Hey there modern vegans and vegan curious, it's Margaret and welcome back to ModVegan.
Today I'm going to talk with you about why I am thrilled by Amazon's
announcement that they will be purchasing Whole Foods.
[intro]
So earlier this week Amazon announced that they would be purchasing Whole
Foods Market for 13.7 billion dollars, and the world went wild.
Lots of people were speculating that this is going to be terrible for Amazon,
because Whole Foods has not been making a lot of money lately. People have been
concerned that, you know, this means that Whole Foods won't be producing good
quality foods anymore, that it will change the entire business. All sorts of
frustration and fear coming out of people - but there is also some excitement,
and I think that that is actually where it's at. I'm actually very excited by
this and I'm going to tell you a few reasons why I think this is actually a
great deal. It's a good deal for consumers and it's also a good deal for
vegans - and especially for people who really like Whole Foods. And not Whole
Foods the company, but Whole Foods themselves. And farmers and I will be
sharing with you guys the reasons why I believe that is true. First of all, I
think we can get out of the way the idea that Whole Foods is this small company
that is somehow extremely special - that it is a snowflake, that we need to
protect Whole Foods because it's a small company. That's kind of silly. It is a
smaller company among all of these giant companies like Safeway and Kroger and
Albertsons and companies like that. When we're looking at grocery stores, sure
it's a smaller grocery store, but it still is pretty big. I think the idea
that it's a small business is kind of ridiculous. It's been on the market for a
very long time, it's been publicly traded so think the first myth that we can
dispel is this idea that Amazon is really just this behemoth coming in and
taking over Whole Foods and leaving them without the choice of what they are
going to do in the future .John Mackey has already appeared on
television talking about how this isn't you know, tinder that it's a "marriage."
But he's really married to the idea of making the succeed with Amazon, that he's
very excited about it. And so John Mackey the CEO of Whole Foods seems to be
pretty much behind this. At least for the time being he's going to remain CEO
of the company. So for people who really love John Mackey and embrace him
as the CEO of the company, nothing is going to change that much in terms of
the leadership at the company. What's going to really change are
the tactics that are going to be used by Whole Foods. Traditionally Whole Foods
strategy in the marketplace has been to price themselves higher than their
competitors and try to provide a little bit more more "feeling" in return. If you
go into a Whole Foods Market they're very beautiful. I've been to one in
Vancouver - they're very pretty compared to other kinds of stores that are
similar size. They have this community feeling everything looks pretty, it's
beautiful, it feels good. You feel like you're a better person just for shopping
there. That's kind of what they try to sell you. And in exchange, you pay them a
little bit more. And that's how traditionally they've been able to
maintain a higher margin than their competitors. Amazon, by comparison, uses a
completely different tactic. What they try to do is have extremely low margins.
Amazon is known for its low margins and for just basically trying to maintain
their head above water in terms of where they sit as a company. They try to just
keep their heads above water. They try to keep the smallest margins that they
possibly can, while taking over more and more companies and extending their reach.
So they have very little margins but they do have a great deal of services
that they provide and they are aiming at growth instead of instead of high
margins, high profits. And that's how the company sustains itself. It's slightly -
if you - if you are much of a you know classic investor, if you believe in value
investing and things like that, you might be slightly wary of Amazon, because
they do not fit into a traditional value creation paradigm. They definitely are
going for growth almost exclusively at the expense of their margins, so in that
respect the two companies couldn't be more different - in terms of the
strategies that they employ. But they do have something in common that I've heard
John Mackey talking about in his book "Conscious Capitalism." And that is kind of
this mission this this mantra that they have as companies. Whole Foods wants to
bring you good food and make you feel good. And Amazon really has a
democratizing principle that they want to have of really allowing everyone to
get everything faster at a lower price. Amazon really is kind of bringing the
future to you. All of their initiatives, like the drones that they want to use to
deliver items - even now we even have one day shipping in Calgary, which is
incredible. I never thought we would have one day shipping arrived in Calgary. But
it's pretty amazing, because as you guys know, I don't really drive it all. And so
having the ability to get products delivered fairly quickly is really nice
when it's something that I can't get from the stores around me. So you know,
when you're not able to get things that are close to you, it's really nice to
have it brought to you and then you don't need to use a car, it's a little
bit more efficient. That's something that Amazon is really good at doing, is
innovation. So what happens when you marry this idea of beautiful Whole Foods
and a healthy aura that whole food's has, and then the idea of innovation and
speed and efficiency that Amazon has? Well, you're going to have a very big shift in
the grocery market. And that's kind of what we're seeing right now. And that's
why people are panicking. That's why over the last couple of days the value
of a lot of traditional grocery stores has fallen: because people realize that
Amazon has taken a step here that is changing the market, possibly forever. And
how is that? Amazon has already given us a bit of a glimpse into the type of
future that they imagine for food. We've seen those ads where they have people
talking into their Alexa while they're making dinner, it orders them all of
their stuff from Amazon Fresh, and then they serve a beautiful meal, You know, in
minutes, to all their best friends because all the things that they ran out
of during the week have been brought to them somehow - probably by a drone or
something like that. Anyway, it arrives very quickly. That is part of the future.
