Mr. Browne, a gentleman you don’t know but have probably seen, will be the key to the success of Amazon’s purchase of Whole Foods and no doubt similar and future acquisitions of that sort as well.
You see, even with all the data in the world…even with all the cloud-computing capacity that exists…even with the most powerful and insightful algorithms, if you can’t deliver the goods, it’s all for naught…just a lot of Digibabble that sounds exciting and might put “bread” in their pockets but won’t put food on the consumers’ tables.
The New York Times reported:
As the competition heats up, Amazon and others will be relying on drivers like Mr. Browne, who makes $13 an hour, plus tips, to handle the biggest challenges of succeeding in the online grocery business….
Mr. Browne knows which doormen will let him use the bathroom, which customers tip well and which buildings will force him to use the service entrance, even if he’s only carrying a couple of bags.
So at the end of the day it’s all dependent on a $13-an-hour wage earner…. Humbling, to say the least.
As my long-term readers know, I greatly admire Amazon. In fact, I admire them way more than I disdain the self-serving analysts who honestly don’t have a clue about what Bezos is really about and have less understanding about what Amazon is really about.
You know them. They have reacted with surprise to the Whole Food acquisition…still don’t get the store…and pretend that Amazon, Prime, in particular, is actually profitable.
Not to crow or be my own kind of self-serving (well, maybe a little on both), I have been writing about Amazon opening up stores for years. Not because I had any inside information, but because it was obvious to anyone who actually listened to Bezos and even more clear to anyone who actually understood retail.
The New York Times reminds us of what Bezos told Charlie Rose in 2012:
“We want to do something uniquely Amazon. If we can find that idea, and we haven’t found it yet, but if we can find that idea, we would love to open physical stores.”
Morgan Stanley, in its report on the acquisition, highlighted a number of points that it believes are key:
- Brick and mortar presence removes online grocery pain point for Amazon
- Shelf space for Amazon’s private-label products
- Opportunity for Prime Now -consumer grocery delivery within two hours
- Driver of Amazon Prime growth (38% of Whole Foods shoppers are not members)
- Brings Amazon closer to its aim at the pharmacy business
Sort of obvious points, no? But there is no big why here.
So let’s start with what I think are the wrong answers:
“Amazon, Whole Foods Deal to Drive Grocery Stores’ Digital Push,” says the The Wall Street Journal:
Supermarkets competing with a tech giant will need data analytics and other digital tools more than ever, analysts say.
Supermarkets much like Walmart were amongst the first retailers to embrace the collection and use of data to better service their customers and to make more money for themselves. And we all need them more than ever.NEH.
Or this one from Newsweek:
While Walmart knows more about stores than any other retailer, Amazon knows more about people, and that wins. Even as Amazon, ironically, opens bookstores, it’s using what its AI learns about the people who live near each bookstore to decide what books to carry. Amazon’s plans for Whole Foods will also probably have something to do with AI learning about individual customers.
Come on…AI? of course…but have you ever gone into a local bookstore and marveled at the selection that seems to be so right on? Why do you think people get emotional about those little stores? Because they KNOW the people around them, and I am ready to bet that we will be hearing more on that subject from Amazon in the near future – and that it will be about the insight gleaned from seeing and selling to live people…
BTW? Follow Zuck’s tour of the US – same principle.
Nope, in my opinion the truth lies elsewhere and is perhaps best articulated by The Ringer:
Jeff Bezos Is the Most Powerful Person in Tech. The Whole Foods acquisition shows he wants to take control of the physical world as well as the digital one….
Amazon is steadily eating the digital world. On Friday, it took a critical step in subsuming the physical world as well.
And there you have it.
I might articulate it slightly differently and suggest it’s all about People First…starting with the premise that he makes money serving our needs and that in the real world those needs include digital and physical assets, understanding that today digital is everything but that not everything is digital.
But to suggest, as many have, that he is disrupting groceries by promising delivery – I can only tell you that I used to deliver for the butcher on my bicycle, and home delivery and home services like doctor’s house calls are all staples of the last century.
I think The Economist has a good line on it all that is worth a read, a thought and a discussion:
Yet Amazon is playing a different, more complex game. It is enmeshing itself in its customers’ lives: each new service, from streaming video to its Alexa virtual assistant, makes it more integral to a person’s day. That gives it new data and revenue that help it improve services and offer additional ones. Shoppers buy groceries often. If Amazon can become part of Americans’ ritual of buying milk and eggs, the firm will understand its customers even better. Shoppers will have fewer reasons to go elsewhere.
All about people.
Clearly they will experiment; obviously bring in Prime (come on analysts/journalist you can do better), and I’d look for stores within stores…not a new concept but one Amazon can exploit particularly well.
And as Nike…”Nike is reportedly close to making a huge move that should terrify Dick’s, Foot Locker and Under Armour.”
IKEA…”House Beautiful reports that IKEA is planning to sell its products through other shopping destinations. And Reuters says that one of those choice sites is one where you already probably shop: Amazon.”
And even Ethan Allen is contemplating what a deal with Amazon might look like…
Fans of the 85-year old American brand will soon be able to turn to an unexpected source for the company’s fine home furnishings: Amazon. Beginning this summer, Ethan Allen will establish a Design Studio on Amazon.com that will offer its furniture and accessories to the e-commerce giant’s millions of visitors.
“Simply, our presence on Amazon makes us more accessible to our clients, both longstanding and new,” says Ethan Allen’s chairman and CEO Farooq Kathwari. “The Amazon experience is one that millions of people enjoy every day, and it dovetails perfectly with our own standards of excellent service and the high expectation of customer satisfaction.”
All of this while the previously “retail-is-dead” zombie lemmings line up:
Forbes reports: “After Amazon And Casper, Every Online Retailer Will Be Looking For Brick-And-Mortar Partners.”
This week, The New York Times reported that big-box giant Target almost purchased online mattress retailer Casper, and instead opted to lead a massive $170 million investment round in the company; while also selling Casper mattresses and bedding online and at Target stores.
And never forget what its real disruption is.
CNBC shares its take on “The real reason Amazon buying Whole Foods terrifies the competition”:
Amazon’s takeover of Whole Foods sent the stock of competing grocery chains plummeting. To understand why, you need to know something much simpler than Amazon’s far-reaching ambitions or possible vision for transformation of the grocery industry: Amazon doesn’t make any money.
Competing with Amazon is terrifying for any incumbent business because the company’s executive team operates on a radical model whereby the company’s overall net income is nearly zero quarter after quarter.
That is by design, not because they can’t come up with any ways to make money. On the contrary, to the best of anyone’s knowledge many of Amazon’s specific lines of business — including, notably, Amazon Web Services — are perfectly profitable. But while Apple, Google, Microsoft, and Facebook hire lawyers and accountants to amass vast stockpiles of cash legally held in overseas tax haven subsidiaries, Amazon simply chooses to barely accumulate any cash at all.
So while I don’t believe it’s the real reason Amazon bought Whole Foods, it is the primo reason for its competitors to quake…unless they too can convince their investors to let them operate without making a profit…in unlimited investment and acquisition.
Take your pick and decide on your own why – but just remember that no matter how you spin it – they are now firmly in the store business…serving people.
And who knows better than the founder of Starbucks…listen:
“The challenge of the retail business is the human condition.” Howard Schultz
And there you have it – Jeff Bezos channeling Howard Schultz in a People First world.
What do you think?