Episode 36
June 16, 2017

Same-Day Asparagus Water: Amazon Acquires Whole Foods

SAME DAY ANALYSIS! Choo choo! 🚂 All aboard the Amazon Hype Train! Amazon announces $13.7B acquisition of Whole Foods and the guys break it down.

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Brian: [00:00:55:13500] Welcome to Future Commerce, the podcast about cutting edge and next generation commerce. I'm Brian.Phillip: [00:00:59:85500] I'm Phillip.

Brian: [00:01:01:37800] Today we're talking about...

Phillip: [00:01:03:57600] We're talking about Phillip's gmail ringing in the background.

Brian: [00:01:06:49500] Google Fi.

Phillip: [00:01:07:45900] Goodness gracious. Google Fi right.

Brian: [00:01:11:73799] No. Today we're talking about. Well, Amazon. Again.

Phillip: [00:01:16:8100] Amazon. Gosh. OK, just fair warning. We are talking one and a half, two hours after the announcement that Amazon is buying Whole Foods. So if you don't want to hear an entire show about us geeking out about Amazon and/or our Whole Foods or avocado water or asparagus toast or whatever it is the millennials are talking about these days, then I would suggest you skip the show. But we want to stick around. Please stick around.

Brian: [00:01:45:81900] We're going to talk about some other stuff, too.

Phillip: [00:01:47:73800] Oh, yeah. We will talk about some other stuff here.

Brian: [00:01:50:17100] You've done a couple of cool things lately.

Phillip: [00:01:52:83700] Yeah. Oh, my gosh. Well, first of all. OK.

Brian: [00:01:56:23400] Let's start with that. Start with that.

Phillip: [00:01:56:47700] What was the announcement, Brian?

Brian: [00:01:58:46800] OK, well, we already said with you in a previous episode. I can't remember which episode.

Phillip: [00:02:05:1800] He called it. You called it.

Brian: [00:02:08:18000] No. No...

Phillip: [00:02:08:18000] You called it, and I pooh poohed it.

Brian: [00:02:12:25200] {laughter}

Phillip: [00:02:12:25200] I said that will never happen in the history of ever, which is basically the death knell for me to be accurate about anything. Basically, someone... Who was it? It was Kalen Jordan from the MageTalk podcast, my co-host on the MageTalk podcast. He said somebody needs to create an ETF that basically tracks the things that he's super into, but like 18 months and retro or something. Like he's always behind the curve on these things. So I think if you married that ETF with things that I say will never happen, seriously, we could... We're incredible market predictors. But you you were right. You were right on this. You called this. On our show. You called it.

Brian: [00:03:02:40500] Dude. I don't know. So we need to clarify what episode that's in, cause I don't know if it was... I think you said it was thirty five. But I'm not sure if it was in thirty five.

Phillip: [00:03:10:67500] It might be thirty two. We are having our crack team of content reviewers going back through our episodes to find where it is now.

Brian: [00:03:20:00] Yeah. Yeah. Or if it even actually made it into the audio. {laughter}.

Phillip: [00:03:24:74700] It's in an episode. I promise you it's in an episode. We'll find it.

Brian: [00:03:29:29700] I swear, like we talk about the stuff on the show, and we talk about it off the show, and I start to lose track of like what's on the show.

Phillip: [00:03:38:86400] My biggest gripe in this whole thing is not whether you and I predicted it or not. It's that all of my snap earnings have been erased in the past two weeks and Whole Foods is up 27% on the day.

Brian: [00:03:54:74700] Oh man.

Phillip: [00:03:54:74700] So, yeah, I'm a pretty angry guy today. No good. {laughter}.

Brian: [00:04:03:58500] Dude. Brutal.

Phillip: [00:04:03:58500] OK, but let's talk about the retail and commerce impact here. I think Whole Foods... Four hundred ninety one stores in U.S. and Canada, I believe.

Brian: [00:04:14:8100] Let's just talk about the fact that they have all those stores and that this is Amazon's first true play into brick and mortar because let alone grocery, because I think we get into grocery all on its own and what they're gonna be able to do with that. This is a landmark moment in retail. This may be... I'm going to step out...

Phillip: [00:04:40:36000] Oh gosh. Temper the excitement.

