Amazon buys Whole Foods

[BeeZee]

As far as Prime Membership goes for me...I split it with my parents. So I definitely make up the cost. I buy more at Whole Foods now simply because of the sale deals. They became competitive on the items that I often buy. I never considered it my primary grocer, I continue to use it for selected items. And since I eat lunch there at times, the $2 off the salad and hot bar from 11-2 during the week is a nice bonus deal.

[lemniscate]

4 hours ago, rotuts said:

@emniscate

 

did you amortize your membership fee ?  $$ 110 or so ?

 

what about the tendency to ' buy more stuff '  once you are a Prime Member  ?

 

just saying.

 

I'm not sure your meaning?

 

I was a Prime member for many years before the WF purchase.   Amazon shows my earliest purchase from them is books in 1998.  I buy lots of merchandise thru Amazon and use the Prime Video entertainment offerings (I am a cord cutter and do not pay for traditional cable).   I amortize with the convenience of getting the things I want when and where I want them.  Not having to drive around to 3-4 stores to locate something or being on endless phone hold with a brick and mortar store when a sales associate forgets about you.  

 

I buy what I need and what I want, within the means I have.   Nothing I purchased recently was something I won't use.  

 

I am an Amazon stock holder, in my 401k and other funds.   I think its OK they do well for me in all aspects.

 

 

 

[rotuts]

it was a bit of a joke.

 

pls ignore.

 

sorry

 

 

[lemniscate]

18 minutes ago, rotuts said:

t was a bit of a joke.

 

pls ignore.

 

sorry

 

 

I'm sorry.   I didn't pick up on that.  Please forgive.

 

[Toliver]

It seems Amazon has a bigger problem:

 

"Amazon is shipping expired baby formula and beef jerky, putting big brands at risk"

Quote

Amazon's sprawling marketplace, consisting of millions of third-party sellers, has become a go-to site for many grocery shoppers, especially since the company's acquisition of Whole Foods over two years ago.

But an increasing number of consumers are finding that, just as the broader Amazon Marketplace has a major issue with counterfeits and unsafe products, the grocery section is littered with similarly problematic items in the form of expired foods.

 

[Toliver]

"Amazon unveils free grocery delivery, but only some Prime members will get it immediately"

Quote

Amazon announced Tuesday that it is doing away with its $14.99 monthly fee on its grocery delivery service for Prime members.
Previously, Prime members had been required to pay the monthly fee for the Amazon Fresh grocery delivery service alongside their annual or monthly Prime membership.
While those that already shop on Amazon Fresh will be eligible for this service right away, Amazon said that other Prime members will have to request an invitation to join.

 

[JoNorvelleWalker]

One of the rags I read, I'm thinking WSJ, had an article on how unhappy Whole Foods customers are with Prime Now home delivery.  In some locations Whole Foods customers are ramming Prime Now shoppers with their shopping carts.  The Prime Now shoppers clog the isles and the choicest cuts of salmon are often sold out before noon.

 

Amazon admitted that the market for Whole Foods home delivery exceeded expectations.  I needed scallions for dinner so my Whole Foods order arrived this morning.  (I used to buy scallions, throw away the green tops, and let the white parts rot; these days I buy scallions, use the green tops to sate my addiction, and let the white parts rot.)

 

But to the point:  what alarmed me is this evening at work when I browsed the Prime Now site I saw Prime Now was not accepting new customers, at least not in this area.  Except by invitation.

 

Who else uses Prime Now that could share?

 

[rotuts]

Amazon quarterly guidance was interesting to read about:

 

https://www.nytimes.com/2019/10/24/technology/amazon-earnings.html

 

WSJ left out some interesting detail that the NYTimes mentioned :

 

for review purposes :

 

 

Who needs Cheetos that fast?’

The number of individual products that Amazon sells is a key measure of its retail business, and unit growth had started slowing about two years ago. In April, Amazon announced that it was moving to make one-day shipping the default for its Prime members, a way to lift growth again.

