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Amazon’s Grocery Push Keeps Stumbling After Whole Foods Purchase

94 points| alexhutcheson | 7 years ago |bloomberg.com | reply

146 comments

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[+] twblalock|7 years ago|reply
Here are two big reasons I won't use grocery delivery:

1. I can't see the produce/meat/seafood and pick the pieces I want. They aren't all the same, so this matters.

2. I can't get beer or wine delivered, and if I need to go to the grocery store to buy it, I might as well buy all my other groceries while I'm there.

#1 is probably not solvable. #2 is solvable but the US has 50 different state liquor law regimes, so it's a bit of a challenge.

So I'm not really surprised that Amazon isn't doing that much better than the others. Amazon is good at delivering things, but groceries aren't good things to deliver compared to the other stuff Amazon sells. Whole Foods in particular caters to shoppers who care about the quality of their meat and produce and want to examine it before they buy.

[+] cc439|7 years ago|reply
Reason #1 is a big one in my experience trying out various grocery delivery services but the greatest problem IMO is in how there isn't a good way to deal with things that couldn't be found or are found to be out-of-stock. 3rd-party services don't have perfect visibility into the layout and inventory system of every grocery chain and each of their individual locations so there is almost always something that can't be delivered in every order. This isn't a problem whenever I run errands myself as I will be more familiar with my go-to stores, meaning I can find most anything (it seems many 3rd-party services push their workers so hard in terms of efficiency metrics that they will give up on locating an item if it isn't immediately apparent where it is) and I can also swing by another store while I'm out if a critical item isn't in stock at my go-to store.

Grocery delivery seemed really slick at first but after the 5th time receiving an order that is missing a critical item, the novelty (and the time savings/convenience/etc) wears off.

[+] samstave|7 years ago|reply
When I had Safeway deliver groceries to me, I noticed that they always selected the more expensive item over anything that was on sale - even when I selected something on sale, they would often claim "item not available, substituted"

I found that my delivered groceries were always more expensive than if I were able to pick out the items myself.

Obviously it will be different for everyone... but I personally dont like delivery for that reason.

Further, if I were amazon owning whole foods -- what I would focus on is minimally packaged items as a product line.

What would the impact to the overall cost of foods be if there were no need to flashy marketing/branding.

Vegetables are cheap in part because we don't need a ton of packaging and marketing around them.

[+] solatic|7 years ago|reply
#1 probably is solvable. In a warehouse, before the meat is packaged, take a 360 degree photo of the portion, and tie the photo to a unique identifier for that portion of meat. Users browse through all the portions in an app, pick the one they want, and that's the one which gets picked off the line and sent to them.

The real problem with that is Goodhart's Law. If you measure for visual appearance, you'll start targeting visual appearance, and the pressures which led suppliers and farmers to value large but flavorless product will only get worse.

The best solution for consumers is a simple weight measurement, and a focus on speeding up logistics to keep the product as fresh as possible. Amazon is uniquely situated to win the logistics game, but it'll take time.

[+] reaperducer|7 years ago|reply
1. I can't see the produce/meat/seafood and pick the pieces I want. They aren't all the same, so this matters.

I think it depends on the region and the options available.

When I lived in a city where Peapod delivery was available, I had no qualms about having meat or vegetables delivered. It really did a great job with that.

Now I live in a place where the options are Amazon/Whole Foods, WalMart, Shipt, and a few others, and they're not very good at picking the best fresh products.

I think the difference is that Peapod doesn't have stores, so the "shoppers" can pick from an entire warehouse of produce. So if a head of broccoli looks "off," there are far more alternatives than someone "shopping" from an individual store's selection.

My solution is to have non-perishables delivered every two or three weeks, and perishables I pick up on the way home from work. It still saves a ton of time not having to do a full shopping run.

#2 is solvable but the US has 50 different state liquor law regimes, so it's a bit of a challenge.

More than that. In some states, it's county to county, or even town to town.

