Amazon bought Whole Foods today. Widespread carnage in the grocery stock prices followed. Jim Cramer called it a major deflationary disruption saying stores cannot compete.
“If I was the Federal Reserve, I would have a meeting on this. Inflation is going to go down…. You have to rethink food … Costco knows how to compete. It will be in there tooth and nail with toilet paper and paper towels. … But Kroger, a crisis in Cincinnati, crisis.”
“Major Disruption of Society”
SupplyChain247 reports Amazon’s Move to Purchase Whole Foods Is ‘Disruption of Society’
TheStreet’s Action Alerts PLUS Portfolio Manager Jim Cramer said Amazon’s move to acquire Whole Foods is a disruption of society, “this is what I regard to be a move by Amazon to destroy the margins and own the business of food and groceries in this country,” Cramer said.
With Amazon putting down $13.7 billion to buy Whole Foods, Bezos is sending a powerful message to his retail rivals;
- Food suppliers will now be dealing with an even larger grocery store, meaning potentially pressured profit margins for organic players such as Hain Celestial.
- Amazon officially shows intent to enter bricks-and-mortar retail in a larger way than just bookstores. Combine that with its unmatched digital presence, Walmart, Target and others have been put on notice.
- Grocer stores like Kroger will now be in an even bigger price war.
- Amazon Prime integrated into Whole Foods could hurt Costco over time. Many Costco members are also Prime members.
“What Amazon did to the mall, it will now do to grocery stores,” said Cramer.
Here is a Tweet to think about:
Mike “Mish” Shedlock
“They don’t ring a bell at the top”, but I think I just heard one.
Mission Accomplished said:
Brings back memories of Cramer list of Internet ‘stocks you must own’ back in the Y2K bubble.
Most hit zero by 9/11
Dr J said:
Cramer is a moron. Had you bought a basket of his picks over the years you be in the poor house. He is why CNBC has never been well respected.
Ron J said:
Cramer is a gamer, a Wall Street insider.
At the home builder top, Cramer said he would never sell Toll Brothers, because it was a land bank. Well, the Toll brothers sold some 400 million of their own stock, as did Bruce Karatz, while he was on CNBC pumping his stock.
He plays the audience the way Goldman Sachs plays their Muppet clients.
The purchase price equals about 30 million for each Whole Foods store, most of which were built for much less than 1 million….Amazon funny money at work.
Funny money will stop someday, just as Herb Stein says.
In the meantime, Bezos picked up Whole Foods for $13.7B.
Zuckerberg paid $18B because somebody told him he needed WhatsApp.
MicroSoft looked around and decided the best place to spend $25B was to buy LinkedIn. So they did.
Having spent 20 years in retail as a CFO’s for public companies including high end grocery stores and a shopper of Whole Foods since they had one store I would say Amazon might succeed, but Whole Foods has a huge disadvantage in one area (I will not say where – no free analysis). I only shop WF for two items any more — their organic potatoes and herb salad mix. Other stores have better items for less money. Amazon has little experience in running brick and mortar so that is a huge disadvantage. A recession is coming which is another major disadvantage against WF as well as competition all over the place. British retailer Tesoro entered S. Cal and the southwest with Fresh and Final (what a name) thinking they would clean US grocery store retailers clocks and Fresh and Final went BK. This was one of the world’s largest retailers and experienced and very deep experience at running grocery stores. Grocery store chains have been fighting for business for 100 years. They are very experienced. Yes Amazon might integrate some of their other businesses into Whole Foods but when you walk WF’s stores there is really no extra space for that kind of business. I will wish them luck. They are going to need it.
David Krenshaw said:
I will not tell you what I think of your comment — no free analysis.
They said that about WalMart when it entered the grocery business. Kramer is an entertainer, but an idiot for investment advice. Barrons did an analysis of his recommendations and you would have made money shorting his advice and definitely not following it.
Watching Cramer’s show for investment advice is like watching an X-rated movie for sex education.
Yep, every movie about business since his show started has to have a shot of him recommending the company the protagonist works for.
Just like superhero and disaster movies have to have a shot of Anderson Cooper.
Lou Mannheim said:
There’s always money in the banana stand!
Exactly. We went front less than 5% grocery shopping at Walmart to 90%. We save 30% on our groceries and their app is excellent. I can find anything in the store with the app and use Walmart pay at the self checkout. Walmart is testing buy online groceries and pickup at the store. Once this happens at my store I doubt I will shop at Publix or Winn Dixie much. I though buying BJ’s wholesale would have been better. Brick and mortar is not going away but will be reduced drastically. We do most of our shopping online but clothes and few things we prefer going into the store.
You’re probably explaining WHY Amazon bought WF then. Amazon and Walmart are competitors – Amazon wants to get into groceries BECAUSE walmart has succeeded at it.
Aldi is succeeding in the US and undertaking a big expansion and are likely a bigger disruption to the traditional grocery chains than Amazon/WF at the moment.
Imagine Amazon converting them into home delivery centers. My local Publix allows me to order groceries online. Smart grocers will find ways to compete, the rest will fade away.
All our local grocery stores offer home delivery. I’m constantly pinged for adds ‘Spend $100 and get $30 off your first delivery’. I don’t want home delivery. I want to browse the food selection. Also, half the time I go to the grocery store, one or more of the prices is wrong. I have to point out an advertised price that I wasn’t charged. Somehow the errors never go in my favor.
I want to see what I am buying as well
True but our family for the most part but mostly the same items every week with a few variations. I can easily order those online and pickup at the store. I am sure if you look at what you buy in the grocery store there is very little variation.
After his failed calls on Motorola to the moon – I’ll never listen to that carnival barker again as long as I live.
The US of Amazone . com. Capitalism gone wild and nobody cares.o
I’m confused why there’s a price war talk. Have you ever shopped at Whole Foods? If they lower the price, they’ll lose half their clientele (and won’t pick up the Wal*Mart or Aldi shoppers).
Whole Foods is the most expensive of the supermarkets. So talk of lowering margins or prices in the industry is pure nonsense. But Whole Foods is also the most profitable of the supermarkets, and Amazon needs profits.
Amazon absolutely needs to show profits. After 25 money losing years, Bezos realizes investors will soon realize the Emperor has no clothes.
Whole Foods has had steadily decling revenues for 8 quarters.
This is a turnaround story, not a growth story.
Good for consumers, but otherwise not value adding
“Whole Foods is the most expensive of the supermarkets.”
