pickup service works pretty well except you don't get sale prices.
I can see delivery coming back now that Amazon is in the picture. I can also see a bigger push to sell prepared foods for delivery. Prepared foods are the real money makers.
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 leave. This is an opportunity for some other investor with Mackey's same principles to buy up WF's human capital. For example, Starbucks will benefit b/c former WF employees make good baristas.
2) Amazon will be left with the infrastructure of WF, primarily the real estate, warehouses, storefronts and whatever slice of humanity Amazon hires to replace former WF employees. So maybe Amazon wants WF primarily for the locations, the real estate and the warehousing capacity. They're getting a good price by buying while WF is at a low.
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.
Noted by a friend who used to work there:
- They treat each store (and each department within each store) like its own separate business, which is great for teaching individual managers about waste, efficiency, profit/loss. However they can't bother to get together on a corporate level and combine purchasing power on most things. Every store has to work on making a deal on their own merchandise, separately.
- In a show of solidarity, all employees, whether floor workers or corporate IT, must work holidays and instead have floating holidays for time off. Then predictably there is a seniority effect where the long-term workers get to have their holidays and the recent hires have to come in on a completely useless day and stay till 3 or 4 when the management "lets" them leave.
Also I recently shopped at their 365 store and it's a great store with better prices, but their website sucks and my name comes up as "firstname lastname" on their computers. If Amazon can knock some sense into their IT, that would be a huge win.
Yeah, darn those investors. How dare people with pensions, 401k's, IRAs, and other investments expect some kind of return on their investment? It's disgraceful. /s
EDIT: The sentiment against investors is rather ironic considering the amount of equity collectively held by HN readers.
Do you vote the proxy for all the funds in your 401k? Do you understand how your vote affects the above - it all does.
This might not be an option for everyone, of course.
It might not be your intent, and you might not have enough of a vote to stop it, but you are still doing it. (sort of like Americans opposed to the current foreign policy are still at fault for it)
If your retirement is 3 months away, then sure you should be thinking short term, which actually means you should be moving away from stocks entirely. Investors that are really that short term should be in bonds or cash.
Imagine suggesting that any employee who was hired when the stock price was higher than the selling price now had to pay money to those who were hired when the stock price was lower. Fortunately, employees are not held liable for the valuation of the company at which they work. If they WANT to participate in that risk and reward they can buy stock--sometimes at a discount like Whole Foods offered.
I flat out reject this idea that people should get the bulk of reward simply for already having money.
Are you saying there should be less/no return for investing your money? If so, how do you suppose we incentivize investments?
I merely stated that the bulk of reward should go to those who actually DO something, not those who's only contribution is already having money. Of course they should get a return on that money. It just shouldn't be the bulk of the reward.
But investors are actually doing something as well - they are putting their hard earned money towards a venture. And as it stands today, we have more need for capital than 'actual work'. So it gets rewarded more. In simplistic terms, If you want an investor to put his money into a business you are starting instead of buying up rare resources or hoarding his cash, you give up equity. And hence their reward are relative to the money they put in.
I was just trying to see if you have any alternative plans to encourage such investment. This is back to basics economics as I know, but I don't know much there. Hence my query.
...or monomania of "the [stock] market," and the myopia of those who look to it to determine what "works."
But the $13 billion sale of a public company is a bunch of hemming and hawing about what the stock was worth a few years ago.
I'm not saying it couldn't have been more successful. I'm not saying Amazon won't completely destroy the culture (they may, they may just let it continue as is and use it as Amazon Fresh logistics hubs as some have speculated).
But I don't see how this isn't a great example of how you can treat your employees well - better than almost anyone else at the same level - and make a lot of money while doing it.
Wasn't Whole Foods valued at over $20 billion a few years ago? If you bought Whole Foods stock at that point (either as an outside investor or an employee) it might feel like Amazon is buying it for $13 billion because Whole Foods has been having trouble staying competitive in the market.
Of course, if you actually started the company $13 billion may be a very big success if your goal was to sell.
[1] http://www.npr.org/sections/money/2017/06/09/532303452/episo...
And it's so much worse than that, really. A lot of public companies are being strip-mined of their true wealth by the insiders. Pump the stock, gut the company, screw the investors.
Amazon as a company has many flaws in its culture (if we are to believe the reports), but they seem to do acquisitions pretty well and know when to leave things alone and let them do their thing.