Brian: [00:04:42:68400] No, this might be one of the... Well. I'll say it this way. This is the most exciting acquisition that I've seen in the past three years.

Phillip: [00:04:53:73800] Yeah. I mean, I can't think of a prior acquisition that was as exciting as far as the tech space. Software is ruling the world. It's kind of incredible. Yeah. Jeff Lewis on Twitter emulating Jeff Bezos, saying, "Alexa, buy me something from Whole Foods." Alexa says, "Buying Whole Foods. Bezos: '$h-t.'" {laughter}

Brian: [00:05:40:89100] {laughter}

Phillip: [00:05:40:89100] Which is incredible.

Brian: [00:05:43:78300] The question is did it deliver in two days or not? {laughter}

Phillip: [00:05:48:14400] Bob Moore, who's VP of Business Intelligence at Magento says, "Amazon buying Whole Foods for 13.7 Billion... It was originally 13 billion, but then they picked up some asparagus water in the checkout line," which I thought was really good. Anyway. Sorry, just to correct myself, 431 stores. So actually someone with real commentary here is a Wall Street Journal financial editor, Dennis Berman on Twitter saying, "Amazon did not just buy Whole Foods grocery stores. It bought 431 upper income Prime location distribution nodes for everything it does."

Phillip: [00:06:29:63900] And I think that is the takeaway. That is the one sentence.

Brian: [00:06:33:72900] Yeah. That is the takeaway. It's grocery, yeah, we can get into grocery. But let's just focus on the fact that Whole Foods is a premium brand, like he said, in premium spots all throughout the nation, or in North America.

Phillip: [00:06:46:48600] Yeah.

Brian: [00:06:48:900] You know, Amazon has access to all of that now.

Phillip: [00:06:53:4500] Yes.

Brian: [00:06:53:58500] That is mind blowing.

Phillip: [00:06:54:33300] What's incredible is... OK. So think about the impacts that this now has in major metropolitan and high end or upper end urban and suburban areas where Whole Foods has strategically placed itself. And we now have a true omni channel grocery retailer in every major city of the United States. And with the possibility of full digital integration. And so Slate.com... Will Oremus writing at Slate in an opinion piece saying this forces every Whole Foods customer, of which they have millions, to very seriously think about Amazon Prime, maybe Alexa. And now maybe potentially having Amazon Fresh in every major city. Like this is... Yeah, I'm with you in the excitement train. Choo choo, everybody. All aboard the excitement train. This is happening. This may actually be the last great omni channel tech acquisition of our lifetimes prior to the next Great Recession, because I think that this doesn't change the fact that consumer expectations and the U.S. economy, especially being a services economy, depending on low wage workers working at stores like this. Like Whole Foods could very well be doing great. They are a grocery chain. We're usually going to need groceries. I don't know that we always need high end groceries that are in this market. But overall, the retail sector is down in the US. Whole Foods is not going to prop that up. And so I think that this could be the last... This like signals the beginning of the end. I'm going to take the contrarian approach. I'm so excited for this. But this is the beginning of the end for the good news that we have in the retail sector in the U.S. I really think that we have a regression to the mean about to happen. We've had 10 pretty great boom years. And I think we're gonna see a contraction, continued contraction, because we already seeing it. Gymboree, which was suffering and now in private equity last seven, eight years, Gymboree closing hundreds of stores nationwide. That just came out this week. So and that's a huge baby brand. So I'll take the I'll take the bearish approach. You take the bullish approach. And I want to hear some of your thoughts.

Brian: [00:09:34:22500] So I think you're you're bearish approach here is not far off in a certain sense. It's true for the majority of retail. It's not true for consumers. I'm bullish for consumers right now. I think.

Phillip: [00:09:55:89100] Yeah, like consumer enablement or consumer experience just got a whole lot better.

Brian: [00:10:00:71100] Exactly.

Phillip: [00:10:01:35100] Yeah.

Brian: [00:10:01:89100] Yes. So, yeah, if you're a retailer out there, I would be concerned. If you're a consumer out there, I'd be ecstatic. And so essentially what Amazon is forcing now. They're really taking the attack on retail to the next level and bringing the heat. If you can't come up with innovative solutions and deliver the best possible service and products to your customers, you're going to lose. Because that's what Amazon is doing.