[+] ondrae|7 years ago|reply
I've gotten beer and wine delivered through Amazon from Whole Foods. They had to check my id at my door.

I think it varies by state law.

[+] chomp|7 years ago|reply
#1 - Even grocery store pickup fails in this regard. I've had employees pick really sad looking vegetables (I am a proponent of "sell the odd looking veggies", but spare me your wilted celery that you haven't been able to sell in a week)

#2 - I can get beer/wine/liquor delivered where I live (Texas) but honestly I can't say that I've ever been in such a crunch where I need to get it delivered. And besides, I do enjoy asking my local Specs' employee recommendations on new beer/wine that I haven't tried that I just can't get with any delivery service.

[+] jinfiesto|7 years ago|reply
With regard to number 1, I've found that some places that do grocery delivery in house (like Raley's,) apparently keep separate stock for delivery (discovered by asking) and it's often in better shape than what's on the floor. I think this is because there's some sort of 100% satisfaction policy to incentivize adoption. This has borne out in my practical experience as I've almost always been more than pleased with the produce delivered by in-house grocery delivery services. The only thing I don't love is that the online interface isn't always synced accurately with what's in stock, so often I get calls having to hash out substitutions before they can deliver.

WRT alcohol, I personally usually shop for that stuff at a specialty store like Ben's or Total Wine. I realize other people have different shopping habits, but I would have to make a special trip for groceries separate from my alcohol trip, and I appreciate that delivery helps me save a trip.

[+] bobthepanda|7 years ago|reply
Re #2: At least in Seattle I can get beer and wine shipped via Prime Now.

Honestly, alcohol is one of the better use cases of Prime Now, since it's always a bummer to have someone get alcohol when it runs out at a party.

[+] skrebbel|7 years ago|reply
1 is solvable and has already been solved by competitors.

What I believe is an EU based VC funded startup, HelloFresh, delivers boxes with recipes + the necessary ingredients to your home. We've been a customer for a while, and everything they send is extremely fresh. Their fish is fresher and better than anything I've been able to buy in my city (not by the sea), including specialized fish shops.

They're definitely not cheap, but they've proven that "I can't see what produce I get" is not a problem to customers if the quality is both consistent and extremely high. For all the criticism they've been getting in here in the Netherlands, their fast-moving consumer goods logistics is spectacular.

[+] sturgill|7 years ago|reply
#1 reminds me of the initial hesitations of buying clothes online. “The internet is fine for buying gadgets, but I need to try clothes on before purchasing them to make sure they fit right.”

We’re still at the early adopter phase of online grocery, but I’d be very surprised if this isn’t mainstream in a decade. Which is why I’d guess all major players take it seriously (from Walmart curbside to Kroger Clicklist).

Disclaimer: I work for a company associated with the online grocery space (though we aren’t online grocers). But I work here because I think it’s a solvable problem with tremendous upside to actually add value and convenience to people’s lives. Who wants to go to a mall to buy clothes these days?...

[+] travelton|7 years ago|reply
3. Sold out of that, replaced by inferior item. 7/10 things replaced on my last order. Argh!
[+] dawnerd|7 years ago|reply
Other huge reason is poor data. Prime now has a ton of stuff you can get from the stores but a lot are either mis categorized, missing pictures, missing nutritional info, size of package not listed, etc. One good example was a frozen pizza I assumed was full size. Everything seemed to indicate as much including the price. When it was delivered it was a tiny personal pizza. Another case was hamburger patties. Wasn't clear how many or what the weight was.

If they want me to shop online they need to make sure all of the information from the package is listed on the page.

[+] ghaff|7 years ago|reply
>Whole Foods in particular caters to shoppers who care about the quality of their meat and produce and want to examine it before they buy.

That may be true but I could equally well argue that, because Whole Foods tends to have higher and more consistent quality than many other chains, a random pick from the product department or meat counter is likely to result in something I'm fine with. At least that's my impression though I don't shop at Whole Foods with any great regularity.

