Amazon + Whole Foods. A Note to the Team About How the Game Has Changed.
How this changes the grocery industry and multi-use retail, forever.
This morning, I awoke to a flurry of push notifications, emails and text messages: Whole Foods had been bought by Amazon. Woah. This was big. And our team and our community had questions. A lot of them. My response to the team is posted below, in its entirety. With one exception…References to some confidential, key strategic projects have been removed.
Today, Amazon decided to buy Whole Foods for $13.4 Billion (a 27% premium to their share price). You can read more in the NY Times article here. A fascinating development and not what I expected to wake up to on this sunny Friday morning. I imagine some of you are wondering what it means for us and for the grocery industry. I wanted to share my transparent thoughts and invite you to join me in an open dialogue.
Overall, this is great news for Good Eggs. This validates our original vision.
- Groceries are the largest retail industry in the US — almost 6% of GDP. We knew it would eventually shift online, but as of today, less than 5% of groceries are purchased there. The US is far behind other international markets. Something was bound to change.
- The single biggest thing that could happen to us (but which we have little control of) was for groceries to move online — quickly. This deal just paved the way for that to happen. More than 50+ million people in the US are Amazon users. Bringing the Whole Foods assortment to this audience catapults good grocery into the digital world. Before today, online grocery was seen by many as a niche, nascent retail category. That is now a much tougher case to make…
This will not be good for all.
- Traditional retailers like Kroger, Sprouts, and Target who are chained to big box stores have already seen their stocks crash by 4–15% today. To thrive, the smart ones will adapt and aggressively pursue a strong, online grocery partner.
- Instacart is at risk of losing one of their largest partners (Whole Foods). What happens if they end up left with primarily mass merchants and become more dependent on ad revenue from large CPG brands?
- UNFI is the primary distributor for Whole Foods. Whether it happens now or in 2025 (when the contract expires), they may have just lost their largest customer. Their stock is down by 10%.
- Caveat: Yes, the deal could be blocked by the government (antitrust) or fall apart in due diligence. But regardless, this is a huge deal. The long term implications are likely to be profound and lasting.
This supports our mission.
We want to reinvent your food system, for good. At Good Eggs, this mission is why many of us jump out of bed everyday. Now, health(ier) food will be as convenient as conventional junk food. Nationally. For the first time ever.
This is also why many of us have been working to grow organic food companies for the decades. Does this mean, our job is done? Nope. We have a long way to go. Imagine a world where local absurdly fresh produce, bakery and seafood is the new normal. It may seem crazy, but the idea that organic would be mainstream seemed crazy 25 years ago. We are bringing in the next wave of change.
We will stay humble.
Amazon is a customer-focused, logistically-minded, data and e-commerce expert. Whole Foods is a respected food brand and pioneer in natural. That is a fierce competitive combo. The game is on and I am honestly excited and honored to compete against such a worthy new opponent.
Whole Foods and Amazon will spend the next couple years integrating their radically different models and teams. Everyday, new speculative theories will emerge about what Amazon might do with these 400+ stores, their new customer base, and the Whole Foods business. During this period, we will remain undistracted.
We will stay laser focused.
All of the hard work from the last 6 years has prepared us for this very moment. Today, we maintain our vision, and we double down on everything we are already doing. We continue to execute flawlessly. We hold our course.
- We are dreamers who do. We stay true to who we are.
- We keep listening to our customers. We don’t let the competitive noise drown out their wants and their needs. They guide the way.
- We are the only company that offers a complete bounty of absurdly fresh groceries, affordable staples, easy weeknight dinner kits and of course, wine to wash it down. 80% direct from local producers. Delivered directly to your door. Same day.
- We own absurdly fresh. Produce picked yesterday. Fish that was caught while you slept. Bread baked this morning. Whole Foods + Amazon can’t touch our expertise here. We know how old & tired their perishables really are and how far away they were really grown.
“As they consolidate buying and push pricing downward, they fail to solve the real problem with grocery: the quality of perishables in the US is horrible. Amazon’s logistics won’t solve this problem — in fact, they will likely exacerbate it. Good Eggs entire model is based on buying directly from local foodmakers. This lets us deliver absurdly fresh groceries. This is what modern consumers crave. This is where the future of grocery is headed.”
- Within the world of groceries, we have proven that we can do this complex operational dance more profitably and more reliably than almost anyone else. In the next few weeks, a story will emerge to the public that unveils some of these proof points.
- Let’s triple-down on curation. Unlike other markets with miles of aisles, we believe less is more. Amazon carries over a million grocery skus. Wal Mart carries 300,000 items. Whole Foods carries over 60,000. Does anybody really need 2,542 kinds of sliced bread to choose from?
- We stay committed to great customer service, built around people, not bots. We will continue hiring the right team and giving them real equity.
- We strengthen our values as others dilute theirs. We will build the highest food and labor standards in the industry.
Note: References to some confidential projects have been removed from this section.
We will get louder.
People love the underdog. They rally around it. And guess what? We are the real deal. We don’t have to fabricate a word. We have so many stories worth telling. Let’s stand tall, with a strong voice and share our point of view.
The game has changed.
We have a front row seat as the grocery and food world transforms before our eyes. Let’s recognize how fortunate we are to be part of this moment. Let’s take advantage of this once in a lifetime opportunity, roll up our sleeves and continue working to fulfill our mission, for good.
“Earlier this week, we also published a mini-magazine that we’re sending to all of our first-time customers. An introduction to our business, our partners, our team — the things that set us apart. This seems as good a moment as any to also share our point of view with you. Want to find out more? Download the magazine here.”