Phillip: [00:10:52:57600] I mean, Whole Foods, for them to own the whole market... First of all, grocery is an incredibly regional business, like incredibly regional. In fact, it might be one of the last great regional and usually a privately owned chain sort of stores in what is an increasingly global or national retail brand strategy or landscape that we have. So I'm still bearish on the fact that Whole Foods is incredibly high end. Amazon, again, still focusing on the incredible high end. Amazon Go obviously now... These are not things that just happen overnight. This obviously was an entire strategy with the Go play sitting in the Whole Foods space. And I think it was a test. It was a test of a particular theory for the consumer experience rolling out to a larger audience. But 400 stores is nothing. Four hundred and thirty one stores is small. It's a drop in the bucket for Amazon to have market dominance. And I think customers will flock to these stores. But most of Middle America cannot afford to shop at Whole Foods for everything. Whether or not the convenience is there. It doesn't matter.

Brian: [00:12:14:89100] What about their 365 brand? That is an unbelievable brand.

Phillip: [00:12:19:88200] You'll have to educate me because I am an above average earner in the United States. And I don't think I can afford to shop at Whole Foods regularly. So you'll have to educate me on this. So what is the 365 brand?

Brian: [00:12:33:59400] Is it 365 or 360? Now I'm doubting myself.

Phillip: [00:12:36:43200] It doesn't... You're only five off...

Brian: [00:12:40:32400] It is 365. So this is sort of generic brands of organics. And also they have what they call their 365 stores, which are sort of their downmarket stores. Or I shouldn't say down market. It's a generic, smaller store that enables people to get organic food at a relatively reasonable price.

Phillip: [00:13:12:54900] Interesting.

Brian: [00:13:14:25200] I'm not saying that I shop at Whole Foods regularly because I don't. I don't actually how the Whole Foods Market that near to my house. But I live a ways outside Seattle.

Phillip: [00:13:27:29700] Which would be a prime market, right? Seattle. Portland, you know, that sort of demographic is kind of really open to... According to their site, there's only four 365 by Whole Foods that are in existence with ten more planned. So...

Brian: [00:13:45:81000] Yeah, yeah. So as far as their stores go, yes. As far as the brand goes, that's in every Whole Foods.

Phillip: [00:13:52:66600] Got it.

Brian: [00:13:53:19800] So the cool thing about 365 is it's still a premium brand. I don't know if you've ever seen like Kroger's or Safeways.

Phillip: [00:14:07:44100] Sure.

Brian: [00:14:08:27899] Like they're premium generic organic brand. So it's actually in line with those as far as price point goes, at least in my experience. Like a gallon of organic milk from the 365 brand is pretty comparable to sort of that, I think any other generic organic milk brand.

Phillip: [00:14:30:56700] Well, so but would you agree that organic foods in general cost more than the normal store brand alternative?

Brian: [00:14:46:79200] If you're going up against brand name alternatives, sometimes it's the same price. If you're going up against sort of generic brands or discounted brands or sale items, then yeah, I would agree.

Phillip: [00:15:03:74700] The majority of Americans...

Brian: [00:15:07:22500] Organic vegetables and fruits and meats are definitely more expensive. So the majority Americans are not buying organic right now. That's said, now, with Amazon in control of the 365 brand, I cannot wait to see what they do with it. That's a powerful thing to have in the hands of a company that is at the forefront of innovation.

Phillip: [00:15:32:10800] Yes, and I completely agree with you there. I think it is. It is up there. But the majority of Americans are getting their groceries at Walmart, you know, Target, Costco, Aldi. And those are the big national chains. I don't know... And those are super centers where they can get all kinds of things. Now, I know Whole Foods definitely has a diversification of the kinds of products that you can get there. You can get paper goods, et cetera. I don't know that you can get electronics at a Whole Foods. The point I'm making is that there's still a convenience factor and accessibility factor, a rural America factor that I think that this is the beginning of a transformation for Amazon, but not necessarily a transformation of the grocery retail space. You know, 400 stores is a dent, but it's not a death blow to any one of the major grocery chains.