Amazon thought they understood it, messed it all around and now it's a sad parody of the former site.
https://www.dmagazine.com/publications/d-magazine/2014/july/...
That particular bit about Bezos and the octopus sells it - You'll be fine if Amazon "gets" your company and it's culture. If not, well...
https://meh.com/forum/topics/faq#q-whats-the-story-here-53a3...
Unions to protect workers are now more important than ever in this new age of monopolies.
Because Amazon can better monetize WF: backing with Amazon's logistics chain, expanding grocery delivery, cross-marketing with customer's existing Amazon purchases, and using WF's real estate for warehousing stock closer to affluent customers for one hour deliveries.
I absolutely agree they'll be tempted to squeeze costs, but I think there's a viable financial option to run WF as-is and still accrue benefits to the greater-Amazon.
It probably also doesn't hurt that Whole Foods is the only grocery store within walking distance of Amazon HQ and about 1000 employees eat lunch there every day.
They'd do what any company that doesn't want to end up bankrupt to do. Attack the easy parts first (overly expensive infrastructure, etc) then hit the two major cost centers: labor and food costs.
If it comes down to two options: lower wages/quality of food or a company that no longer exists, the former is probably the better alternative, no?
Twitch.TV is the same way, after it got acquired. They just leave them alone and let them do their own thing.
Amazon made its name by shipping consumer hard goods. It continues to do well with non-perishable items. But this nut is the Everest of retail. It will be a challenge to get it to fit into their model.
I've tried a bunch of different grocery delivery services (Seattle area) and Amazon Fresh is far and away the best of them. I stuck with Safeway for four months and literally every single time they delivered an order, there was a problem with the order. Every single week! There was always something missing (not even obscure stuff - once they claimed to be out of bananas, for example) and the packaging was terrible - just getting the bags from my front door to the kitchen often let to something falling out and breaking.
Amazon Fresh does things very, very well. They show up on time, almost never have a stocking issue and the packaging is very well designed - the frozen stuff is packed with dry ice, the cold stuff with an ice pack and the rest are packed into reinforced paper bags that are sealed to prevent stuff falling out en-route. It takes only moment to move everything into my kitchen and I've never had something break en-route.
Customer support is much better too - every time my order was missing an item, I'd have to call Safeway and often I simply couldn't reach someone (especially outside of 9-5).
Grocery stores need to up their game quickly or they will go the way of Sears and K-Mart.
As an aside, the amazon fresh packaging is great as trash bags. The ice packages they send along are great to put in your freezer and use later on trips. They recently (at least to me) added a durable cloth-based cooler, which they say you can put on your porch and they will reuse. I may let them have it back or I might use it as a cooler for my normal grocery store trips.
It is slightly more expensive, but the bottom line is that in the middle of the week I am just too worn out to go to the store, so being able to have a mid or end week delivery means that I have stuff at home instead of having to order out.
I guess I qualify as an amazon fanboy ;-)
Relevance to this HN story, I think they can probably leverage this to help their Amazon Fresh business.
- Amazon has been shipping tens of thousands of non-perishable grocery SKUs from their main site for about 10 years. They've had to deal with expiration dates, chocolate that can melt, bundling multiples, highly variable shipping cost vs margin, etc. That organic cereal you buy at WFM is available on Amazon too.
- They have relationships with all the large packaged-goods companies.
- They've been operating a small-scale local grocery business (Amazon Fresh) for about 10 years, now in 14 cities.
- A lot of this direct-to-consumer business is complementary to Whole Foods' experience.
Whole Foods is stable as a company and (afaict) has higher operating margin's than Amazon's retail business. So they could largely leave them alone but still gain a more-or-less national perishable foods supply chain that lets them open Amazon Fresh and Amazon Go in many more cities much faster than if they had to do it from scratch.
Looking at it the other way: Amazon knows it's bad at this, so it's acquiring the expertise.
at any other grocery store, yes
Whole Foods gets higher margins because their customer base cares more about various intangibles beyond just the value-for-money. Take those intangibles away and suddenly you're competing on value-for-money alone and Walmart will eat your lunch while smaller, independent grocers go after your dinner.
Very much, like many premium businesses part of what they are is to ensure everything will be lovely, easy, and just happen. That is the added value. Take that away and you're competing against ASDA etc. Premium brands need to keep that, it is a very valid market but must be looked after.
Whether Bezos treats Whole Foods the same probably depends on whether he has confidence in existing management. It's also possible he has ambitions to totally remake WF into something else. In that case, it doesn't matter what managers are there because Bezos wanted the Whole Foods market presence and not the management team.