[+] madrox|7 years ago|reply
If you live in the bay area, you may want to try goodeggs.com. We've tried all the delivery services and this is the only one that hasn't been terrible.

It delivers alcohol no problem. You still can't pick your produce/meat/seafood but because of how goodeggs sources we've never had a single problem with what we get delivered, and we're also very picky about those things.

I'm not affiliated with goodeggs in any way...just a passionate fan.

[+] titusjohnson|7 years ago|reply
Regarding #2, within a single state you'll have different rules per county. Alcohol delivery is laden with landmines.
[+] bitxbitxbitcoin|7 years ago|reply
I think 1. is partly a symptom of the target audience not being people that want produce/meat/seafood. Instead, it targets people who are buying the presealed and uniform stuff, even if they're buying produce.
[+] kop316|7 years ago|reply
Shopping at Whole Foods is a whole lot worse with Amazon owning it versus before. To get any of the deals, you have to link your purchase with an Amazon account. IIRC, they have a "blue" and "yellow" discount, where you can only get the "yellow" discount in addition if you are also a Prime member. The prices without either discount seemed exceed pre-Amazon Whole Foods.

The whole experience reeked of sucking up data about a person, and really made me never want to go back.

[+] staplers|7 years ago|reply
The worst part about going through this process is to getting to checkout and realizing I only had 1 discounted item (out of 20) that saved me 30 cents.. The labor of connecting to in-store wifi and opening the app itself almost isn't worth the discount..
[+] wlesieutre|7 years ago|reply
Is it sucking up any more data than other grocery stores have been doing basically forever by requiring your membership card to get sale prices?
[+] 2sk21|7 years ago|reply
I really haven't seen much difference. I'm the designated shopper in my family and I usually shop my local Whole Foods for a few items every week. Despite having my Prime bar code scanned from my phone, I have never once received a discount. The prices and quality are more or less unchanged.
[+] lackbeard|7 years ago|reply
The two things I really appreciated about Whole Foods were the faster checkouts and the fact that they didn't constantly bug you about a club card.

I don't really go out of my way to shop there any more...

[+] misiti3780|7 years ago|reply
the quality of the food at the wholefoods in NYC has gone down since the purchase. sometimes i go to the one in Williamsburg and the entire produce section is cleaned out by like 5pm. the lines are longer now also. not sure how they fucked that up.
[+] kolbe|7 years ago|reply
I think the sales are worse, too. I used to be able to scan the meat and produce sales, and create meals around those options. Today that's virtually impossible.

Recently Amazon realized how badly they fucked up cheese sales, and reverted back to the old system. Most people I know will only buy good cheese if it's >30% discounted. For a couple months, Amazon decided to scrap big sales in favor of 1-5% off ones. So far as I can tell, that test was a complete failure, and we're back to being able to have good cheese at good prices.

It's a far worse store. Lucky for Amazon, they have a few years before a competitor will emerge to bring back a legitimate luxury shopping experience back to my demographic. But Eataly or someone of that nature will shift their business model a little to fill the void eventually.

[+] ryanSrich|7 years ago|reply
I really don't understand why anyone shops at Whole Foods. It's insanely overpriced compared to any other grocery store I've ever been in. The 3-4 times I've been there since the Amazon acquisition have resulted in $0 in savings. Nothing I have to buy is ever on sale or discounted via Prime.

I find Trader Joe's, New Seasons, and local coops to be much more affordable and better quality of varying degrees for each.

[+] gdulli|7 years ago|reply
And for the privilege of providing Amazon with all that data about you in exchange for the best discount, you get to pay them $120/year.
[+] s0rce|7 years ago|reply
And the store is packed full of people shopping for online delivery orders on their phone all the time.
[+] xianb|7 years ago|reply
is it really different from the data collection of other grocery store shopper cards though?
[+] wilg|7 years ago|reply
This is pretty easy to explain:

1. Whole Foods sucks. They have poor quality items (especially produce), are often out of stock of common things, they don't have name brand items, and the prices aren't great.

