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Snooth User: dmcker

More disruptive changes in how we buy food and wine?

Posted by dmcker, Jun 17.

Seems Amazon is buying Whole Foods for a bit under $14bil. It's easy to imagine that they'll change the purchasing experience there as they have elsewhere. The rub-your-noses-in-it brick-and-mortar bookstores they're putting up that replace all those oldskool ones they put out of business have no pricetags on their products. At those new stores you scan with your phone and depending on your relationship with Amazon differing prices will appear.
 
“Our goal with Amazon Prime, make no mistake,” says Amazon CEO Jeff Bezos, “is to make sure that if you are not a Prime member, you are being irresponsible.”
 
So perhaps before too long you'll walk into Whole Foods and have to purchase your food via your phones and your Amazon account. You'll likely see plenty fewer workers on the floor by then, too.
 
Bezos is nothing if not ambitious, and seems to want to take over enough of the world that politics will likely play a greater and greater role vs. their operations. He is merciless when it comes to competition (e.g. the predatory pricing that forced Diapers.com to give up the ghost and sellout to him). Food is a pretty basic and emotional subject, and if he wants to shape how we have to buy it, as well as products in every other consumer market he can corner, I'm sure we'll see more and more reaction. Will be worth watching to see the impact on wine retailing that is also likely to ensue. 
 
Wall Street certainly sees where things are heading. As soon as the acquisition was announced, Target’s stock price dropped 10 percent, and Walmart’s by five. Amazon’s rose by more than the price it is paying for Whole Foods. Overall something like $40bil in market value was immediately wiped out. 
 
Over here in Japan Amazon's online food ordering and delivery (AmazonFresh) is starting to ravage the competition. Some niche operations are surviving but even big supermarket chains are steadily losing the fight. Some niche operations are hanging in but they've been hurt, too. Deliveries are timely, yet prices across the board are not the best, so it's hard to say how well consumers are being served. People know the name and order from them because they seem to have everything but the kitchen sink, but don't realize they're killing whole competitive marketplaces and selective choice at reasonable prices by giving into that one-stop-shopping convenience.
 

I wonder if Bezos' recent PR via Twitter and other platforms regarding intended charity works going forward will be enough to help him avoid the negative attention that, for example, Gates and Microsoft garnered back in the '90s in a less emotional market segment. 

 

 

 

Replies

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Reply by rckr1951, Jun 17.

Pretty soon we'll be see the Amazon AI Experience so no human interface is required.

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Reply by GregT, Jun 17.

That's pretty much the way things are now. People live in their phones. They go places so they can take selfies. Forget the real experience, the smells, the sounds, the feeling - the picture is all that matters. So why not simply have lives you can download from Amazon and just live those?

As far as delivery - even Amazon can't crack the three tier system for alcohol. You'll be able to buy your food from them, as you can already, but ordering wine along with it? Probably not for dinner tonight.

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Reply by EMark, Jun 17.

The prevailing opinion that I have heard seems to be that this is a move to help Amazon with the "last mile" of deliveries.

Greg is, as usual, correct in that mobile devices have replaced television as the "glass teat."  Many of our generation are very happy to order a variety of goods on-line:  shirts, books, batteries, I ordered a backyard grill on-line.  Most of us, however, are reluctant to order our groceries on-line.  Packaged products are one thing--Rice-a-Roni is Rice-a-Roni--but we want to see and touch our produce and proteins.

That being said, Peggy and her sister regularly ordered groceries on-line and had them delivered to her parents house because they were unable to go to the store themselves.  So, we were able to adjust our thinking on it.

Anyway, some are thinking that the Whole Foods network of stores, in addition ot being distribution centers for groceries, will become "Amazon Pickup Centers."  These stores are located in prosperous urban centers where delivery is more difficult--think apartment buildings, town houses and condominiums.  These types of residences also are going to have a high percentage of affluent potential Amazon shoppers who are working during the daylight hours and do not want to have their deliveries left unattended at the front door.