If you can accurately target the consumer you’re trying to reach, pricing power is there in spades and profits will surely follow. Instead of serving everybody, you must zero in on the folks who really matter. I think maybe Bezos figured this out by watching President Obama.
For example :
Salary for serving one year as President of the United States = $400,000
Fee for speaking one hour to a group of Wall Street bankers = $400,000
Carl R said:
No, I’ve never shopped there. We have one here, but we have a lot of similar stores catering to the high end, so they are but another store in a crowded segment. I can’t imagine what Amazon wants with them, but hey, it’s only funny money anyway, I guess.
My neighbors–particularly including the mother of 1yo twins–have been raving about Kroger’s pick up service. It’s no prime delivery, but it doesn’t have to be. This may be myopic, but as much of a distribution advantage as Amazon can produce, I think they have sailed straight over the head of the “ethos” of whole foods shoppers and the price sensitivity of “Real America”. I understand in the abstract it’s about distribution channels, cost savings blah blah blah, but this just seems way off the mark.
Stuki Moi said:
Not sure where the “destroy margins” part comes from. Like Medex pointed out a few days ago, Amazon doesn’t have magically lower distribution costs to brick and mortar stores, than established players. And it’s not as if Wholefoods is a low margin leader for virtually anything.
Instead, it’s partly an admittance by Amazon, that once faced with sales tax parity, the “last mile” of delivery, all the way to the customer’s door, is really, really hard to do while actually making money. Better have the cashier at the one place most people go almost every day or two or three, hand the customer his Amazon purchases while he’s there anyway. In
addition, if drone delivery ever does become reality, the drones will need to be stationed in neighborhood stores anyway. Not giant distribution centers way out in exurbia.
Then, synergistically, since you are at one grocery store to pick up your Prime purchases already (free Prime if you opt for Wholefoods pickup…), why not do the rest of your shopping there? Irrespective of whether Target or Kroger may be a buck cheaper for a case of beer?
IOW, less about margins, than about trying to leverage online ubiquity, to expand into a new sector of the market, while ganing efficiencies. From a logistics pov, recognizing that there is inefficient overlap between two parallel deliveries to the customer’s door: One by UPS, the other by the customer himself, as he buys groceries that are too bulky and time sensitive for UPS delivery. So, cut one out. Amazon Fresh and others have largely ran into a wall trying to cut out the grocery one. So then, turn the tables….
“Instead, it’s partly an admittance by Amazon, that once faced with sales tax parity, the “last mile” of delivery, all the way to the customer’s door, is really, really hard to do while actually making money”
Uber can’t make any money delivering Joe Sixpack himself to his doorstep, but now Bezos wants to do Joe’s grocery shopping for him and expects to make a profit?
Stuki Moi said:
It’s the other way around: Bezos wants to reduce delivery costs, by having the grocery bagger drop the last 1 to 3 days worth of Joe’s Amazon shopping in Joe’s grocery cart alongside Joe’s groceries, when he stops by Wholefoods. Which he does 3-7 times a week anyway. In essence, making Joe himself perform the profit destroying last mile delivery, instead of paying someone else to do it.
Medex Man said:
The yuppies that are too lazy to get a competitive price on their groceries are now going to carry packages for Bezos?
Amazon was going to roll over UPS and Fedex a couple years ago… the air was going to be cluttered with drones. Fedex drivers would be crying in the unemployment line. UPS drivers too. Turned out even the US Post Office was too much for Amazon to compete with.
Amazon had no competitive advantage in package delivery. After AmazonGo stores went nowhere (as predicted by Wholefoods CEO at the time) — its hard to see any advantage Amazon has in groceries either.
They are starting with a second rate grocery chain, that they overpaid for in cash, and they are having the same CEO run it.
Amazon Whole Paycheck is off to a rather inauspicious start
“having the grocery bagger drop the last 1 to 3 days worth of Joe’s Amazon shopping in Joe’s grocery cart alongside Joe’s groceries”
No way, no thanks!! I buy a lot of stuff on Amazon. I do so because it shows up at my door – so that I don’t HAVE to tote it home from the store. Grocery shopping is enough of a logistical pain, without having one’s Amazon purchases added to the cart. UGH!!! A lot of them are huge (24 rolls of paper towels) or heavy. And to try to coordinate my grocery shopping with the arrival at the store of a book I’ve ordered? Besides, you are assuming that people will suddenly want to shop at Whole Foods and be ripped off. I don’t think you’ve thought this all through.
Stuki Moi said:
If you buy stuff by the literal container load, you aren’t one of the millions whose subsidized prime shipping cost helps keep Amazon out of profitability. But you may still reconsider, if Amazon offers you a Wholefoods coupon for the amount shipping all that stuff to you costs….. There are Prime members racking up shipping charges in the thousand+ range every year, and this will only grow as more and more shopping is done online. It adds up to a lot of savings if a meaningful portion of those guys are OK with carrying another prepackaged grocery bag home with them, whenever they stop at the grocery store anyway. For the average suburban family, 7 bags instead of 6….
Another advantage for customers, is that for many/most things sold by Amazon, delivery to the small number of Whole Foods stores, can be point to point. Not point to UPS distribution center, wait overnight, load on delivery van, drop off… So, you can pick up your book a day earlier at Whole Foods, than you can get it to your door for free. Plus, with the book you get a $3 Whole Foods coupon, all neatly added and organized by the Amazon app on your phone. Or you can have the book delivered right alongside your fresh groceries and prepared dishes from Whole Foods (that you already pay $8 dollars for regardless, of course…..)
Any way you slice and dice it, there is a big savings potential, available to be split between Amazon and the customer, by reducing the amount the two currently, between them, pay UPS et al. Doesn’t mean everyone will take advantage of it, and do so with every order. But many undoubtedly will. Sometimes. And with the scale Amazon is operating at, that can make a meaningful difference.
Macro Investor said:
I’m amazed that the company blamed for killing brick and mortar stores, now wants to be one. I think they’ve lost their minds and this shows their growth spurt is largely done.
I agree that a lot of their reasoning has to do with collecting sales tax defeats most of their advantage.
Costco and walmart have much more experience in this area. Any in-store automation that amazon does will be quickly copied by everyone. For those who mentioned in-store pick up of online orders — doesn’t everyone already do this?
CzarChasm Reigns said:
“…here’s the joke going around trading desks on Wall Street:
Jeff Bezos said to Alexa, ‘Buy me something from Whole Foods,’
and Alexa bought Whole Foods.”