But it's not the immediate future. I think what Amazon's going to be doing in
the immediate future with Whole Foods is actually getting it to be easy for you
to go grocery shopping. So at the beginning it's going to just involve
ease of shopping - it's going to be a lot of online ordering and what they might
be able to get rid of very quickly - and this is the thing that may surprise
people - but I would almost guarantee you this this is the first thing that's
going to happen - is what they will do is you will be able to do all of your
ordering online on Whole Foods - so you're going to be ordering all of your
groceries, they will be assembled and what they're going to be able to very
quickly start to eliminate is stocking shelves.
I bet you Amazon is not going to be stocking all of the shelves in these
Whole Foods stores. Whole Foods might still look pretty, but I bet it's going to be a
bit more of a "concept" at the front of the store. You'll be picking up your
groceries. There will be no going through the grocery checkout line. all this stuff
will be prepackaged ahead of time. Mark my words: very quickly robots are
going to be doing that stuff just like you have an Amazon Fulfillment Center.
You're going to go, you're going to get your groceries you will pay on your
phone ahead of time, pick them up...done. And that's kind of going to be the first
thing that they're going to do. So what is this going to really mean for you -
what it's going to mean is if you work in a Whole Foods, your job is probably in
jeopardy. It's definitely not going to be good in terms of the amount of employees
you see in grocery stores. And this is where it gets a bit complicated. I can
see how a lot of people may be very concerned about this. I mean, here in
Canada at least, almost every single grocery store you go to, it's almost
entirely automatic checkout. And it's moving that way faster and faster.
Because people don't like sitting around and waiting while someone checks them
through a grocery store checkout line. That's just the truth, and you can
long for a happier day when you'd go to farmers market, whatever, but that is a
different kind of experience, and it's not what people are really demanding at
grocery stores. People want things quickly. They like to be able to use the
internet to get their stuff. They want to get in and out in a hurry, and that's
something that Amazon is going to be helping Whole Foods to do much more
efficiently. So a lot of those expensive employees of Whole Foods that used to
be getting all sorts of amazing health care because I know that that's one of
the big things that Whole Foods does, is, you know maybe provide plant-based diet
recommendations for their employees, and all this wonderful stuff that's going to
be on the down turn. But like, there's going to be way less of that. Not because
they're going to be providing less to their employees - I bet you they will
still have amazing benefits packages for their employees. But they're going to
have far fewer employees. So that's going to be the first place that you're going
to see something like that, you're just going to see a drastic reduction in
employees for Whole Foods. Amazon is obviously going to be using
these Whole Foods stores in order to source some of their stuff for Amazon
Fresh, but that's - none of that is really what I expect to excite you guys.
It may even upset you if you are not a fan of the free market. But what I think
will excite you is something a little bit different that Amazon has to offer,
and that is kind of the direct to consumer mindset. And how does that help you if
you grow your own vegetables and your own fruit, if you're a farmer? It actually
helps you a lot. If there's one thing that's happened on Amazon since 2012,
it's been the whole idea of this marketplace where people can create a
product and start selling it through Amazon, have it fulfilled by Amazon and
have it reach a wide variety of people very quickly. It can even become a worldwide
phenomenon - that's been one of the things that Amazon is really good at doing and
what they might be doing and I would almost guarantee this what's going to
happen, is that, if you're a small farmer, suddenly your organic produce that you
might have rot before you could sell it is going to be able to be sold on Amazon
without really a broker or middleman. That food is going to be able to get to
the consumer more quickly. If you're a small organic farm and you produce
amazing produce, your stuff is going to be able to be sold through Amazon,
fulfilled by Amazon. It can be sold in Whole Foods stores - you might get a nice
little display of your apples, but people are also going to be able to buy that
stuff online no matter where they live and get it sent to them - which might by
more expensive at first, considering the cost of shipping and stuff these days -
but I think that over time what's going to happen is farmers are going to love
this. Because it's going to cut out the middleman, and I think that's what really
terrifies grocery stores. It changes the entire way that food works, because
currently if you have a small product, it's really hard to get it picked up
anywhere unless you go to Whole Foods. Because one thing Whole Foods has done over
the last, you know 20 years ,what they've really done is they've allowed small
producers a cool niche grocery products to get a market. Whole Foods has been the
market for those kinds of products, and that has been amazing for these people.