Brian: [00:16:39:63900] No, certainly not. You know, and I think there's a little bit of a long... This is a long term play. I don't think you're going to see major changes over the next year or two. Maybe maybe a few. Obviously, I think the first thing that's going to happen is Amazon's going to offer more fresh products via delivery probably. Or I mean, just imagine being able to shop for Whole Foods catalog on Amazon.com. Like, that's mind blowing. And how that gets to you, whether you pick it up in-store or Amazon figures out a way to ship it to you. I don't know exactly how that's going to play out. But I am really excited. I mean, I think this is, like you mentioned, premeditated. There's no doubt that they've got plans for what to do with this.

Phillip: [00:17:30:20700] Yup.

Brian: [00:17:31:5400] It's not, "OK, let's just buy this because it's a good thing to buy." I mean, Whole Foods has been one of the best success stories in grocery over the past 10 years. So I think Amazon is paying a bit of a premium, like if they wanted to go get just a straight up grocery store, they probably could have got something for less.

Phillip: [00:17:53:7200] Oh, yeah. Possibly. Yeah, it was definitely very smart and logical choice for the future of the Amazon brand. Yeah. For sure.

Brian: [00:18:07:30600] Yeah. Yeah. Ands, I think... Oh, man... Amazon is coming after Walmart hard because I think they're feeling the same thing from Walmart right now. I can't help but wonder if this is a response to Walmart's recent wave of acquisitions that are going sort of upmarket with Moosejaw and Modcloth and the like.

Phillip: [00:18:32:85500] Right. Sure. Sure.

Brian: [00:18:34:38700] Also, I should look this up, but I think Amazon is also introducing a Prime plan for low income households. I think they're gonna make it like six dollars. I need to go look this up again.

Phillip: [00:18:55:27900] Yeah.

Brian: [00:18:59:8100] So I guess what I'm getting at, this is just sort of another thing where I think Amazon's coming after Walmart as much as Walmart's coming after Amazon.

Phillip: [00:19:11:21600] Well, the markets are reacting. I mean, at market open... Yeah. Whole Foods is up 30 some percent on the day. But SuperValu, which is parent brand for a bunch of grocery chains, including Albertsons, down twelve percent, Kroger down 15, Target down 10, Costco down six. So it's, yeah... The markets are reacting. They think that this is a big deal and having effect in the sector. So what do I know? But I also think that there is probably a large overlap of a Whole Foods consumer to the Amazon consumer. But I don't know. There has to be some... I hate the word synergy, but there has to be some synergy between the brands at some point in the future which make it feel like a cohesive experience. This is just too big of an opportunity for Amazon to support the Amazon brand. But the Whole Foods brand is no slouch. Right? And Amazon, especially in a Bezos tweeting yesterday, looking that he wants to increase his philanthropy efforts. And the thing that I think about at Whole Foods, is yeah, well, it might represent the pinnacle of your own health, but Whole Foods is one of the largest wasters of prepared foods in the United States of America. They have a lot of hot bar foods and salad bar, and a lot of that food goes to waste. And so there's some good conversation, I think, to be had around the way that maybe Amazon can bring some sanity to Whole Foods in the way that they're doing their costing supply chain and maybe even in their sustainability to make that brand even more philanthropic. So that's a thought that I had as well. But I think it's good for both brands.

Brian: [00:21:26:59400] It is. I think it's a good... Just, like you mentioned, from a synergy standpoint, these are definitely compatible brands, and I think, you know, culturally they definitely align. I think if anything maybe Whole Foods is even more progressive than Amazon is in certain sense, which is great. I'm hoping that these both sort of rub off on each other in some ways.

Phillip: [00:21:53:27000] Yeah. I have to wonder now if every single Alexa device in existence has just become a built in advertising channel for Whole Foods.

Brian: [00:22:08:70200] {laughter} I don't think they'll use it that way. I don't see that happening. Amazon's pretty good about bringing about synergy between their departments, but they're also pretty good about being siloed, in a good way, I think. And so they're not going to compromise the integrity of the Echo product, or the Alexa product, because they want to cross promote Whole Foods. I don't see that happening.

Phillip: [00:22:38:32400] Yeah, I can see that. I can see that too. I also have to wonder too if... Amazon just does a wonderful job at building value into Prime. And a lot of that is on the digital side, which has no physical inventory. Digital downloads are sort of an infinite consumable. So I'm curious how they would see the grocery end. And I don't live near an Amazon Fresh. I'm not in an Amazon Fresh market, which would be nice.