I ask not as a personal attack on your credibility, this comment just seems a bit inconsistent with the Holacracy movement that he championed a couple of years back.
http://fortune.com/zappos-tony-hsieh-holacracy/
https://qz.com/849980/zappos-is-struggling-with-holacracy-be...
https://www.theatlantic.com/business/archive/2016/01/zappos-...
I agree that this is inconcsistent with the Holacracy movement (even if the move preceded the movement officially, clearly these workers were never fully Zappos employees in Tony's eyes, which is sad).
I don't think you have much to worry about if you're a WF employee. Amazon actually treats their employees very well. In my experience here, I've never seen any of the things the NY times article talked about, either on my team or any other team I've interacted with. People have a healthy work/life balance (40-50 hours a week), get paid very well (definitely above average, and probably in the top 25% of industry), and in general they are concerned with long-term employee sustainability, rather than letting employees burn out and quit.
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. That's a completely different environment than full time employees work in.
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 there is a lot of demand for engineers, and they have to be treated well to retain good folks. That is not comparable to the good culture that OP claims WF has.
I'm not saying its ok to be inhumane or break laws and treat your workers like cattle. I'm just saying that if you've never worked at a minimum wage unskilled job before, you probably don't realize how much it can be hell, just due to the nature of the work. The same thing can be said for lots of labor like farming, construction work, mining, etc.
The economic/social situation of people force them into these jobs. Just ignoring this and accepting it as reality is ridiculous. This can be said of any of such social behaviours. In some cultures, the violence on women is countered by the logic that they were wearing certain kind of dress and nobody is forcing them to do this etc ..
There are certain values in society that we should try to fight for. They may seem idealistic in current perspective, but nevertheless we should strive for them to make progress inch by inch. Brushing them off under the pretext of "nobody forced them" is not right.
I remember reading a story about a 19th century company that literally put chains on the doors to prevent workers from leaving the building. When a fire broke out, dozens died. Today we don't allow that type of behavior, and for good reason. The reason that you can move elsewhere to get a better job is because society has worked to ensure the prevalence of said good jobs, and I hope it continues to do so.
But probably more similar to most jobs in a grocery store than a software engineering position.
Just a tad, but the financial analysis told us inhumanity was the right direction to move in. /s
I haven't seen any articles about the working conditions at warehouses in years, have you? In the mean time, they've opened dozens more warehouses.
(The latest was the NYT article which was about office jobs and which is a whole discussion in its own right.
https://www.google.com/#q=amazon+ambulance+warehouse
https://bits.blogs.nytimes.com/2011/09/19/inside-amazons-ver...
> In a lengthy and heavily reported article, The Call said a warehouse employee contacted the Occupational Safety and Health Administration on June 2 to report that the heat index in the warehouse had reached 102 degrees, and that 15 workers had collapsed. The employee also said workers who were sent home because of the heat received disciplinary points.
> Eight days later, the paper said, an emergency room doctor at a local hospital saw enough Amazon employees suffering from heat-related injuries to call OSHA and report “an unsafe environment.”
> So many ambulances responded to medical assistance calls at the warehouse during a heat wave in May, the paper said, that the retailer paid Cetronia Ambulance Corps to have paramedics and ambulances stationed outside the warehouse during several days of excess heat over the summer. About 15 people were taken to hospitals, while 20 or 30 more were treated right there, the ambulance chief told The Call.
In a giant warehouse managed by a company with > 100k employees, things are not changed that quickly...
I wasn't a contract product picker either, I'm a Paramedic that helped staff the on-site medical clinic, which exists mostly for workers comp paperwork and the occasional emergency. (in 6 months, I responded to 2 actual medical emergencies.)
The warehouses were not overheating even in the Texas sun, we didn't have an ambulance sitting outside, and people weren't passing out. I'm not sure what was up with the one in the story but it definitely sounds like more of an exception than the rule. But that story of that warehouse just keeps coming up.
Some positions are temporary seasonal labor, but Amazon employs people full time in their fulfillment centers as well, and they work hard trying to convert the former into the latter.
Where I am (near Austin, TX), Amazon is running a campaign to recruit UT students with the promise of "tuition assistance." The way they treat their FC employees has nothing at all to do with their relative skill level, educational background or expected tenure. They've also been pushing 60 hour mandatory overtime for over a month for some shifts and they pay well under the cost of living for the area in which they operate, and I expect that represents the general treatment of the majority of Amazon employees, because there are far more of them at the bottom of the pyramid than the top.