Brian Olsavsky, the company’s finance chief, said the offering had increased sales to Prime customers. “They are buying more often, and they are buying more products,” he said.

 

Amazon expects to spend about $1.5 billion for one-day delivery during this quarter, which includes the holiday season, Mr. Olsavsky said. That includes costs for faster shipping as well as other expenses, like the lost revenue from customers who used to pay extra to get something in one day.

The one-day offering lets Amazon get a bigger piece of consumers’ wallets on products typically bought at grocery stores or pharmacies. A typical order for items shipped in two days or more is $23.33, and Amazon spends $5.08 to fulfill and ship the items, according to a Morgan Stanley analysis. But for one-day shipping, the typical order is $8.32, and Amazon spends $10.59 to fulfill and ship it, meaning it loses money on many sales.

 

my bold emphasis 

 

the WSJ mentioned that the Whole Foods partition of the company

 

was not doing that well.  sorry I can't find those quotes.

 

the issue w home delivery , that is not mentioned too often

 

is its cost relative to its profit.

 

Ill have to go to a local WQF before noon

 

and see the BumperCarts in action !

[BeeZee]

Considering the number of Amazon (non food) orders I have received late, I don’t know how promising same day delivery for food is going to work. Orders are exceeding capacity to fulfill.

[JoNorvelleWalker]

3 hours ago, BeeZee said:

Considering the number of Amazon (non food) orders I have received late, I don’t know how promising same day delivery for food is going to work. Orders are exceeding capacity to fulfill.

 

I've not had any Prime Now two hour food orders arrive outside the promised two hour delivery window.  I did have one order (out of many) that for some reason never shipped. But I've never paid extra for the one hour delivery option either.  If you need delivery faster than two hours the one hour option is there.

 

I also believe the orders are exceeding capacity to fulfill.  That is why they are not accepting new customers in this area.  But in the long term is having orders exceeding capacity to fulfill a bad thing for amazon?

 

 

[rotuts]

@JoNorvelleWalker

 

" But in the long term is having orders exceeding capacity to fulfill a bad thing for amazon? "

 

depends on the cost of fulfillment.

 

Its my understanding currently those orders are at a loss to Amazon.

 

Amazon's , and every other business's goal , is profit.

 

growth at a loss looks attractive temporarily ,

 

but long term its not.

[lemniscate]

I never use the home delivery, but I've used the parking lot space pickup version.

 

I also don't get the "ramming" thing.  I see the fulfillers in the store with 3-4 bags in their carts.  Never see a logjam.  Seems to me they are reducing the aisle cart traffic by 3-4 carts per fulfiller, so I'm not sure how people are getting upset with that, but my WF store is huge.

 

The area for the filled Prime Now bags is in the entry atrium, and does not get in the way of egress to the store.

[rotuts]

 

@lemniscate

 

"" Seems to me they are reducing the aisle cart traffic by 3-4 carts per fulfiller ""

 

it comes down to " Personal Entitlement "

 

all the rage these days.

 

if WF has sold out of your favorite extra fresh Salmon , 

 

get their earlier , or get something else.

 

maybe Amazon could institute a ' reservation system "   for

 

Ultra Prime Members   for a modest fee.

 

you just call in the Am , and they set aside that Salmon on ive for your pick up later.

 

Amazon needs all the fees it can get , believe me

 

Ill let JB know of my idea.

 

after all , AMZN is not doing as well as AAPL

 

and I have a very small personal interest in AMZN and AAPL.

 

but Id never "" Pay to Pay "

[teonzo]

On 10/30/2019 at 1:54 PM, rotuts said:

But for one-day shipping, the typical order is $8.32, and Amazon spends $10.59 to fulfill and ship it, meaning it loses money on many sales.