Lame joke from “After its stock pop, Amazon will get Whole Foods essentially for free”
Amazon does not lack for distribution centers.
Amazon does not lack for a good online shopping experience.
Amazon does not lack AI, cloud computing and automation.
“Your margin is my opportunity.” Jeff Bezos
Grocery shopping is about to change.
Medex Man said:
Europe’s Aldi is about to change the grocery business in the USA.
Amazon just wasted $14 billion in cash, instead of paying with overpriced stock. And they paid a premium for a second rate grocery chain that is in desperate need of improvement just to be competitive with historical grocery chains.
Sadly, shoppers won’t benefit from Amazon’s heroic efforts to help shoppers afford goods. Bankers will just print additional service inflation, and the average person will continue to move slowly backward. Our ancestors used a gold standard to protect themselves from bankers. It was the only time in our nation’s history where shoppers benefitted from technology leading to good deflation.
In many communities, Walmart is the sole feeding station.
An Amazon, Walmart duopoly is a welcome change.
Granted, Whole Foods stores are clustered in upper-income areas.
If whatever model Amazon is working on works… An acquisition of one of the dollar style store chains should round out the distribution network to the more rural areas.
It wasn’t practical for Amazon to ship fresh vegetables, fruits, and frozen food from a central warehouse. Local grocers with same day delivery works well for that.
Dr. Strangepork said:
whole foods…a store so far from my house it might as well be in another state.
Working with Walmart of Kroger makes better sense to me…
The US already has some of the lowest food prices in the world. Now they will get even lower. Sounds like a win for the consumer. Deflation is about the only way that the bottom 80% can improve their living standards as many of them can’t increase their income unless they have the necessary skills.
Only problem with your theory is that most of the job creation has been in the low or unskilled areas. Its actually a very vibrant market out there for servers, bartenders, cleaners, and bum-wipers. Its the skilled who have a hard time finding jobs or even maintaining their incomes.
With some of the lowest food prices in the world, Amazon really is limited in what they can bring deflation-wise to the sector.
Hey Mark. I agree with you that the majority of jobs created are low paying. However, there are also lots of high skilled jobs that pay very well that sit unfilled due to a lack of skills. There are labour shortages in many markets in the US, especially construction, but also STEM areas. But if you don’t have the skills you don’t get the high paying jobs.
Sadly today, most jobs created are low paying. These people cannot increase their income level without the necessary skills, is what I am saying. Therefore the only way they can improve their living standards is by having the price of life’s necessities (like groceries) go down.
I know it never used to be like this. After the second world War, the middle class increased in size dramatically, due to a combination of factors (little international competition, unions, etc). Most jobs created were well paid. This all ended around 1980 for two main reasons. Reagan cut taxes for the rich and brought in “trickle down” economics. He also started the slow demise of unions. At the same time, the domestic economy had to start competing against companies from all over the world. (I know I am over-simplifying, but I can’t type all day. Apologies for not mentioning the Fed and the banking system as well.)
Ever since then, the middle class has been shrinking, and the disparity in incomes has been growing. This is true all over the world (not just the US, and Canada; I think you are Canadian Mark?)
Since it takes decades for these trends to play out, I don’t expect this to change anytime soon. Therefore, the primary way to achieve a middle class life these days is to acquire the necessary skills to get the better paying jobs.
That’s why I devote most of my time now to a charity that tries to improve people’s Skills. We also try to teach financial fundamentals, about how to live within your means, and save for a rainy day. I can’t change the system. All I can do is to try to help people manage within the system.
So I applaud anything that can lower their cost of living, especially in an area such as groceries.
Isn’t that how capitalism is supposed to work. Constant evolution and improvement in productivity by the workforce adapting to competition. Creative destruction. Low skilled low wage jobs should be offered to immigrants who understand that hard work pays off eventually by moving up the economic ladder. The problem here lies in the fact the govt. subsidizes laziness and pays people to not work and reproduce. We can’t go back to the good old days.
Capitalism does indeed work that way, though our system is more like “crony capitalism “.
Low skilled jobs are for low skilled workers. If immigrants are high skilled, they should apply for the high skilled jobs. I want my surgery performed by a skilled surgeon, not a ditch digger.
We need to improve the skills of our workforce if we want to compete.
We should also welcome deflation in the cost of living as it helps the bottom 80%.
Correct about crony capitalism. We have the best government money can buy. A revolution is needed to change this. Trumps rhetoric about draining the swamp doesn’t look like its going to happen.
Kind of a myth that unions were the reason for high wages. Kill off a 60 million highly productive people in a war and you’ll create a lot of demand for labor. Destroy productive factories and whatever is left over will get a premium. Rubbleize cities and you’ll get a lot of people interested in buying products.
My high school American History and Civics teacher was also the union shop steward. I got a heavy dose of union BS about how unfair Bethlehem Steel treated the workers before the union came in and saved everyone. Years later I found out that the union didn’t exist and wasn’t wanted until the 1940s, when pressure from the government basically forced the union in. But looking around the old neighborhoods in my town it was pretty obvious that people got paid pretty well back then. No way there could be that much management to support neighborhoods like the ones built in the 1920s and earlier, not to mention the streetcar network, dairy, big department stores, the many grocery stores, dozens of churches and bars, and the 3 major daily newspapers.
yup – wages were rising faster before unions arrived. Unions actually reduced wage growth
The primary driver of wage growth was lack of international competition combined with strong unions (though not the only reason). I will use the auto industry as an example. From 1950-1980 the big 3 dominated auto sales. They only had to compete with each other. The UAW would pick one company to negotiate with, and force a strike until the company conceded. The company wasn’t worried about becoming uncompetitive because they knew the other companies would make the same deal. This forced up wages and benefits, and the price of cars, but it didn’t matter because there was no foreign competition.
After 1980 there was more foreign competition, and US automakers were in trouble.
Today the industry has restructured and new employees can’t get the same wages and benefits of the grandfathered employees. The unions are now pretty powerless. This is one reason that the middle class is shrinking.
You can repeat this scenario in many industries (steel, mining, manufacturing, etc.)
Others have made equally good points about how we got to where we are today with the shrinking middle class , but as far as I’m concerned, foreign competition and weakened unions are a big part of the reason.
Please note, that this is the reality as I see it, and I don’t think it can be changed. If you want a middle class life today, you need to acquire the necessary skills to get the high paying jobs.