Brian: [00:23:19:68400] Not many people are.

Phillip: [00:23:20:76500] Yeah. So I don't know how Amazon handles grocery other than the delivery aspect, but I have to wonder if there's an advantage to Prime or a same day delivery channel that could open up here and hook more people into Prime and build more value for Prime. And it also introduces the potential for Prime memberships to also have another rate increase.

Brian: [00:23:47:8100] Yeah absolutely.

Phillip: [00:23:47:8100] And they've been steadily increasing the rate of that year on year. So building more value into Prime, especially with access to grocery now and potentially some additional services available through grocery. I mean, can you imagine Amazon same day pickups at every Whole Foods, if not same day delivery in your neighborhood, having Amazon lockers that it just becomes such a natural thing because now they have retail space. There's so much that they could do there. But it's going to have to be gradual. And I don't think that this is an overnight transformation.

Brian: [00:25:59:21600] Yeah, I agree with you. It's not overnight. This is going to be a thing that happens over a period of time. And Amazon's done a very good job with that. Amazon's not an overnight success story.

Phillip: [00:26:10:63000] {laughter}

Brian: [00:26:10:63000] It's a very calculated and step by step. I'm not saying it's not speedy. It's happening fast, but it's not overnight. They've been very measured about how they've done things. So I think that will happen here as well.

Phillip: [00:26:30:1800] Yeah. So what's your hot take here? It's a good thing.

Brian: [00:26:35:61200] My hot take... Is it a good thing?

Phillip: [00:26:38:33300] Yeah.

Brian: [00:26:38:54000] Absolutely. Yeah. I mean, as far as general economy and benefit to consumer, which is really what I like to see, this is an awesome thing. I think this is gonna be... This will be another trailblazing moment where everyone looks at it, and they're like, "Well, OK. Now, how do we respond to this?"

Phillip: [00:27:01:37800] Sure.

Brian: [00:27:02:64800] And honestly, not many people are going to have a response. This is going to create more chaos in retail, like you mentioned. Gymboree is just one of many names ahead to close more stores, which, hey, I mean, if you're going to be getting into purchasing retail space, just wait a little bit longer, because... And maybe that's Amazon's entire play here as well.

Phillip: [00:27:32:82800] Yeah.

Brian: [00:27:34:27000] Let's get to know how to do this brick and mortar thing, because there's going to be a huge market opportunity in the not too distant future. We're going to be able to snap up all of these stories that are going under for a song and a dance.

Phillip: [00:27:50:12600] Yeah.

Brian: [00:27:50:12600] Oh man, I mean, like, think about that. Market opportunity on retail space here is gonna be a good deal.

Phillip: [00:28:01:5400] Yeah, sure. Also who are Amazon's competitors now from a general goods retailer?

Brian: [00:28:14:9000] I mean at this point, now obviously Amazon's competing with Kroger and high end, smaller, upscale grocery chains. Like out here in the Northwest, we have one called PCC. That would be a good example. They're competing with Costco. Absolutely. Costco sells an insane amount of organic food.

Phillip: [00:28:44:59400] Sure.

Brian: [00:28:48:39600] And wine, which Whole Foods is also pretty big wine retailer. So I think they're definitely... Like actually, I think Amazon is coming up against Costco just as much as they're coming up against Walmart with this acquisition.

Phillip: [00:29:06:9000] Yeah.

Brian: [00:29:09:20700] I mean, who else? I mean, who are they not competing with?

Phillip: [00:29:13:14400] Well, I'm just thinking back to five, seven years ago, Amazon would have probably been compared to Walmart. Or I'm sorry. No, not even. EBay. You know, Amazon would have been a digital commerce retailer competing with eBay. eBay basically just isn't even third in that race anymore online.

Brian: [00:29:40:46800] Yeah.

Phillip: [00:29:40:46800] And in fact, actually I had a list of things for us to talk about on our next episode, one of which was Flipkart acquiring eBay India, which I felt like really interesting.

Brian: [00:29:54:22500] Oh yeah.

Phillip: [00:29:54:22500] That's not even on my radar anymore. eBay basically isn't even competing. And eBay used to be a force to be reckoned with. So eBay's out of the game. Walmart all of a sudden has had a brain transformation.