I don't doubt the engineers are doing well, though. They probably get chairs to sit in and everything.
This might be one of the more tone deaf things I've read on HN in recent memory.
Today has taught me that HN has a pretty fierce anti AMZN bias, and it shows. I have 4K+ karma, and am sharing my honest opinion and experiences working for AMZN for the last year. Next time, I just won't participate. This community has gone downhill pretty seriously in the last few years... No big loss.
If it speaks volumes, those volumes are more about this being a tech-industry biased forum than anything else. We don't really talk about the fast food industry and it's working ccondition nearly as much (though, even so, the whole industry is often used as a shorthand for terrible working conditions even when discussing other things.)
Your idea that the fact that HN talks about Amazon more than the fast food industry is anti-Amazon bias and not tech-industry focus is interesting, but not particularly plausible. (Especially given that plenty of that talk is positive.)
I once had a coworker that walked into the building, and said that morale was so low people would start crying when they were paged. Gave back his signing bonus and resigned immediately.
Completely anecdotal stories obviously. Not saying you're wrong, but you may be the outlier?
> I don't think you have much to worry about if you're a WF employee. Amazon actually treats their employees very well.
Normally when people say Amazon abuses their employees, they aren't talking about AWS.
Do you mean the software developers who work on Lake Union or the many lower skilled people who work in Amazon's fulfillment centers...like people who would work in a grocery store...
> 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. That's a completely different environment than full time employees work in.
People who work at Wholefoods aren't software developers making top bucks.
I've never had anyone in person tell me that Amazon was a good place to work unless they were trying to recruit me.
40-50 hours of work a week isn't healthy.
Every one of my friends in engineering (actual engineering, e.g. civil, aerospace, etc.) positions get at least 1.5x for any hour over 40 they work in a week. In fact "unpaid overtime" is something I hadn't heard of for an engineering position prior to working in software. It's almost like workers in this industry are competing to see how much they can let themselves be exploited.
1. If nothing else, engineers are considered a learned professional.
2. They probably make over $100,000 per year.
3. They may hit the executive exemption.
In some cases these employers' contracts require them to pay overtime to employees that work on the contract project, but generally that isn't the case. They pay overtime because of the historical evolution of the industry and the expectations and dynamics of the employer/employee relationships.
If you treat your people like valuable members of society/your organization they will develop and improve on the actual skills that an unskilled job needs, like anticipating problems, knowing when an how to escalate issues, being warm to customers, being knowledgeable about the business and your products, and hustling when needed.
If your treat your people like disposable chattel then they’ll show up to punch a clock, check the boxes, and get out as soon as possible.
We can say all we please that we want great customer service, but we vote with our wallets, and our wallets say "Save $5 per trip to interact with the trained monkeys."
Thus, we have Walmart.
This is very much a cultural problem that stems from treating service workers as subhuman and undeserving of a decent wage.
And the price difference is hardly as high as $5 per trip. Even places with really high minimum wages don't get that bad. It's more like a few extra cents, barely noticeable. Where the savings on payroll at the bottom are going is usually payroll further up the chain.
Some stores have much better customer service than others, like Whole Foods and Costco (just to cover both sides of the pricing models), and they seem to be doing all right.
Seasonal workers in the FCs literally get only 4 hours of training and are then filling orders. That's the pure definition of unskilled, and a far cry from a pastry chef at WF.
There's the checkout counter and stock in the back, but I feel like the employed-during-the-day crew definitely has career opportunities.
Enjoying your ivory tower I hope?
But keep in mind poor non-tech people are trash and you can treat them like it!
If you work for AWS, you are either software engineer or linux/network admin. And that means you bring high value to Amazon. So yes, Amazon would treat you well.
But as you go further down the value chain, your treatment will get exponentially worse. And I can't imagine cashiers and stockers being viewed as high value makers by Amazon.
What do you think most Whole Foods employees are?
Gotcha.
I'm just guessing, but I'd think WF would tighten up the philosophy a little, probably focus on whole and natural foods more than some of the other philosophies as that can scale. That would mean maybe leading a little less with local, FT, and only organic in favor of whole and natural food. Perhaps some more brand name stuff on the shelves. It provides a great way to roll out Go with a customer base that is probably receptive to it. THen I'd expect more technology stuff, curb side pickup, maybe even free delivery from amazon to WF stores for pickup, maybe.