Stuki Moi, workers skill said:
The middle class started shrinking when the US went off gold. That’s what has allowed virtually unlimited printing of money to drive up “asset” prices. “Asset” being Newspeak for: “Those things the wealthy and connected owns disproportionally more of, than the rest.”
Now, it; obvious to anyone not pathologically indoctrinated; that simply printing money does not increase systemic real wealth. All real wealth: Farmland, factories, workers skill/human capital etc…, stays exactly the same, whether some piece of paper has George Washington’s head printed on it, or mine. Hence, wealth stays the same as before, even after the money printing.
But, since the printing increases the wealth of asset owners (the wealthy), simple arithmetic dictates that the wealth of the rest will decrease; as, again, overall wealth is not increased.
That’s all there is to it. All babble about Reagan’s tax cuts and Obama’s Kumbaya and gays in restrooms, is just there to divert people towards childish, partisan fights amongst themselves, while the looting goes on.
While the nonsense about “skills discrepancies”, “Mexicans” and “Chinese,” is no more than a way for arbitrarily fortunate newspeakers, to pretend that themselves getting ever wealthier on account of the Fed stealing on their behalf, is somehow due to some supposed flattering trait intrinsic to themselves.
But it’s not. It’s just theft. No more, no less. Nor in any way difficult to understand, Theft pretty much by definition renders the beneficiary of the robbery richer, and the victim poorer. Hence, as expected, theft by debasement and asset pumping, renders those with “assets” richer, and those without, poorer. Who’d have thought???
C. Smith said:
Please share the name of the charity. Sounds like something I’d be interested in.
What jobs might those be that can’t be filled? And don’t say tech — the tech companies receive hundreds of applicants per job, throwing most of the applications into the garbage arbitrarily. No skills shortage in STEM whatsoever.
Stuki Moi said:
The fact that some yahoo may be able to semi successfully fill out a job application for a “tech” job, doesn’t mean there is no skill shortage in STEM fields. In inherently complex fields, there are, by definition, always skills shortages. As sufficiently skilled workers are the overwhelming limiting ingredient in how fast an organization can grow. If SpaceX could hire someone with the chops to solve the quadrillion remaining issues preventing them from getting Musk to Mars, SpaceX would grow exponentially.
In reality, though; the whole “skills” “debate,” is just empty babble and meaningless diversion. Left to their own devices, people will accumulate the skills they need to get by. The ones propagating the whole “skills” myth, are almost exclusively zero-value-add dolts without any real ones. But who do have some pointless make-degree or “job title” that they like to preen around pretending implies they have “more skills” than others. Hence are justified when demanding higher pay than those they claim are “lower skilled” than themselves.
In any field requiring real, value adding “skills”, like most “tech” fields, once a company starts playing host to enough of those kinds of dolts, those with any real standout skills, leave for startups. For those with something to contribute, life is too short to sit around listening to lawyers, HR boat anchors, finance clowns, ladder climbing rule-and-procedure riders and other such wastes of time.
David Krenshaw said:
STEM / Schmem. Tech / Scmech. Skills / Schmills.
You’ll never get ahead working for someone else, period.
No matter what your skills are, you’re just minutes away from a pink slip from some PMS-crazed woman or minority boss.
Besides, what tech skills can you have that can’t be found in India?
I know tech PhDs from ivy league schools who are re-negotiating their contracts every two years (i.e., they’re not even employees).
We’ll see how this pans out. Most people who can afford to shop at the Whole Foods are well paid folks who are doing well due to the largesse of federal reserve (for example, through software jobs in start ups that wouldn’t have existed without the Fed money). When the party ends, a lot of these people will be out of work. Even without a crisis, the inflation in these areas is high (high rent, for example) and the money is tight — may be this was why Whole Foods wasn’t doing so well lately?
They’re getting a lot of competition from other grocery stores. Oh, not Walmart, for sure. But I’ve noticed Kroger (City Market out here) has really improved their produce sections with a lot more variety, and Costco’s frozen vegetables are almost all “organic” now.
Most software/tech jobs pay very little.
Amazon has no interest in deflation, or groceries. Besides is setting himself up to run for president. He just bought the urban tippy vote.
Is this the beginning of the end for AMAZON? I mean stick to non-fungibles.
Kevin Smith said:
Whole Foods has turned into a candy store.
We loved Whole Foods when we visited California years ago, and made a point of visiting the new one in Buffalo when it opened. Never went back. Basically it was candied everything. Not much for healthy simple foods.
Stuki Moi, workers skill said:
It shows the limitations marketers face, when betting solely on signaling as a selling point. The more uptight and “correct” upper middle and upper classes, likes to pretend their tastes are somehow different than those of the sugar and grease consuming masses. But, as Hemingway pointed out, they just have more money.
So, once the initial hooplah about having a sophisticated palate for “healthier foods” wear thin, the only way to grow, is to sell the same old sugargrease; just with a pricetag, packaging and “story” that differentiates it from what the coalrollers buy at Walmart. The biggest successes in food marketing over the past 2 decades, have all come from the likes of “gourmet” sugar drenched cups of joe, “gourmet” or “organic” chips and chocolate; heck even “gourmet”, “organic” sugar itself….
Perhaps the textbook case study for this phenomenon, is automobiles: The same people who were powering the move away from “those wasteful oversized American V8 Landyachts” towards “more reasonably sized”, “better handling” “European Sports Sedans,” have taken every opportunity available to them, to overwhelmingly pick the largest, most wastefully powerful version of said Euro car they could possibly afford. Until Mercedes’, Bimmers, and Audis, are now big old landyachts with V8s (or turbo substitutes). Just with a non-American brand name. And a not-affordable-to-most-Americans price tag.
And then, the same story repeated itself with SUVs….
Whole Foods is conspicuous consumption.
Amazon is gas savings, price, and convenience.
No client overlap. Synergy nil.
john clark said:
Amen Galbraith,AMZN competes for price sensitive market and WF is about designer carrots for yuppies.
As far as WF stores doubling as distro points for AMZN where will the amzn stuff be stored and processed, how about the increased traffic flow, not just amzn delivery trucks but incremental vehicle traffic. Even local zoning issues with a local retail zoned site suddenly morphing into a warehouse/distro center.
The many thousands of Walmart stores are really more suitable for hybrid bricks and clicks intermediary sites. Some have grocery pick up and if you’re buying packaged goods thats great but I’d rather pick my own meat and produce.
AMZN has been able to walk on water a lot longer than anyone expected so maybe they’ll be able to wring some benefits out of WF.