 

This sentence seems to be pretty inaccurate. Let's say Amazon has a 50% profit margin on those $8.32 (50% is really optimistic). With this margin, they would be losing $6.43 every $8.32 order. With a 30% profit margin they would be loosing $8.09 every $8.32 order. These numbers make no sense.

 

 

 

Teo

 

[rotuts]

@teonzo

 

give Morgan Stanley a call :

 

1 (888) 454-3965

 

and yes that's their number

 

no need to say anything or guess :   same day shipping is costing Amazon more than it makes for each shipment

 

can't last 

 

possible a big mistake.

 

and Ive got skinny in the game

[CatIsHungry]

Amazon has reported for years that Prime shipping is a loser for them, profit wise. They have also said it is such a boon to their business they (reportedly) will not give it up. 

 

It apparently was was such a loser for FedEx that FedEx opted not to renew their with them, also. FedEx was very “big whoo” about it - said something that amounted to (I’m paraphrasing) - Amazon was less than 1% of their business so no big deal. (I was very surprised) ... I guess it’s a bigger deal for UPS than “big whoo” because I haven’t heard otherwise ... yet.

[rotuts]

@CatIsHungry

 

interesting analysis

 

one has to be very careful w

 

what's on the internet re

 

factual content.

 

it seems that Prime , the older version

 

was very successful 

 

I can't give you the numbers from the WSJ or the NYTimes

 

which are vetted and have a reputation to uphold.

 

not everything JB  ( speed dial # 1 for me )

 

has done well :

 

a dumb-ass phone , they could not give a way ?

 

a similar tablet ?

 

a WholeFoods that's not here nor their yet for them ?

 

it seems its going to take a massive investment from Amazon

 

they say 1.5 billion $$ more than the 800 million spent so far

 

and those funds come from other areas of this business 

 

for same day delivery to be profitable.

 

I really doubt this will happen

 

but what Amazon has done in the past

 

after mistakes , sometimes expensive mistakes are made

 

they shut the mistakes down , and move on to new initiatives.

 

their might be a place for several hour delivery from WF

 

within a careful demographic 

 

but I doubt for non-perishables

 

"" on products typically bought at grocery stores or pharmacies ""

 

 

 

 

[CatIsHungry]

1 hour ago, rotuts said:

@CatIsHungry

 

interesting analysis

 

one has to be very careful w

 

what's on the internet re

 

factual content.

 

I dont have a thing against your boy, JB at all -I absolutely admire the way he has grown his business ...  and as for my sources - well, FoxBusiness - WSJ - WaPo - you can google and the info is there for anyone to see / easily find and it goes back several years. It’s a product that loses Amazon money but draws more members - which apparently makes them money. 

 

I don’t criticize it - I’m just reporting it. 

 

I have seen several things, as you’ve mentioned - Amazon thought they’d market they thought they’d get into and decided later it wasn’t for them. Better to do that than live with an albatross around their neck. More power to ‘em. 

 

As for Whole Foods - eh - we’ll see - I hope it works out - a lot of people here seem to be happy with being able to have their food delivered from there. I don’t know about their delivery demographics - but I do know we are ‘outside the delivery area’ and we live about 40mins from WF.

[JoNorvelleWalker]

They keep promising a new Whole Foods in walking distance but I have yet to see them break ground.

 

[CatIsHungry]

1 minute ago, JoNorvelleWalker said:

They keep promising a new Whole Foods in walking distance but I have yet to see them break ground.

 

 

I’ll keep my fingers crossed for you! IIRC from your other posts, that would be a great boon for you! 🤞🏻

[teonzo]

12 hours ago, rotuts said:

@teonzo

 

give Morgan Stanley a call :

 

1 (888) 454-3965

 

If I did it then lots of people would laugh:

- the guys at Morgan Stanley, since my spoken English is simply ridiculous;

- the guys at my phone provider, looking at the intercontinental bill;

- my neighbours, who would hear me speaking an alien language with some dialect curses thrown in randomly.