But what Amazon can do is actually amplify that effect and can take it out
even further. So instead of it just being you know one guy, with this crackers, it
can even start going out to people who grow fruit and stuff like that.
Just...you know if you make a cool breakfast cereal that it's going to show
up in all of the Whole Foods locations - it can actually be far bigger than that.
It can be - you make something in your in your, you know approved facility, you
develop say, a great breakfast cereal, or even even amazing apple chips that you
make. Those can get picked up far faster if you've got good branding, good
marketing. That stuff is going to be able to be taken to a much larger audience
much more quickly. So I would see that as the most immediate effect of this, and
it's kind of funny - um last week there was a YouTuber who made a video about
the the kind of - the death of her small business and it was really sad you know
this this raw food market that she had been working on for a long time and it
was kind of tragic she was saying, you know, that big business was taking this
away, and that she worried for the small farmer. And I would say don't worry for
the small farmers! Because you know what? As scary as it might seem that things
are changing, that smaller markets aren't really doing that well anymore - I think
this is actually a really promising opportunity for a lot of those smaller
farmers. Small organic farmers are not going to have to be worried about
dealing with brokers and things like that anymore. If you are a small farmer
and you're trying to sell your product at Walmart, forget about it! That
just does not work, and this might mean a total change for that kind of thing.
Especially for these smaller markets, smaller producers. It might make a really
big difference to them. So I actually kind of see Amazon as the farmers market
of the future and I would not be that surprised if in a few years we see a lot
more of this. I I think that's the first change that you're going to see. I do
think that a lot of people like myself - that don't really need to drive at all -
like people who live in major urban centers, are probably going to be doing
even less driving because of this. Because they're going to be able to get
all their groceries either through Amazon or maybe go and pick them up at
that Whole Foods -maybe be able to just go once a week and get their
their groceries that they've ordered ahead of time, pick them up, have them
already paid for. Or you know, if they have the money they could pay someone in
their neighborhood to pick up everyone's groceries and deliver them to them. And
that's something you see a bit more in the States. I live in Canada, we don't
have kind of that um, that system in place so much yet -
have people going out and picking up groceries for other people - but it's
coming, and it's coming all over the world, but especially in the States. It's
going to become the rule to have people doing things like that. The big warning
that I have for everyone is that grocery store employees, grocery checkout clerks
and even shelf stocking people - that is just - it is a business, it is a job that
is coming to an end. That's why I made the video about automation and robots
taking our jobs. I truly believe that because of the efficiency of capitalism -
which I actually don't think is a bad thing -
capitalism is extremely efficient. It irons out inefficiencies - especially
when you combine it with technology. It gets rid of inefficiencies in the market.
But what that means is that you are an inefficiency. And especially now that we
have robots that can do some of these jobs - if you look at Amazon Fulfillment
Center, it's pretty much entirely robots. And the reason they're able to get so
much done so quickly, is because they rely on automation.
[warehouse noises]
Robots are a great technology there are a lot of fun and they really help us improve the speed of
delivery to our customers it also helps us increase our selection to our
customers by over 50%
that is taking over everything and the only way we can
really defend ourselves against that kind of stuff is through something like
a minimum wage. And that's that's really the only thing that can do we need a
guaranteed minimum income something like that. Something even like what Milton
Friedman suggested back in the 70s, of negative income tax. That would make sure
that everyone got at least enough to live, instead of some of the more
wasteful social programs that we have today that just are far too expensive to
manage and really are a drain on our system and keep good things from the
people who need them the most. I really believe. Anyway I'd love to hear
what you guys have to say. Leave it in the comments section below. Do you think
this is crazy? Are you upset Whole Foods is being bought by Amazon? What do you
think this means to the business? Let me know and I hope you guys have a great
day. If you enjoyed this video, please give it a thumbs up and subscribe, so you
don't miss another great video like this one. And I'll see you next time. Take care, bye.
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