Imagine “Amazon Prime members save 5% at Whole Foods”. Could get a whole bunch of new Prime members out of that – and a whole new set of data to be collected. That is probably the value in the purchase.
Food is not what it used to be….how can u have organic food……what does that mean the other shite is
the birds said:
whole foods = whole paycheck. that is the mantra around here in new england. flip side is I have never gotten food that spoils with in 2 days like regular grocery stores. so this should be interesting, to see what happens
I have seen the changes in whole foods over the years. At least the one in Boulder Colorado had a very good selection of goods even it they were over priced (almost all the “organic” crap is grossly over priced). But they at least provided the best fresh baked breads and good selection of fresh wild caught fish (not previously frozen). And the choice of cheeses, especially imports was great. In the DFW area the fresh baked breads don’t match what I can get at City Market in Ft Worth. Their seafood selection is not as good as City Market, and their cheese selections have become really crappy. As for produce, they can’t match the selection, the quality, or the price of City Market. And the regular shopping prices for canned goods and other items are far better in selection and price.
So I can only wonder why Amazon bought Whole Foods unless it was strictly for the name. Maybe other Whole Food stores haven’t gone down hill, but I wouldn’t care to place any bets. Conspicuous consumption has a limited market and floor space is at a premium in any grocery store. Maybe Bezos figures he can do more inventory turnover with a brick and mortar store. Amazon sells a ton of specialty food items and if they can more more inventory to local outlets then the inventory turnover might be higher in the long run. And perhaps Bezos may be able to offer a slight price advantage. But can’t really see this great American redefinition of the grocery store. The grocery business is cost per square foot, traffic (foot and auto), and margin on cost of goods sold. Where’s the innovation?
Amazon Prime for a discount ($5.99/mo) to anyone with an EBT card, now yuppie Whole Foods. Bezos wants to sell to the entire spectrum (at least the lower 95%). The next Walmart, but entirely on-line with home delivery.
Imagine the pols he’ll be able to buy… as he did the Hildabeast. Hey, we’ll reach a 100% multinational corporation controlled government shortly (if it isn’t already)!
Maybe he just wanted to get another libertarian run company.
Tony Bennett said:
“major deflationary disruption”
If Cramer spokeof Lidl it would have been closer to the mark.
Stuki Moi, workers skill said:
Wholefoods shoppers are about the most narrowly self selected group of price insensitive grocery shoppers anywhere.
If Lidl can duplicate some of their impact in Europe here (harder here, as US consumers are more spoiled for choice and diverse; margins are already fairly tight; and the US leeching classes that need to be paid off, are also more diverse, distributed and unpredictable), their entry may be more deflationary.
Medex Man said:
Aldi’s entry into the US grocery market might be deflationary — depending on how it goes.
Trader Joe’s was a European entry, and after an initial “pop”, Trader Joes has kind of faded into the background. They are OK, nothing wrong with them per se… but not the transformational entrant that was first hyped.
mega mike said:
Why did Amazon buy Whole Foods?
Amazon just acquired a training ground for retail artificial intelligence research
Medex Man said:
Decades ago, Proctor and Gamble pioneered a lot of the consumer research stuff this article talks about. Its hardly new stuff.
If you open your eyes when you visit Publix or Stop and Shop or Wegmans (and probably the others, I happen to be familiar with those) — there are people and cameras “upstairs” watching traffic flow through the aisles, monitoring how long a customer lingers in front of a display, etc. There are dozens of people employed to study the receipts of customers with frequent shopper cards… studying how different pricing structures effect purchasing decisions. The existing grocery stores already have people who specialize in quantitative studies (machine learning / statistics).
Like P&G, existing grocery stores also have employees who specialize in qualitative studies (how different displays “feel” to soccer moms versus a nurse getting off the night shift versus Mr Mom). Amazon can mimic the machine learning algorithms used by existing grocery chains — but Amazon has absolutely no experience on the qualitative side.
I read that geekwire article and was struck by how unbelievably naive it is. Another “media pundit” who hasn’t visited Earth in years.
Medex Man said:
And you will notice all the big casino floors (Vegas, Atlantic City, indian reservations, Macau in China, etc) all have “eyes in the sky”.
They started (decades ago) as purely a security measure. But the casinos quickly learned to study traffic flows around the betting floors, which blinking lights attracted customer attention. VIP cards allowed them to track which customers bet how much, versus who spent money on dining, shows, entertainment, etc. The way casinos give complimentary perks to VIPs changed more than a decade ago.
I am trying to say this isn’t anything new. Amazon doesn’t have an advantage at all — except for hype. Bezos is the PT Barnum of our time, able to attract a crowd over the silliest pretense.
The question is whether he has any business advantage that justifies a $14 billion price on a 2nd rate grocery chain. Everyone in the grocery business and casinos has been doing this artificial intelligence stuff for years.
The stuff Amazon is doing has NOTHING to do with what P&G was doing. P&G was trying to sell more P&G grocery products – Amazon is trying to determine what upscale grocery shoppers buy at Amazon.
Interesting. Also from that link – “Amazon did not just buy Whole Foods grocery stores. It bought 431 upper-income, prime-location distribution nodes for everything it does.”
This merger is mixing oil with water. The highest cost grocer with the low cost internet store and try to mix the cultures. WFM shoppers are there for the experience and not for quick shipping. WFM employees are paid well with benefits that are not available to amazon employees. they just pissed away $14 billion to disrupt the industry. Should be fun to watch.
Your margin is my opportunity. The ceiling is the roof. Covfefe.
Medex Man said:
The margin in the grocery business is tiny.
Medex Man said:
Two years ago, John Mackey — the CEO of Whole Paycheck… I mean Whole Foods — called Amazon’s mis-adventure into groceries “Amazon’s Waterloo”
Amazon has zero competitive advantage in the retail grocery business. They have a stock that is generously priced or overpriced, depending on who you ask — but Amazon foolishly paid $14 billion ***IN CASH*** which is already leading credit agencies to think about downgrading Amazon’s credit rating.
If you read Peter Lynch’s book “One up on Wall Street” many years ago… this is an example of diworsification… a giant conglomerate entering an industry where they have no competitive advantage.
Whole Foods is a second (or third?) rate store, filled with “premium” overpriced yuppie nonsense. How does that compliment Amazon’s claim to having the best prices? It doesn’t. Its a poorly run Tiffany’s being bought by a discount jewelry chain.