So, a reasonable workaround for these people is to stop by the Whole Foods on their way home from work, pick up the groceries that they ordered AND pick up the shoes or the book or the A/C filter that they ordered the other day.

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Reply by Really Big Al, Jun 17.

I guess I need to head over to our local Whole Foods and take a selfie before the sign changes.  I've seen a lot of change in the past 30 years and most of it was for the better (not all of course).  We still want to pick out our fruits and vegetables in the grocery store.  

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Reply by GregT, Jun 17.

I want to pick up my fruits and vegetables, but apparently a lot of people don't. Fresh Direct is thriving, at least by the boxes I see. It's weird but people are OK with not actually touching and seeing and smelling their food. I go to farmers markets so I can do that and don't buy vegetables at Costco because they're all in bags.

Seems like the last mile is the Amazon strategy. They're testing out these little delivery carts right now but I don't see those working in a place like NYC - people will just break into them. They'd be OK in the suburbs, but in the city you'd have to stop in somewhere.  And Amazon is opening centers all over the place, so the footprint of WF is going to help.

I still don't get the economics though. The grocery business is really low-margin and maintaining stores where the public comes to spill, steal, destroy, and complain has to be a lot harder than maintaining your own warehouses, not to mention the fact that your product goes bad. Non-perishables have the advantage of being non-perishable. Cosmetics, toothpaste, shampoo, etc., I can understand, as well as medicines. Bananas? Not so much.

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Reply by dmcker, Jun 18.
Elliot Bay Book Co. in Seattle is one of those great 'destination' oldskool bookstores that put on author's readings and live music, have comfy alcoves to hang out in and multi-level stacks of very wide ranges of books that you can browse in for hours. One of the pleasures of urban life near Pioneer Square in Bezos’ home town, but which is fighting tooth and nail to survive as his paradigm shifting ‘progresses’ further.
 
His new model of bookstore has claustrophic space, no comfy chairs or sofa corners to sample lots of books at leisure. Brushed metal and glass and plastic and a little blonde wood that is overlit yet not warm at all. All print in some Helvetica derivative. The only info about the books seems to be crowdsourced from Amazon's BigData banks. Lots of robots and very little personal warmth. And plenty of pointers to smart watches and other products.
 
These are not bookstores as I’ve come to love them and use them. Elliot Bay is. Barnes & Noble and Borders and the other chains were the stepping stone away from the old, now Amazon has taken their aggregation to exponentially greater levels to destroy them and change the entire paradigm. Not in any way that I enjoy, but I’m not much of a statistic in Big Data marketing algorithms. Hell, I still prefer to read books on paper when possible, even if well more than half of what I now read, including books, is off screens.
 
 
As far as I can tell millennials seem to have little compunction against buying fresh produce and meats and so forth online; busy people don’t seem to want to take the time to go to the store.
 
Many of the currently known whats and whys of Amazon's initiative via this merger have already been touched on here—lots of articles out there in last couple of days discussing them. Groceries are a huge market (I seem to remember a figure in the hundreds of billions per year but need to check), and one of the last (for now) challenges for Amazon and they have to whip WalMart to be kings of online purchasing (and for WalMart this battle may be one of longterm survival). Seems they realized they couldn't do it without physical stores, thus Whole Foods became part of the strategy. The 'last mile' locations will also mean delivering plenty of other products than groceries, for sure. Interesting in a pervertedly yucky way to imagine right now how Whole Foods physical stores will change. Touch screen barrista recommendations? Sensors hitting your cart and phone as you leave the store after no interaction with any checkers? No service people on the floor at all? Essentially robot-run stores.
 
If Trump could understand this maybe he'd want to focus on job losses here. A lot more than in the coal mining industry, that's for sure. But then again Whole Foods customers aren't exactly his political base, are they?
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Reply by JonDerry, Jun 18.