You cant change WF too much or it just breaks and people like it for what it is. I think it would be easier to start a generic grocer from scatch than turn WF in to a safe-way.
I have never worked as a cashier, but I can't imagine it's a very fun job. Automating out those jobs seems like a win-win, as long as the former cashiers can find a job doing something else.
Edit: For anyone wondering where my perspective is coming from, see this: http://www.businessinsider.com/amazon-go-grocery-store-futur...
Stacking the shelves isn't anymore fun that working the checkout. As someone who has done both I'd say checkout is the preferred role as it's much less physical (stacking shelves gets tiring after 8 hours) and you get chat to customers.
When I was talking about the other jobs at WF I was thinking about like.. the ice cream scooper, and the smoothie maker, and the customer service rep at the front for when people want to return items. That's not to mention all the the chefs that make the food for the hot bar, or the bread and cookies for the bakery department, or the sushi. All of those jobs could have a social element to them.
Contrast that to other grocery stores (Shaws and Wegmans, for instance) that seem to calculate exactly how many cashiers they need such that no line is more than 3 people deep, but none of them are idle, ever. And the average cart is full-to-the-brim, so there's always a wait. It can be 9pm at night with 3 customers in the store, but there will still be a wait.
A locker would get me into Whole Foods more often for sure.
It's like how Mark Zuckerberg launched Facebook, except for if he had just bought Harvard.
That's not a problem with 'conscientious capitalism' itself, it's a problem with the monomania of the market and the loss of compensatory factors that could hold that monomania in check.
I've stuck with my cell vendor because of the customer service, even when the price / coverage wasn't as good as I perceived others would be. I've also left my cable company for a poorer competitor because of the difference in customer service. I've got thousands of miles on United that I never intend to use now.
So there's a legit strategy that makes sense to a Wall Street firm, where you specifically go after stuff with good will so you can convert that to capital and then flush what's left. It's not dissimilar to how real estate is a form of storing capital, best used without actual people living in the real estate to mess it up: the wipe-and-flush strategy is about intentionally converting these 'rare gems' into raw capital through using the goodwill up.
As long as that is more profitable than not doing it, good customer service (or 'enlightened' capitalistic activity) is something you can't have, or can only have until it's seized and squeezed. Market forces make the wipe-and-flush phase inevitable: the longer you hold out, the bigger a prize that goodwill is, provided the thing is publically held and subject to this dynamic.
I think in growth industries, the potential future of goodwill outweighs the value of expending that goodwill right now. Unless you've already lost the market -- but I don't think that'll be to prices as much as competitors offering more/better products.
Would it be possible to modify society to prevent such a competitor?
http://www.huffingtonpost.com/2013/01/16/whole-foods-ceo-oba...
> “It’s more like fascism,” Mackey recently told NPR. “In fascism, the government doesn’t own the means of production, but they do control it — and that’s what’s happening with our health care programs and these reforms.”
> Mackey, a libertarian, compared Obamacare to “socialism” in a Wall Street Journal op-ed he penned in 2009. Obamacare would “move us much closer to a government takeover of our health-care system,” he proclaimed.
I disagree with almost every word of it, but I don't think it contradicts the idea of "conscious capitalism" or treating your employees well.
He also sort of regrets his "fascism" comment:
> "Well, I think that was a bad choice of words on my part ... that word has an association with of course dictatorships in the 20th century like Germany and Spain, and Italy. What I know is that we no longer have free enterprise capitalism in health care, it's not a system any longer where people are able to innovate, it's not based on voluntary exchange. The government is directing it. So we need a new word for it. I don't know what they right word is," Mackey says.
- http://www.npr.org/sections/thesalt/2013/01/16/169413848/who...
Although, fascism doesn't just have "an association" with dictatorships, that's literally what it means. Government controlling industry is basically a side effect.
So basically, leave out the 'conscious' as it is disposable. Good to know.
If it's any consolation, this was just a matter of time. The next 30 years will be "interesting."
I feel like this is a great fit, with whole foods being a progressive company in US grocery space.
It's a fair supposition, however, that Whole Food's front line staff (who map to the warehouse employees that Amazon absolutely treats like garbage) probably will.
Why? Reviewing any of Amazon's acquisitions shows that they have revenue targets that, when met, means they just don't get involved. Why suppose they are suddenly going to do the opposite now?