Amazon will have to chop 20-30% off Whole Paychecks costs just to become competitive with existing grocery chains. Then they have to worry about several European grocery chains (Aldi and Tesco) that are looking to expand into the US.
Publix already offers prepared foods. So does Stop & Shop (Ahold’s US stores). So does Wegmans and Piggly Wiggly and Shop Rite and Kroger and countless others. Both Costco and Walmart already offer prices that are lower than Amazon Prime. And Aldi is talking about selling products at a loss to try to gain a foothold. These are all well established grocery chains with a supply chain in place, plenty of capital, plenty of employees trained in grocery sales.
If Amazon establishes self pay cash registers… so f-ing what? Every other grocery chain already has self pay registers — ALREADY. They have prepared foods — ALREADY. They have curbside pickup — ALREADY. Most have local delivery of grocery packages — ALREADY. Amazon Whole Paycheck is talking about adding these features a year or more from now… probably but not definitely.
Amazon has nothing but hype. They overpaid, in cash, for a 2nd rate grocery chain. The same chuckle head CEO that mismanaged it before is still going to mismanage it. And that chuckle head is the same guy that said Amazon was meeting its Waterloo two years ago.
Two years ago, Amazon was going to destroy UPS / Fedex. That nonsense was quietly pushed off the headline page because Amazon has no advantages over UPS or Fedex. Amazon can’t even compete with the US Post Office.
Bezos is a fantastic show man. He can hype things like no one else. But delivering packages efficiently is a lot easier said than done. The grocery business is another case of an “easy” business that anyone can do, but not everyone can do well.
And if Jim Cramer thinks this is transformational — you know Cramer willl be apologizing on Comedy Central for steering everyone wrong shortly.
James R Chaillet, Jr., MD said:
I live in the CIncinnati area. Kroger’s everywhere. I also treat Kroger employees. Two things strike me about Kroger’s situation now. First, while Kroger is well run overall, they are huge and not nimble. Can’t turn on a dime. Second, the unionized workforce, which partly explains point one. More importantly, I’m not sure the union gets it and will go along quickly and frictionlessly with any changes that Kroger needs to make to survive.
I have never been in a Whole Foods Market. I will not be changing this now that Amazon has bought them. When driving by their location I see the parking lot jam packed with upscale cars and SUVs. Only sheep shop there.
You’re not missing too much. I go there once in a while for lunch because there are usually some pretty women to watch and they make a darn good piece of chocolate cake. But for how much it costs it had better be.
perhaps amazon thinks only the rich will be able to afford food in the future?
Medex Man said:
Forget about all the homeless people being engineered out of San Fransisco — when even Google employees can’t afford to live near Google headquarters:
Stuki Moi said:
Silicon Valley, like many other places in the US, is being choked by the zoning and development idiocies put i place for no other reason than to enrich useless leeches in the real estate rackets, and their hangers on in related fields. And straight up “having no place to live” is just a tiny tip of the iceberg.
Below the surface is the amount of time wasted by the supposedly “best and brightest”: On commutes, annoyances related to constantly having to relocate from one shoddy roach motel to another at the whim of some expendable rent seeking nothing; the untold hours spent wanking around with retard level trivialities like showings, open houses, making offers, getting prequalified and the rest of the nonsense that the idiots who know nothing better, probably thinks are some sort of important rituals. While in reality, for someone with the earnings (and contribution) potential of anyone getting past 1st round interviews at Google, it is a triviality that ought to be solved in five minutes: Your job is here, you have X family members, you need this much space, OK here are 25 places: Have your wife pick the one she likes the most, and get back to us by lunch. Done. Now get back to using that brain for something less trivial. Next!
Since we live in a progressive, dystopian hellhole with nary a redemming quality left, and those running such places are inevitably not the sharpest tools in any shed, hence fall all over creaming themselves at being able to talk to someone as famous for being “smart” as someone with a business card saying Google; large and well hyped companies like that will undoubtedly be allowed some makeshift, second rate, clumsy “solutions.” But, like employer sponsored health care, all that does, is further limit worker flexibility; sclerotizizing the flexibility that made Silicon Valley what it is (or at least was.) The biG4 (search, gmail, maps and Andriod) aside, Google alumni have had at least as big an impact on innovation as Googlers proper. If quitting your job renders you homeless (in addition to health care less), that’s just one more nail in this once worth vile society’s coffin.
“Your job is here, you have X family members, you need this much space, OK here are 25 places: Have your wife pick the one she likes the most, and get back to us by lunch. ”
Google and its fellow tech companies don’t hire people who have wives, husbands, kids, grandparents. They hire very young people, mostly men. Then they get rid of them when they hit 30.
Stuki Moi said:
Brin and Page are young, but they’re both over 30, and as far as I know, neither is fired yet….. Ditto for many higher ups over there.
When you’re primarily in the business of developing new stuff, largely aimed at emerging generations, and is in a field where the state of the art changes fast, it’s natural to mostly hire fresh out of school candidates, whose taught skills are still fresh.
Especially in a world where “new new,” or even “future, future” is rewarded waaaay beyond what is societally rational and efficient, on account of excessive money printing rendering actual current usefulness at generating cash flow, almost entirely irrelevant.
None of which in any way refutes, that it is so far beyond idiotic that Taliban rule starts seeming quite benign; that the people Google does hire, are stuck wasting their time, being worried about even, something as utterly trivial and so long ago solved, as the so called “problem” of obtaining decent roof over their heads, so they can focus on something more useful. All in order to keep a bunch of less-than-nothing-in-every-way leeches, in unearned splendor.
I know its off topic but in regards to your second paragraph I have often wondered when something disruptive will put real estates agents out of business. I could never figure out why they were worth 6% of the selling price of a home”s value.
Stuki Moi said:
Eventually, the inevitable wealth concentration, resulting from the asset pumpers robbing those who produce, for the benefit of those who idly already have; will leave even the massive indoctrination apparatus aimed at keeping the former pliant and submissive, unable to prevent a shakeup.
Either the productive will “all” switch to focus solely on becoming realtors, banksters, lawyers, public unionistas, criminals and other forms of leeches themselves, so that production plunges and the country is ran over from the outside. Kind of like Europe.
Or there will be a civil shakeup/revolution, like happened in Somalia, and is unfolding in much of the Middle East.