Brian: [00:30:09:85500] Called Marc Lore.

Phillip: [00:30:09:85500] And their digital marketplace... Yeah. Marc Lore. It's got to be more than one person. But I do see that transformation taking place. And that's huge. Right? So Walmart becoming a digital eCommerce marketplace retailer has transformed its brand. I'm curious... I wonder if in the next five years, if this plays out in a certain way where Amazon becomes the crusty, old... You know, if they start having transformation the other direction.

Brian: [00:30:46:87300] I mean, I think a lot of people have kind of said that. The reason why I don't think that's true is because of their business model. Their business model is broad. Let's throw every innovation at the wall that we can possibly think of and see what sticks and then invest in that business. And so they could have... Amazon could have stayed as the Walmart of the Internet.

Phillip: [00:31:14:13500] Sure. Yep. And they still are.

Brian: [00:31:17:59400] They still are. They still are. But they also have all kinds of other things going on. Actually, there are rumors. There are rumors. I'm transitioning a tiny bit here, but of Amazon doing a phone, another phone. And doing it in a completely different way. One... Making it compatible with Play.

Phillip: [00:31:45:7200] Right.

Brian: [00:31:45:42300] Two... Coming in at a much lower price point like they should have to begin with. And then three... I think they're going to be a lot more like partner focused with this phone. We'll see. The rumor is that it would be called Ice. So it would be Fire and Ice.

Phillip: [00:32:03:75600] Oh for crying out loud. I'm really glad they did that because otherwise I would probably say on a future show, like, why didn't they just call it the Ice? Because how cool would that be? Fire and Ice. But actually I've rolled my eyes now, just like the movie. They called it "Now You See Me 2." The sequel to Now You See Me. I'm like, "You could just call it "Now You Don't," you guys." How insane how insane would that be?

Brian: [00:32:35:26100] {laughter} Oh my gosh.

Phillip: [00:32:35:26100] Anyway. I'm really interested to see how this plays out. This is a public company. Whole Foods is a public company. There will probably be some people that aren't too thrilled about this acquisition. I can see certainly people that are concerned about the corporate culture. Whole Foods has a very specific sort of corporate culture that I think has been mocked and parodied in comedy and media and in a bunch of different ways. In fact if you remember... Did you ever see... What was a Tina Fey movie? Tina Fey. Amy Poehler. Where Amy Poehler is the surrogate mom for Tina Fey's baby.

Brian: [00:33:27:65700] Oh, yeah, I don't know if I actually watched it. It was that forgettable or I just didn't actually watch it.

Phillip: [00:33:34:45900] No. It's such a good movie. It's actually a really, really funny movie. Baby Mama. So in that particular movie, the Tina Fey character works for what would be, you know, basically an early version of Whole Foods, which is a much larger chain now. But 10 years ago when the movie came out it was funny and sort of the the corporate culture, they're sort of being around mindfulness and spontaneous meditation. And also, you know, gentrification's sort of playing into depressed neighborhoods and all kinds of really interesting things. But Amazon is the opposite of that. Amazon, we see story after story after story of people who are internal to the Amazon culture, who feel like they're overworked for nominal pay, who are incredibly...

Brian: [00:34:25:60300] Not for nominal pay.

Phillip: [00:34:25:60300] It's nominal. It's nominal in the industry.

Brian: [00:34:28:4500] Oh, like in the warehouse. Yes. That's true.

Phillip: [00:34:29:26100] Yes. I'm saying that Amazon supply chain and fulfillment relies heavily on lower middle income employment. Yeah. But what's interesting there is that they're trying to take jobs away from retail, and they're offering just a little bit more above what current retail is being paid. In fact, there was an interesting story in the Tampa Tribune about a year and a half ago, which I'll have to find and dig up. But there was an interesting story there of Amazon opening one of its distribution centers in the Tampa Bay area, and the effect that it was having on employment in the surrounding suburban retail service industry, because the service sector in that area has been on the decline for ages, especially large retailers like Sports Authority, shuttering and Best Buy kind of closing some stores. A lot of people in those industries not having pay raises for ages. And then Amazon offering a dollar more an hour. That's like this monumental thing that happened for that area. They're going to hire five hundred people for day one. It became like this, land grab for a dollar more an hour. I don't think that's... So Amazon sort of being known for very tightly managing its costs. And I think that that translates to employee happiness. We've seen a lot of people, especially in the tech realm at Amazon, sort of writing these long sort of whistle blower type exposés on the internal corporate culture. I think that there could be a shakeup there, and Whole Foods is going to have to work hard to protect its own culture from being taken over by the Amazonians.