 

 

 

12 hours ago, rotuts said:

no need to say anything or guess :   same day shipping is costing Amazon more than it makes for each shipment

 

can't last 

 

possible a big mistake.

 

Those numbers can't be correct. It could make sense if the $8.32 was the typical profit for an order, not the typical order. My English is mediocre, so it can be a fault of mine, but if I read "typical order" then I understand "average amount of money spent by a customer for an order". $8.32 is far too low for an average order on Amazon, it would mean that for each item that costs over $100 there would be lots of orders below $5, a bit unrealistic. As is unrealistic the $10.59 to fulfill the shipment for an order of $8.32. An order for $8.32 is about the size of a blu-ray or DVD, I don't think the shipping costs in the USA are more than triple than in Italy.

Having said that, you need to consider the whole picture, not the single frame. This single subject (free 1 day shipping for Prime members) is loosing money. But it can lead to more profits on other areas, like profiling (remember that Amazon makes LOTS of money on profiling customers). If this road leads Amazon to loose 5 on that single frame, but gain 8 on all the others, than the whole picture is +3, not -5. I would be confident that the guys at Amazon know pretty well their numbers and made lots of studies before making this choice. They can predict the costs for the 1 day orders, and they can predict the gains on all the rest, so if they took this road then it means their data pointed out it would be a profitable one overall.

 

 

 

Teo

 

[JoNorvelleWalker]

11 hours ago, teonzo said:

 

Those numbers can't be correct. It could make sense if the $8.32 was the typical profit for an order, not the typical order. My English is mediocre, so it can be a fault of mine, but if I read "typical order" then I understand "average amount of money spent by a customer for an order". $8.32 is far too low for an average order on Amazon, it would mean that for each item that costs over $100 there would be lots of orders below $5, a bit unrealistic. As is unrealistic the $10.59 to fulfill the shipment for an order of $8.32. An order for $8.32 is about the size of a blu-ray or DVD, I don't think the shipping costs in the USA are more than triple than in Italy.

Having said that, you need to consider the whole picture, not the single frame. This single subject (free 1 day shipping for Prime members) is loosing money. But it can lead to more profits on other areas, like profiling (remember that Amazon makes LOTS of money on profiling customers). If this road leads Amazon to loose 5 on that single frame, but gain 8 on all the others, than the whole picture is +3, not -5. I would be confident that the guys at Amazon know pretty well their numbers and made lots of studies before making this choice. They can predict the costs for the 1 day orders, and they can predict the gains on all the rest, so if they took this road then it means their data pointed out it would be a profitable one overall.

 

 

 

Teo

 

 

Teo, speaking as a proud Prime member the $8.32 price does not seem far off.  It may not represent my average order price, but it sure is about close to my median order price.  Today a shower curtain was delivered for $8.59.  Yesterday a Moroccan cookbook for $9.26.  A few days ago a pound of yeast for $8.78.

 

[teonzo]

12 hours ago, JoNorvelleWalker said:

 

Teo, speaking as a proud Prime member the $8.32 price does not seem far off.  It may not represent my average order price, but it sure is about close to my median order price.  Today a shower curtain was delivered for $8.59.  Yesterday a Moroccan cookbook for $9.26.  A few days ago a pound of yeast for $8.78.

 

 

Out of curiosity, if you had to ship one of those items to a friend using 1 day delivery, how much would it cost?

 

 

 

Teo

 

[JoNorvelleWalker]

3 hours ago, teonzo said:

 

Out of curiosity, if you had to ship one of those items to a friend using 1 day delivery, how much would it cost?

 

 

 

Teo

 

 

Probably $20-$30.

 

[rotuts]

@teonzo

 

"I would be confident that the guys at Amazon know pretty well their numbers and made lots of studies before making this choice. "

 

One would hope so.

 

I hope so .

 

then there is the thorny issue of shy they spent a bazillion dollars trying to make a better  iPhone.

 

they couldn't even give that away.

 

time will tell.