2. Amazon's delivery service sucks. The website and app are terrible compared to Instacart, and only deliver from Whole Foods or Amazon.

(I am not in love with Instacart either, its almost impossible to get a grocery delivery same-day if you decide to put in an order after 4pm in SF. Sometimes you'll fill up your cart because it says "2 hour delivery" and by the time you're done it says "Tomorrow Morning".)

[+] freyir|7 years ago|reply
I haven't been to Whole Foods much in the last few years, but their produce used to be at least as good as other supermarkets, and usually better. What are you comparing it to? Have you noticed the quality go down over time, or have you always had issues with the produce? I agree though, their prices aren't great, and their store brand/off-brand items are often sub par.
[+] qudat|7 years ago|reply
> 1. Whole Foods sucks. They have poor quality items (especially produce), are often out of stock of common things, they don't have name brand items, and the prices aren't great.

As someone who shops at both Kroger and WF, there is a big difference in some produce items (WF is better). There is most definitely a difference in their meat/fish (WF is better), it's no competition.

The overall experience between the two stores is one of the biggest reasons why I go to WF. My fiance and I will sit at the bar and drink a glass of wine before shopping. It's a relatively laid back bar where you don't have to tip and the prices are cheap. On some days it's $4 for a glass. Then we will grab a shopping cart (brand new at the WF we go to) and stroll around well-lit and spacious isles to get everything we need. No one is bumping into us, hardly anyone is in our way. All of the produce/meat/cheese stations always have friendly staff ready to help with rarely a long line. Checking out can be hit or miss but we rarely wait longer than 10 minutes from start of checkout to walking out the door. The experience really is excellent compared to Kroger.

At Kroger everyone working there seems miserable, no one is friendly, the stations are hit-or-miss on whether someone will be available to help. I wouldn't want to spend an extra minute at Kroger, while I can and regularly do take my time at WF because of how nice it is to be there.

Mind you, these two stores I go to are within a half mile of each other. They are in the same "neighborhood" so-to-speak.

So when I read things like this I'm very confused. My guess is that someone's WF is different than the one I go to.

[+] colinbartlett|7 years ago|reply
Here in New York, FreshDirect has been the grocery delivery king[1] for a while but they had some missteps last year. I took the opportunity to try Amazon Prime Fresh.

I placed my first order and several hours past the end of my scheduled delivery time, my groceries still hadn't arrived. So I canceled the order, canceled Prime Fresh and that was that. Not a good way to win over business from the competition in what is a pretty competitive business in New York.

If my story is representative at all, it's unsurprising that their marketshare has declined, even after a very expensive acquisition.

1. https://www.bloomberg.com/news/articles/2018-12-11/inside-ne...

[+] gtsteve|7 years ago|reply
I think this might be because food is quite different to the other products you buy from Amazon - you typically buy ingredients and you typically do this once or more a week. Amazon makes a mistake every so often with a delivery but with this sort of throughput you have a bigger window for things to go wrong.

I stopped using Amazon Fresh after a string of deliveries where entire bags were just missing. Not out of stock, just not in the order. Of course, they refunded me but when buying ingredients to cook something complicated it can totally change your plans.

Their selection would change frequently. Sometimes basic things would be out of stock for weeks, sometimes items would just disappear, even items from common brands.

This is effectively the normal Amazon experience (good with occasional errors) but when applied to food it's somehow considerably worse. I now use a competitor's service; all they do is online grocery deliveries. It's very hard to be all things to all men; sometimes specialisation is a good thing.

[+] tvanantwerp|7 years ago|reply
I haven't used Amazon / Whole Foods' grocery delivery (always lived within walking distance), but I have tried other services like Peapod by Giant and Instacart. On the whole, it's been a terrible experience. Lots of orders botched. I once ordered two pounds of shrimp and received...two shrimp. I've had shoppers who can't tell green onions from leeks or zucchini from cucumber. For my last office birthday party (we do it for everyone) we ordered a cheesecake from Instacart, and it arrived moldy. So I'm not at all surprised that people, after having tried grocery delivery, are backing off.

