Two months ago, I wrote about the potential impact of the Amazon purchase of Whole Foods on grocery prices. Both here and in the Boston Globe, I hoped and predicted that Amazon would use its famed distribution network to drive down prices on the healthy and organic foodstuffs that made Whole Foods famous.
I’m happy to say that I was right. Today, on Day 1 of Amazon’s official ownership of Whole Foods, Americans got to see the first tangible impacts of Amazon ownership and, as predicted, it was lower prices. As noted by journalists, the chain once derided as Whole Paycheck should now be referred to as “3/4 Paycheck” given deep discounts averaging 25% on a wide range of products ranging from bananas to butter.
Though terrifying for Amazon’s competitors such as Kroger, Walmart and Costco, Amazon’s major foray into brick-and-mortar groceries may end up being a boon for consumers – at least in the short term. It’s no secret that Amazon retains its web startup mentality in aggressively promoting loss leaders to drive out competition. And increased competition will better serve consumers who have been squeezed by recovering inflation on food prices.
Soon, Amazon intends to install more of its Amazon lockers into Whole Foods locations, thereby facilitating deliveries for goods bought on the Amazon website while also increasing foot traffic to its stores. Analysts also speculate that Amazon’s grocery delivery service, Amazon Fresh, may get a much-needed shot in the arm with goods from Whole Foods. The corporate synergy of this deal is palpable – and just beginning.
This makes people nervous. Already, journalists and think tanks have sounded alarms about how Amazon’s growing power may make it a monopoly. They argue that Amazon is an antitrust problem given that it already captures nearly half of U.S. online sales, is the leader in providing cloud computing through Amazon Web Services and has a robust marketing and logistics division.
To bolster their point, it is true that Americans can now spend a large part of their day using Amazon services without even knowing it. You could wake up on a Saturday, go to Whole Foods for groceries, order supplies off Amazon, read a book with your Kindle, watch TV on Netflix (powered by Amazon Web Services) or catch a movie on Amazon Prime Video. All of your needs met by Jeff Bezos and company.
On Friday, Amazon purchased upscale grocery and health food chain Whole Foods for $13.4 billion. Business outlets have praised the deal for both sides by noting that Amazon gains the brick-and-mortar presence that it has long sought while Whole Foods gains a major bump in stagnant stock prices. Squeezed by Costco, Target and Walmart’s increasing forays into the organic produce, Whole Foods was forced on the defensive in recent years, making shareholders unhappy.
Now, with the sale to Amazon, Whole Foods gains a second life as part of the world’s largest internet e-commerce company. Already, speculation has begun regarding how Amazon can leverage its technology to streamline Whole Foods’ operations and how Amazon can leverage the massive network of 460 stores in the US, Canada and UK to extend its relatively recent profitable streak.
But what do these obvious business benefits mean for American consumers?
While it will take time to know for sure, it’s probable that Amazon will add Whole Foods products to its AmazonFresh service, available to Amazon Prime members for an additional $14.99 a month. Competition in the American online grocery delivery service space has been unexpectedly fierce in recent years with companies such as FreshDirect and Instacart holding their own against Amazon and likely slowing AmazonFresh’s expansion into additional cities.
With the exception of rare and particularly bleak days, I don’t tend to think of myself as a moron — nor, as far as I can tell, do those who know me well and love me. I will hazard a guess that neither you nor those who love you think of you as a moron, either.
So let’s be bold, proffer one another the mutual benefit of any disparate doubts, and declare: We are not morons!
I propose, then, that this be the year we stop ingesting as if we were. Still with me? Let’s find out.
On the matter of morons, I think they are very much the exception rather than the rule. I have met a lot of people over my years. I’ve taken care of many patients over decades and come to know their intimate thoughts as the privilege of doctoring uniquely allows and requires. So I know firsthand that most of us are endowed with our fair portion of both sense and sensitivity. Formal education, the color of a collar, degrees and credentials don’t distinguish us nearly as much as some might like to think. In most ways that matter, most people have that practical brand of folksy wisdom and intelligence that serve most handily on any given day.
And yet, as a matter of routine we are fed a steady diet of both food and food for thought as if we were abject morons. That’s how it’s served to us — but of course, only we get to decide whether or not to swallow such insalubrious slop. It’s a New Year, and time for new chances. Here’s our chance to stop the slop.
On the matter of common sense, I have been driven many times over the span of my career to lament the fact that it isn’t nearly common enough. But as just noted, I think it really is — in most areas. We apply it routinely to finances, home care, our careers and our families. We just turn it off when captivating promises about effortless weight loss, miraculous vitality, or age reversal waft our way. The result, of course, tends to be that even as we get fatter, sicker and older, we get poorer — spending our sensibly earned money on a senseless parade of false promises.
Google’s informal corporate slogan is “Don’t be evil.” Whole Foods is a Fortune 500 company with a net revenue of 10 billion dollar that prides itself on a commitment to social responsibility. Both companies have pledged to do long-term good in the world, even at the expense of short-term gains, and both are wildly successful.
If corporations can be profitable as a result of their commitments to social justice and corporate ethics, why can’t this doctrine be extended to the pharmaceutical industry? Someday, a company called GoodPharma might reach the Fortune 500 on the basis of a pledge to improve access to medicine, conduct international research trials in accordance with the highest standards of research ethics, engage in research on orphan diseases, publish negative research findings, promptly report information about adverse effects, and generally act as a model for ethical industry practices. If this business model hasn’t been explored, it should be.