The dimbulbs and dittoheads may be bought off and passified by cheesy flag waving, “be happy you live in America, you can go pee in the womens restroom” and “the banksters are rich because they are ‘smaaaaart’ and made ‘smaaaart” inveeestments” for a while. But eventually, the crassness of the looting, and the fact that what we live in is nothing, at all, more than a totalitarian cleptocratic dystopia, with exactly zero redeeming qualities, will become obvious even to them.
usually a violent revolution is precipitated by hunger. Thats the last straw. We are a long way from that. Getting the corruption out of politics via term limits, one longer term, and campaign finance reform will go a long way to right the ship. It will require a constitutional convention. Thats the best path to purge the corrupt malevolent political class
David Krenshaw said:
Real estate agents will go the way of travel agents very soon. People will shop for houses virtually and look at twenty in one day instead of two, without disrupting the occupants.
I live in the Palo Alto area in Silicon Valley. A grocery store near me went under; the site was vacant for years, and then several upscale “markets” came in and failed horribly. Finally, to the revulsion of the city fathers, a discount food outlet came in. They are doing brilliantly; they are always full of customers. The country has enough upscale food markets already. If Amazon wanted to have more customers, they should have bought a discount food chain.
Most people are not Whole Foods shoppers; most people are at least somewhat price sensitive. When I go to our local WF (once a year, for lipstick), the parking lot is full (since parking is so limited around here), but the vast cavernous aisles are pretty empty.
So, where is the crushing price competition for medical care? Why haven’t a few of the Silicon Valley “disrupters” gone after that low hanging fruit?
Stuki Moi said:
“So, where is the crushing price competition for medical care?”
The same place the crushing price competition for Silicon Valley real estate is: Banned!
By the same worthless, expendable leeches. For the same reason: To reward themselves and the sycophants in their immediate social circle; with wealth, resources and influence none of the idiots would ever in a billion years be able to command a fraction of, if America still remained at even remotely free society.
You need medical professionals to design a single payer system. They have the inside knowledge on how much waste and unnecessary revenue driven procedures are done. If you look at other industrialized countries with a single payer system their health care costs are about one half of those in the US and they have much better health/ health care outcomes. The problem is our govt is to incompetent, corrupt and malevolent to make this happen. I am not a socialist/ leftist but the current system doesn’t work and no system at all would leave many people at risk. National health insurance would also lead to rationing healthcare which is unacceptable to the public. A example would be spending a couple of hundred thousand dollars to treat cancer in a senior citizen with a life expectancy of a year.
John J. King (@JohnJKIII) said:
Cramer is a well known dope. Have the Fed meet on this? Yeah, let’s have the Fed plan the whole economy. As for disruption, watch Lidl & Aldi. They can easily compete with Amazon and have driven the Brit grocery market into fits. To survive, they too have to compete on price and quality. Love the chaos.
FRANK STEIN said:
WHOLE FOODS UNDER JOHN MACKEY’S MANAGEMENT WAS THE REAL DEAL BUT NOT SO SINCE HE RETIRED.
WHOLE FOODS BUILT ITS EMPIRE ON THE BACK OF ITS CUSTOMERS WITH CONSTANT PRICE INCREASES AND DECREASES IN FOOD QUALITY. THE AMOUNT OF FRESH PRODUCE THEY SELL HAS DROPPED ABOUT 75% SINCE MACKEY LEFT BECAUSE OF GMOs. (I’VE COME TO REALIZE WITH “O”RGANIC BRAND BEING SOLD IN GROCERY STORES THAT GMO FOODS RAISED ORGANICALLY ARE LABELED “ORGANIC”.)
WHEN THE OIL FRENZY HIT AROUND 2009 -2010, IT WAS JUST AFTER WHOLE FOODS HAD MADE ABOUT A 25% INCREASE IN PRODUCT PRICES TO COVER YET ANOTHER PURCHASE OF SUPERMARKET CHAIN THAT FOOD PRICES BEGAN TO RISE. A LOT OF CUSTOMERS LEFT WHOLE FOODS PARTIAL (LIKE ME) OR TOTALLY. AND TODAY THE OTHER CHAINS ARE DOING A GOOD JOB COMPETING.
AND THERE IS AS HIGH AN EMPLOYEE TURN AROUND AT WHOLE FOODS AS AT OTHER CHAINS.
WHOLE FOODS IS REALLY GOOD AT PROMOTING ITS IMAGE BUT UNFORTUNATELY IT IS LARGELY AN IMAGE.
AND NOW WITH AMAZON WANTING TO PUSH THE COST OF ITS PURCHASE ONTO CUSTOMERS, I WONDER JUST HOW THE RETAIL BUSINESS WILL SURVIVE IN THESE DIFFICULT ECONOMIC TIMES?
YOU, KNOW THERE IS ALWAYS THE POSSILBITY THAT AMAZON WILL MAKE A MISTAKE. I MEAN, LOOK AT WHERE SEARS AND K-MART ARE. AND WAL-MART IS ONLY STAYING ALIVE BECAUSE OF ITS GROCERY STORE. I DON’T SEE A GROCERY STORE WORKING ON THE SAME WAREHOUSE PRINCIPLES AS AMAZON?
FRANK STEIN said:
JOHN KENNETH GALBRAITH’S BOOK CALLED THE “NEW INDUSTRIAL STATE” PUBLISHED IN 1967 IS ALL ABOUT HOW THE AMERICAN ECONOMIC SYSTEM ISN’T CAPITALISM BUT AN OLIGOPOLY.
a state of limited competition, in which a market is shared by a small number of producers or sellers.
ONE CAN’T HELP BUT NOTICE THAT THE “CAPITAINS OF INDUSTRY” SEEM TO SUFFER FROM PARANOID SCHIZOPHRENIA. WHY ELSE WOULD ONE DONATE ONE’S ENTIRE LIFE TO CONTROLLING EVERY BODY AND EVERY THING AROUNG THEM? THOSE MEN ARE DRIVEN BY FEAR. AND AS A CONSEQUENCE OF THEIR POWER FORCE EVERY ONE TO LIVE IN THEIR INSANE WORLD.
