Did you see the news that Amazon is buying Whole Foods for $13 billion?
Whole Foods has been at the center of the "good food" movement in the United States since it was founded in Austin, Texas in 1980 and has grown to over 400 stores nationwide. This deal marks a seminal moment in local food / good food / whatever you want to call it.
I have spent a lot of time over the past few days reading reaction from around the Internet and posted on Facebook to get feedback from our crowd.
In short, I think this boils down to: keep innovating, keep leaning on your story, importance of marketing, importance of technology and keeping up with consumer expectations around convenience and delivery. This deal just confirms the general direction I have been pointing to over the last few years and accelerates these same trends.
Here are some of my first take thoughts. I would love to hear from you and what this means for your business.
- Whole Foods was seeing a lot of weakness in same store sales and with Wall Street, that put them at risk of being sold. Whole Foods was faltering in a movement they helped pioneer.
- The low-price ethos of Amazon is going run head on with the Whole Foodsethos of somewhat-higher-prices for higher quality. So what happens? My guess is that lower prices will win. If you are selling into whole foods as a small scale farm, watch out.
- The "whole paycheck" reputation really stuck to Amazon and was hard for them to overcome. I think is something we really need to be careful of in farm direct sales -- we have a reputation as being elitist, only for rich people. I do not think it is true, and I could write a lot on this issue, but it is something we really need to work to overcome as soon as possible if we want to grow this sector of agriculture. And I do.
- Whole Foods sales are 2x the sales for all local food. WF is not really about local food. It is a grocery store.
- Amazon wants to move into the grocery business to compete with WalMart and grocery is HARD, this deal gives them 400+ physical locations and puts them in short reach of many Americans (especially affluent Amercians who are by and large Amazon prime members).
- Amazon wants to move to same-day / next day delivery for food and this will change consumer expectations. We need to figure out convenience to continue to compete.
- Amazon is going to increasingly compete for our same customers so we need to continually improve our game, get better technology, get better at marketing.
- As farmers, we have the "story" that Amazon/Whole Foods cannot hope to match so we must continue to lean on that as our competitive advantage. Consumers want to spend their money in a way that they can feel good about and in a crowded market, this is how we stand out. Telling your story -- ie marketing -- takes work. You are probably not spending enough time on this aspect of your business.
- Competition in "food" is just going to continue to increase. We must innovate. What worked last year will not work this year.
I look forward to hearing your thoughts on this deal and what it means for the future of farms like ours.
Founder, Small Farm Central