As to Amazon and Whole Foods' retail experience, I feel like quality has declined, shortages are more frequent, and using the app's QR code for deals is painful, frustrating, and insufficiently rewarding to bother with it.

[+] Jgrubb|7 years ago|reply
My one datapoint - I decided to stock up on beans and ordered a couple dozen cans of the organic Whole Foods house brand. Almost every single one of them arrived dented to hell, and then I noticed that the reviews almost unanimously state the same thing. Apparently this is how they've chosen to get rid of cans that they can't stock on shelves, yet they still charge the full price anyway.

Fool me once, shame on you...

[+] madrox|7 years ago|reply
My fiancee loves to cook, and since we live in SF without a car, she has spent a lot of time trying out various grocery delivery services. Every single one has problems, from cost to quality to delivery reliability. In our experience, Instacart+Whole Foods is the most unreliable. Prime is ok, but the quality isn't always there. We've also tried specialty delivery services for meat, but those get expensive. We ultimately have been pretty satisfied with Good Eggs + Thrive Market and haven't set foot in a grocery store in months.

All this is to say I think grocery delivery is the holy grail of supply chain challenges. There is little tolerance for inefficiency at any step between farm and table. It's easy to spot when you're out of tolerance, but difficult to control for.

I think we're still in the early days of this space. It reminds me of the early 2000s when cord cutting was possible, but not common. However, once it really takes off it'll change everything.

[+] Einstalbert|7 years ago|reply
I use this service weekly and have had next to no issues for several months now. The quality is as good as my local grocer, although I still prefer to visit there for fresh meat or bakery items; the stuff you get online in terms of "fresh" isn't bad but it is much more expensive, I've found.

I've never been to a physical Whole Foods so I can't say if their quality has gone down as a result of this. My local grocer has a delivery service but I am too entrenched in Amazon to try it out.

[+] danial|7 years ago|reply
I discovered how different the Whole Foods experience is nationwide when visiting them in Memphis and San Diego. I wonder if some of the negative WF comments are a reflection of that. My experience (and personal opinion) is that Seattle tends to have a far superior experience. I feel that after the Amazon acquisition, the produce, selection and prices seem to have changed only a little, it's the rest of the experience that tends to win me over: brand new stores, espresso bar, hot lunch/breakfast and salad bars.

As for the delivery service, I have had a love-hate relationship with Amazon Fresh as well as Prime Now WF delivery in the past. Having analyzed the situation a little I realize that my satisfaction with their service is a reflection of my state of mind. Outside of some blatant delivery issues such as the leaving my groceries on a busy arterial in the vicinity of my home (yes, actually happened), I have been unhappy when there wasn't an immediate need for the groceries. This is when I tend to notice issues such as price discrepancies, or poorly substituted items, etc. I have been much happier when there is a burning need, such as being exceptionally busy and not having time to make a grocery run that week. That's when the smaller issues tend to go unnoticed.

I am glad to have their delivery service available. Once a month or so I find things to be quite chaotic, and find it quite easy to launch an app on my phone and get groceries a few hours later. Instacart is similarly convenient, but none of the other stores I have tried (Safeway, Costco, etc.) come even close. They all suck sometimes, but the WF/Amazon experience seems to sucks less.

Somewhat related, if you have friends going through a major life event such as having a baby, receiving the gift of free grocery delivery will make them very happy.

[+] whoisjuan|7 years ago|reply
Wow, that's an ambitious title for such a poor article. Four paragraphs citing a UBS analysts report.

And on top of that, the author has the nerve to close the article with a disclaimer that says he wrote the article with the assistance of another person.