Brian: [00:36:28:8100] That's true. That's actually a really big point, because being in the Seattle area, I do see Amazon culture. It is a real thing. It is a very strong culture. They take it very seriously.

Phillip: [00:36:40:62100] Sure.

Brian: [00:36:45:3600] Amazon employees are known, especially ones that kind of come out of college and go into Amazon directly, they have a certain stigma to them. The ones that sort of come into Amazon from another employer... I think a lot of Amazon employees that I've talked with are, this is a little bit anecdotal, but they're either looking to move departments to a department that they really want to be in.

Phillip: [00:37:18:60300] Yup.

Brian: [00:37:19:24300] Or they're looking to get out after they finish their period. The way that Amazon's structures their compensation is basically you get a very large bonus if you stay for a certain period of time.

Phillip: [00:37:38:40500] Got it.

Brian: [00:37:38:40500] And so people are looking to stay for a certain period of time and then get out. And so it is what it is. It attracts a certain kind of person and/or people that want to make a chunk of money and then move on to something else. And it's been effective for them. It's not where I want to work. Unless you're in the right department. I think that's the other thing is, like I mentioned, that they silo in a good way. And I think that there is some benefit to siloing by department culturally as well, because the AWS culture is completely different than the, say, Echo Department culture, Echo and Alexa culture.

Phillip: [00:38:29:5400] Sure. And we say that as people who don't work there. Right? But, I mean, you probably know actual people that work there. I don't. I'm going off of, like, Wall Street Journal reports.

Brian: [00:38:37:85500] Right. Right. Totally. I would just say, if you do get an offer from Amazon, try to find out from people that are actually in that department how they feel about that department.

Phillip: [00:38:54:28800] And let's hope that they give you full transparency. But that's beside the point. Yeah. So my hot take here is this is good for Amazon. Probably not so great for Whole Foods employees, and Amazon seems to be immune to the earnings issues. Their stocks in the nine hundreds... They're sort of accustomed to not having to have massive fat earnings reports with massive growth year over year. They've really well trained their shareholders and that expectation. So I think this could be a great thing for the growth of the Whole Foods brand and especially Amazon understanding loss leaders. And maybe we could see some great economic impact from that with Whole Foods adopting some of the Amazon methodology for pricing. So potentially some benefit, too, for existing Prime customers or a new benefit of Prime or a new level and maybe local delivery. So, yeah. Great for the consumer. I'm curious what the impact is economically. I don't know that we're gonna know that for a long, long time.

Brian: [00:40:12:45000] I want to make a couple points here, too. I'm going to make another pseudo prediction. And that is that as Amazon sort of expands its offering to grocery, they're really starting to kind of round out everything, like everything that anyone can ever buy. Right?

Phillip: [00:40:32:29700] Yeah.

Brian: [00:40:33:66600] And so I actually predict that they will start to get into budget and money management. Kind of like a mint sort of situation where you track your spending, and I think eventually they're going to have a way for you to really understand what you can afford and help you build budgets that make sense for your family or your household, because they can really know everything that you buy.

Phillip: [00:41:07:65700] Amazon banking. You just predicted Amazon banking.

Brian: [00:41:12:34200] I don't know about banking. I don't know if they can do the banking or not. So this is the second, this leads me to my second point, which is we are seeing a new kind of business here with Amazon. We talked about monopolies a little bit before. But what we're seeing with Amazon is it's not a monopoly. They've built insane scale by building out into every possible vertical. And as a result, they're building a business that's not a monopoly, but it is its own ecosystem of more epic proportions than even Apple's because it covers so much ground.

Phillip: [00:41:59:67500] Gosh. And they really do. They do literally everything.

Brian: [00:42:04:66600] Yeah. Yeah. They do a lot of it very well. That's the crazy part. So I think... I wonder if we'll start to see some sort of regulation around... Probably not under this administration, but in the future and as Amazon continues to grow. I wonder if we'll start to see regulation around like this is not a monopoly, but if you don't play with Amazon, you're gonna be in trouble. And that's a weird... Like this is a new kind of entity of the likes that we've never seen before.