It's entirely "fair" to posit that a company with a documented record of abusive workplace practices might extend that same umbrella of mistreatment over an acquisition. Even more so given that the acquisition involves a large number of employees of the category that Amazon has always treated as disposable.
Yes, the infamous NYT story. It's funny, because I've yet to see all the ugly that story implied was wide-spread across the company. AWS can be notoriously difficult (particularly the not-so-fun S3 on-calls).
But there's an enormous difference between a wide-spread problem, and a problem that seems to be focused, very narrowly, on a few teams.
> Amazon has done neither of these things.
You say that with authority. Do you have ANY familiarity with Amazon's internal policies/changes that have gone into affect regarding these news stories?
Here's my problem: A company of some 300,000 people had documented cases of mistreatment. You've, in turn, determined that not only is this problem so wide-spread that we can define Amazon as a "bad employer" but, apparently, they need to take the time to personally inform you of any changes that have been made as a result of said problems.
> might extend that same umbrella of mistreatment over an acquisition.
And yet, of Amazon's acquisitions every single one of them have been left to their own devices.
You seem to have an agenda, which is fine, but let's not pretend your summary is in any way based in fact, but rather, exclusively on a few articles in newspapers.
Anyway, here's reporting about how their warehouses used Neo-Nazis to intimidate immigrant laborers and worked a temp to death. If you have evidence of the drastic measures that would need to be taken to prevent this kind of behavior, I'm happy to hear about it.
http://highline.huffingtonpost.com/articles/en/life-and-deat...
https://www.independent.co.uk/news/world/europe/amazon-used-...
You don't seem to have an agenda, you absolutely have one. What happened to that temp is tragic, but you can't get more isolated than 1.
> Anyway, here's reporting about how their warehouses used Neo-Nazis
You mean the company they hired that then hired some shitty people? I don't get why Amazon is now responsible for that.
But I only used the term "seem" because your framing is to position yourself as somehow more impartial and knowledgeable, while refusing to clarify your own relationship with Amazon and what informs your (in my view) similar stridency.
I knew whole foods was falling at the hands of Costco, organic for cheaper, but whole foods had great variety and did try harder than all the other big-chain food stores.
Every scamazon victory feels like a loss of the world.
Time to bust this trust. Time for regulators to start breaking scamazon up.
I doubt WF is going to find themselves watering things down - I think they are going to be spending their time learning something from Amazon about logistics and data-driven growth, but they're going to spend a lot of time teaching Amazon about how running a store that has fans as much as it does customers, about how to make that work.
That means they will have to stay true to their cause: Fair Trade and organic deals are part of WF's core brand, and if they remove them, they will lose their fans. What Amazon will want to figure out is how to make that more economic by scaling it. It might be the best thing to happen for animal welfare in the food chain this generation.
Store automation is an interesting one. What Amazon have been trying to figure out is how to take away the pain points of stores (queueing), but that does not mean all staff are removed. Stock needs checking, shelves need stacking, and in my local supermarkets the checkout is already semi-automated, but I still have to queue. Amazon's plan is just to take that further. Does it mean you could have fewer staff? Yes, of course, but you could also decide instead of growing profits, grow the brand: redeploy those staff into genuine customer service roles.
It's an interesting move, I think. I don't think you need to be alarmed if you're at WF, you need to be alarmed if you're at Walmart, Tesco or any other major food retailer anywhere on the globe though.
You know, if they had unions than an acquisition wouldn't really have a negative effect on their benefits
I'd think Amazon would have bought another grocery chain if they fundamentally didn't want the WF business model. We'll see, though.
... or just expand and move people to new stores. Seriously, what's the yearly turnover for front-line positions?
Does Santa Cruz need two stores (Capitola is practically Santa Cruz)? A Blossom Hill store? Competing with Los Gatos and Campbell?
At the time (I was s cashier) WF culture was dead set against self checkout stands, because they really wanted someone to be there to help customers.
Only the 27th street WF is as good as the many, many other natural/whole/organic foods stores there.
As opposed to having longer checkout lines? How about investing in a non-shitty self checkout stand?
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 - including dedicating a fair amount of paid time to trainings. I've heard mix stories about how Amazon treats employees. I wonder how that will mesh.
So I guess I'm asking:
* What is going to happen with employee culture?
* What is going to happen with all the "Fair Trade" deals WF has in place that might not be the most economical decision now?
* Here comes store automation and hefty lay-offs?
Source: Worked at WF for 3 years