[+] gdulli|7 years ago|reply
Journalism is collaborative more often than you likely think.
[+] sunshinelackof|7 years ago|reply
Whole foods has pivoted from your local health foods store--at a national scale to a national superstore--at a higher quality. Grocery and especially natural groceries are turbulent. Their customers generally check enough boxes to end up in the enthusiast/early-adopter category. Even if the Amazon purchase didn't turn them off, targeting the more casual "trader joes" class makes more sense.

My personal concerns with grocery delivery and automation in general is that the automation of my boring daily tasks might not free up more leisure time, but more time to spend working.

[+] BeetleB|7 years ago|reply
I've tried 2 grocery pickup services.

One was a positive experience, but their prices are a bit high, and they charge $5 for the service on top of it. If I do most of my groceries from them, it'll affect my wallet too much.

The other was Walmart. Groceries are cheap, but I never got an order without a problem. Usually, they did not have an item (as in the store never carried it) - why can't the web site tell me that this particular store never has this item?

Now there's a fairly well priced grocery store I shop at. I'd happily pay them $5 each time for this service, but they don't offer it.

[+] intopieces|7 years ago|reply
Amazon’s grovery deliveries use far too much plastic for my taste. Every onion, green pepper, etc is wrapped in its own thing, and then the bag has some keep-cool-foam that I’m sure doesn’t recycle.
[+] linuxftw|7 years ago|reply
People here complaining about the grocery delivery, it's been fantastic for us. We don't use it for meat or produce, but we do buy a lot of specialty products specifically from Whole Foods that other (closer) retailers don't have. Things like vegan cheese, specific gluten free items, etc.

We buy most of our meat and produce from another local grocery store, and now we just order the odds and ends from whole foods. This saves us a bunch of time so we don't have to make two stops.

[+] gumby|7 years ago|reply
Although there could be a problem, this article is weird. It cites expansion in Prime Now, which is a crappy source of groceries.

Amazon deserves a lot of the blame, though, as they have such confusing branding: Amazon Fresh (only works on web and phone); Amazon Prime Now (phone app), Amazon Prime Pantry (hard to use), plus the amazon dash wand which confusingly may place objects into your Fresh cart, or on a shopping list you can find in the regular Amazon app, or in a list only available with the Alexa app. I don't know what's going on with this supposedly customer-focused company.

In any case: I ditched my cars last year so mostly need delivery. The cheapest of the walking distance grocery stores is Whole Foods, and since I had so many problems with Instacart I've pretty much adopted Amazon Fresh. It actually works OK as long as you don't mind waiting until the next day (same day slots are rarely available in Palo Alto). But I get veggies and meat delivered with different services; Amazon's prices aren't that great.

[+] ra1n85|7 years ago|reply
Ordered several times from Amazon Fresh. The delivery failure rate and prices are high, the selection is terrible, and the quality of the food is shaky at best.

I had a delivery person call me and need street by street instructions on how to reach my place. I spent 20 minutes guiding them in the little bit of Spanish I remember from high school.

[+] fpgaminer|7 years ago|reply
We've used Amazon Fresh in the past. They gave us a few free months, so figured why not. Long story short, we stopped using it even with them throwing month after month of free service at us.

Obviously, produce was hit and miss. Mostly miss. The dumbest thing was they consistently packed produce in with cans.

Selection was terrible, and continued to get worse over time (including after the Whole Foods acquisition, which was weird).

Minimum order kept going up. Which was a double sucker punch with the reduced selection. Hard to fill the cart went they have hardly anything and keep raising the minimum.

And at some point they started sneaking in a default tip. They'd just tack on a tip without prompting you. You could change it ... if you noticed it was there (in small font mixed in with your checkout list).

And no app support.

Fresh is probably one of Amazon's most poorly executed services.

[+] ilamont|7 years ago|reply
Is the problem too many services targeting people who want organic produce, imported crackers, and meat/fish that's 2x Krogers?
[+] eli|7 years ago|reply
It's surprising that they aren't better at competing with Instacart even though they own the whole store.
[+] burtonator|7 years ago|reply
Whole Foods employees HATE Amazon...

The deli guy literally was talking about how horrible it was there...