Some heady discourse here. I hadn't thought too much about what may happen here but sounds like none of it's very good. Whole Foods is a place I visit almost daily as I have one in walking distance. I heard they weren't doing so well as a company and wish they were better run so as not to be a taker over target. 

The locker system does help solve a problem for my neighborhood. Just hope WF doesn't change too much. Would be nice if it were old school like during the day and techy by night.

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Reply by Coleney, Jun 19.

Here is one more interesting article that shows the future of wine buying.

http://www.nomacorc.com/blog/2016/05/8069/

In fact, the future is already hear, fortunately or unfortunately

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Reply by outthere, Jun 19.

AI = Artificial Intelligence, Allen

 

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Reply by Stephen Harvey, Jun 20.

Whilst the online channel has made in roads the big issue for many mobile people is safe secure delivery.

Our biggest Wine Shop chain is Dan Murphy's which is part of Woolworths [Australian not South African version] has a click and collect service where you can order and pay online and pick up from the store most convenient to you.

As they do all forms of alcohol and have a huge range it is a good service

The other issue with wine is the purchase is often short term driven by an event eg "Crap I need a bottle of wine to take to a friends house tonight - oh well will call into Dans [Dan Murphy] and grab a bottle plus a couple of beers/ciders etc

 

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Reply by dmcker, Jun 20.

Continuing my musings above, when you walk into the store you will almost certainly get recommendations on what you should want to buy based on past purchases through Amazon and elsewhere (easy to imagine them buying or trading data from Facebook, for example, but not stopping there), and what the store is pushing. These will go far beyond the now oldskool 'people who bought this also bought....' Tieups between cookbooks and ingredients lists are easy to imagine. Perhaps they’ll access your travel history and even slip in some ethnic ingredient recommendations. And as your personal DB in Amazon’s cloud fills out further, you may even get recommendations about what not to buy, for example if they have access to medical or arrest or other records. The trick for Amazon will be to present these to you smoothly and soothingly and enticingly and persuasively--effectively connecting the equivalent of clickthroughs to the act of dropping physical items in your physical shopping cart--as opposed to ways that will annoy you, of course. Your thinking and behavior will need to be managed to further their corporate needs. Wonder what happens when someone tries to exit the store when they have more in their cart than Amazon detects they can pay?

Progress is something that we're taught is inevitable. Yet this is not how I will want to shop for my food (or books), while I'm still around. I'm a bit anomalous in that I may not be as tracked by Big Data as many, nor might I fit into their algorithms' preset categories. Guess I'm one of those outliers that can be ignored. Regardless, I'll want to talk to a live butcher, fishmonger and even green grocer, much less a barrista and others of that ilk. Will be interesting to track Whole Foods and how it transitions from now to the 'there/then' I describe, which is fairly reliably predictable. Not interesting as my type of consumer, but as something akin to an industry analyst.

And Greg, I think Amazon, and others, will retry/restart their wine strategies and things will change in that segment, too.

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Reply by Stephen Harvey, Jun 20.

Its interesting in Australia that we have quite a diverse range of how to buy fresh produce with specialist stores actually competing with Supermarkets in the same centre [same with Butchers]

Talking to the owners they say foot traffic is important and even my children who are all "experts" [self assigned] in on line buying they all buy there fruit and veg fresh.  

In Adelaide we have the Central Market - so named as it is virtually right in the centre of the city and it is a destination where shopping for produce is just part of a whole social interaction which includes breakfast, coffee, 

The Amazon model will work for some people but for many others they value the social interaction and the opportunity to actually do something that is not "work"

Plus lots of coffee shops means the Barristas must be on the ball 

I also think wine is a little the same, there is a certain fun aspect of cruising wine shops - I also crusie wine sites too so its all part of the experience

I think human nature dictates people want experiences

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Reply by dmcker, yesterday at 12:07am.

But how quickly will those experiences become more virtual than real? More managed than extemporaneous and naturally exploratory? More pointed to and persuaded than 'found'?


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