Phillip: [00:42:44:84600] Yeah. And yeah. That's a great sort of point just to end it on, I think.

Brian: [00:42:52:55800] Wait, wait, wait. Before we end, I want to add one more thing, and I want to get back to something that I briefly mentioned earlier, kind of off topic, and that is that Amazon has just introduced their $5.99 a month Prime plan for low income families.

Phillip: [00:43:16:20700] They didn't say for low income families.

Brian: [00:43:19:34200] No, it is. It's for low income families.

Phillip: [00:43:22:34200] And where's the qualifier for that?

Brian: [00:43:25:47700] I think you might have to be on the SNAP program, basically food stamps. I need you to confirm that, but essentially. Oh, yeah. Oh, no. It is. Here it is. Only customers that have valid EBT cards.

Phillip: [00:43:43:45000] Oh, wow.

Brian: [00:43:44:87300] Yes. That is huge.

Phillip: [00:43:49:23400] But being able to access Amazon Prime Services, not via SNAP, but you only have access to it if you already have SNAP?

Brian: [00:44:06:8100] Only if you have a valid EBT card.

Phillip: [00:44:08:11700] I understand. Okay.

Brian: [00:44:09:62100] Yeah. Now, think about this. Think about what kind of shopper shops at Walmart. I've shopped at Walmart. I don't want to generalize, but a lot of low income people shop at Walmart.

Phillip: [00:44:26:65700] Sure.

Brian: [00:44:27:56700] It's available. It's cheap. They accept EBT.

Phillip: [00:44:33:27000] Sure.

Brian: [00:44:35:63000] And I think that they spend a lot of their money at Walmart and for good reason. If Amazon is opening up the benefits of being an Amazon customer to that market as well. I mean, imagine how concerned Walmart is right now. That's a big chunk of their market.

Phillip: [00:45:00:19800] Sure.

Brian: [00:45:03:33300] I'm not gonna... I don't know how it's going to actually play out. Like, if this is actually going to change buying behaviors. But it's something that Amazon's targeting.

Phillip: [00:45:15:00] Yeah something definitely to watch. And it's part of their strategy. Right.

Brian: [00:45:18:36000] Yeah.

Phillip: [00:45:19:57600] That makes a lot of sense. It's interesting.

Brian: [00:45:22:73800] And they're testing right now. Sorry. They're testing right now to see if that would allow online payment with SNAP carts. That's insane.

Phillip: [00:45:34:49500] And something that's probably... It's one of those things that sounds like it should have been a thing all along.

Brian: [00:45:40:87300] Yeah. Yeah, no kidding.

Phillip: [00:45:42:80100] Especially since the best prices for many things can be found online and probably things that qualify for those programs.

Brian: [00:45:51:63900] So true.

Phillip: [00:45:52:54900] Very interesting. All right. Well, that's a great place to end it. Amazon continuing to express dominance, especially in retail and in innovation in retail. And so we wait with bated breath. And we want to know what you think. As always, you can leave your voice and your opinions into this conversation at FutureCommerce.fm. We just launched new redesigned. Real excited about that. So go check that out. And remember, you can subscribe on Google Play or Apple podcasts. And remember to leave us five star there and show us some love by visiting one of our sponsors and telling them that you heard us talking about them. And that's going to help us keep the show coming to you every week. But anyway, thank you. Thanks, Brian. This was a great thing.

Brian: [00:46:44:44100] Another good session, man.

Phillip: [00:46:45:1800] And what's really great about this is that we're putting out content that's relevant like the day it's happening, which I'm really excited about. I'm hoping we can do that more often.

Brian: [00:46:52:74700] If we publish today that...

Phillip: [00:46:54:55800] It's happening. It's publishing today.

Brian: [00:46:56:56700] It's publishing today?

Phillip: [00:46:57:66600] Yes, it is.

Brian: [00:46:58:89100] Sweet. All right.

Phillip: [00:46:59:47700] All right.

Brian: [00:47:00:63900] Let's do it.

Phillip: [00:47:00:63900] Well, thanks for listening, and until next time, keep looking toward the future.

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