I PREDICTED A WHILE AGO THAT THE FASCISTS RUNNING THIS COUNTRY WOULD EVENTUALLY SUCK SO MUCH WEALTH OUT OF THE POCKETS OF THE CONSUMER SO THAT THEY WOULD THEN BE FORCED TO FIGHT EACH OTHER UNTIL THERE WAS JUST ONE MULTINATIONAL COPRORATION LEFT STANDING. AND THAT THAT CORPORATION WOULD COLLAPSE UNDER ITS OWN WEIGHT OF INCOMPETENCE.
jeff K said:
I’m not buying this. Amazon is like any other predator in that they come in, undercut prices to drive out competition, even at a loss, and then raise prices higher than they were now that the competition is gone. I expect this again. For example, I’ve noticed over the last 12 months that Amazon has snuck its prices up a good bit on many items. I routinely find better deals on the web for all sorts of stuff. Amazon prime “2 day” shipping does not seem to be as timely as it was even since just last year (by this I mean often times, two day delivery is being quoted 3 days out were this was rarely the case last year.)
My point is that I do not think Amazon will maintain market share if I’m right about prices going up from them. Nor is Amazon “deflationary” in the long run. Maybe when they force competition out of the market they are deflationary, but they will make up for it with big jumps in prices in my estimation and I think we are already seeing evidence of that. Realize they cycle may be years however.
Finally, I think groceries are special. I think people will still want to sniff, squeeze, read, compare like products, pick a particular cut of meat, etc. I think the best thing B&M stores could do is improve checkout. The pick-up and walk out checkout process should be ubiquitous by now! Speeds checkout, cuts out minimum wage employees and makes the store much more “amazon” like in that it has little overhead.
FRANK STEIN said:
I DON’T KNOW WHAT IS SO MAGICAL ABOUT AMAZON. I JUST LOOKED AT ITS FINANCIALS AND PROFITS ARE FLAT AND SALES ADJUSTED FOR INFLATION LOOK FLAT AS WELL.
WHY THINGS ARE FALLING APART AT THE BRICK AND MORTAR STORES ALSO AFFECTS AMAZON. PEOPLE AREN’T BUYING BECAUSE OF POOR QUALITY, HIGH PRICES AND FEAR OF FUTURE PROBLEMS. AMAZON CAN’T ADJUST FOR LOWERING BUYING POWER.
BUT, ACTUALLY, THE PROBLEM ISN’T THE ECONOMY AS MUCH AS THE ECONOMIC MODEL OF PROFIT TAKING. JEAN-BAPTISTE SAY SAID NEARLY 2 CENTURIES AGO THAT PROFIT TAKING (SAVING MONEY) BLED THE SYSTEM OF MONEY TO FUNCTION. AND THAT IS THE PROBLEM OF PROFIT TAKING. TAKE A $30,000 CAR FOR EXAMPLE. THE TOTAL COST TO BUILD IS $15,000 BUT THEN THERE IS THAT OTHER $15,000 WHICH IS CALLED PROFIT. AND WHAT DETERMINES THE PRICE OF “PROFIT” OF YEAH, “WHATEVER THE MAKET WILL BEAR”. ADD TO THAT THE FACT THAT NONE OF THE WAGES/SALARIES USED TO BUILD THIS CAR ARE RELATED TO THE LABOR PERFORMED OR TO THE FUNCTIONING OF THE COMMERCIAL MARKETS. SO THE WORKER/CUSTOMER HAS TO BORROW MONEY TO BUY THE CAR. NOT ONLY FOR THE MANUFACTURED COST BUT FOR THE PROFIT COST AS WELL. YOU HAVE TO CONSIDER THE INTEREST CHARGE ON THE LOAN AS PROFIT AS WELL. NOW EVERY MANUFACTURING AND RETAIL BUSINESS IS CHARGING A PROFIT ON EVERY THING. THEN ONE DAY PEOPLE WAKE UP AND THERE ISN’T ENOUGH MONEY TO RUN THE SYSTEM ANY MORE.
SO, THE PROBLEM WITH THE BRICK AND MORTAR RETAILERS IS THEY ARE LAYING OFF WORKERS SO THE CEOs CAN TURN A PROFIT AND MAKE THEIR GINORMOUS SALARIES BUT NOT BECAUSE THE BUSINESS DOESN’T HAVE ENOUGH MONEY TO PAY FOR OVERHEAD AND WAGES. THE MORE THESE BUSINESSES LAYOFF PEOPLE THE FEWER CUSTOMERS THEY HAVE. SO THEY RAISE PRICES, REDUCE SELECTION AND REDUCE QUALTIY WHICH COSTS THEM MORE CUSTOMERS. SO, THEY REPEAT THE PROCES OVER AND OVER AGAIN.
WHILE THIS IS HAPPENING THE CEOs, BOND HOLDERS AND STOCKHOLDERS ARE HAVING THEIR INVESTMENTS LOSE VALUE. SO THEY HAVE TO BLEED MORE OUT OF THE SYSTEM.
I’VE BEEN WATCHING SINCE MAY THE FOREX RATE OF THE USD DROP. BUT, SURPRISINGLY NO ONE IS REPORTING ON THAT. AND THAT IS WHERE THE –UNREPORTED– INFLATION IS COMING FROM. I’VE BEEN NOTICING THAT ONCE AGAIN THERE IS ABOUT A 25% INCREASE IN MANY CONSUMER GOODS. LARGELY BECAUSE EXPORTERS HAVE RAISED THEIR PRICES TO GET AROUND THE LOW BALLING COMING FROM THE USA CONTROLLED IMF.–PEOPLE SHOULD TAKE THE TIME TO LEARN ABOUT HOW THE USA CONTROLS THE IMF AND HOW COUNTRIES ARE SWITCHING TO THE BRICS SYSTEM.
Quoting Crammer, now that really is ridiculous……
The Real John Smith said:
I tried Prime Pantry one time. It sucked. Expensive and the groceries arrived late. I prefer to go to a store.
Bezos’ hubris has finally caught up with him; he’s gonna take it in the bung, BIG-TIME, with this move.
Ambrose Bierce said:
Amazon is living off the proceeds of lower shipping rates. I pay full when I go to the USPS outlet to send item A which Bezos ships for free, after he sells it to me at retail mall prices. Not sure what kind of (RICO) deal he has with them (USPS delivers his PRIME on Sunday). Since Bezos is a LIB who likes to tweet his displeasure in a newspaper he owns, Trump’s SEC might block this sale and pay closer attention to whose interests are being served by government employees working for his company while on the taxpayer dollar. Bigger news is the number of items being drop shipped directly from China which means no fulfillment center is needed, they can lay off more American workers. Someone besides Janet Yellen super low interest rates is subsidizing the carriers (by crushing the price of crude, it seems almost antithetical to promote electric cars doesn’t it?) Now rates and oil prices will head higher, good news is those fulfillment center workers can get jobs as wildcats.