Amazon Sucks at Running Whole Foods

Discussion in '[H]ard|OCP Front Page News' started by Kyle_Bennett, Jan 19, 2018.

  1. Kyle_Bennett

    Kyle_Bennett El Chingón Staff Member

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    Whole Foods customers are complaining that Amazon has turned the grocery store into what looks like "Soviet Safeway." It seems as though the order-to-shelf system to control just-in-time inventory to bring operating costs down is not working as well for fresh food and vegetables as it does for books.

    "At my store, we are constantly running out of products in every department, including mine," a manager of an Illinois Whole Foods complained to Business Insider. "Regional and upper store management know about this. We all know we are losing sales and pissing off customers. It's not that we don't care — we do. But our hands are tied."
     
  2. Gasaraki_

    Gasaraki_ Gawd

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    Kyle, please don't use click bait sites as a source. Other articles running this story have interviewed store managers and the reason why this is happening was based on changes made before the buyout by Amazon. Amazon is now investigating on fixing this issue that Whole Food corporate did before they got bought.
     
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  3. ol1bit

    ol1bit [H]ard|Gawd

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    It's legit. I know plenty of people that shop or shopped at Whole Foods here in Central Phoenix. Its little things, like retired people not being able to reach up over their heads. poor store layout. The real question is, can they get people to go back, it's been bad since the takeover.
     
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  4. katanaD

    katanaD [H]ard|Gawd

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    i still find it interesting that a company whose premise was to kill brick and mortar stores, is now running some.
     
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  5. Kyle_Bennett

    Kyle_Bennett El Chingón Staff Member

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    Please get your list of Gasaraki_ approved domains so I will have those to refer to in the future to shape all of our news posts. Thanks.
     
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  6. Kwaz

    Kwaz Whine & Cheezy

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    Is this why they raised the price of Prime?
     
  7. kju1

    kju1 2[H]4U

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    IMO anything here is good: http://lmgtfy.com/ ;)
     
  8. Dead Parrot

    Dead Parrot [H]ard|Gawd

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    Would be interesting to read the minutes of meetings held before this was implemented. Did they even consider how to handle late trucks, icy roads, or folks stocking up before a storm? The results in the store seem to indicate they didn't. "Just in Time" inventory management can work for books because the book customer may complain but often let the order stand if their book is a day or so late. The same can't be said if they are shopping for a Super Bowl party a few hours before the game.
     
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  9. dangerouseddy

    dangerouseddy Limp Gawd

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    with fresh food you want it in the shop and sold asap I would have thought, unless amazon doesn't have to eat the spoilage costs.
     
  10. kirbyrj

    kirbyrj Why oh why didn't I take the BLUE pill?

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  11. Khahhblaab

    Khahhblaab Limp Gawd

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    ...just in time inventory cant work for a supermarket....duh. First of all, what are you goiing to do with all of the empty shelf space. Primarily, there is too much impulse buying at supermarkets. Cant be reliably tracked.

    Just in time inventory may be a situational illusion. Because stock isnt sitting on shelf space, its not losing money. But who's renting the unused space to the keebler elves? No-one

    Just in time can work when tracking inventory that is going to make a car - for instance - but groceries? Its a silly idea for food staples, unless they are considering: We are down to our last 200 of X. Then it can work, as long as the product isnt on sale.

    IMHO........:cool:
     
  12. kju1

    kju1 2[H]4U

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    Stock sitting on shelves can lose money. It can expire. It can have an opportunity cost of having more of something else that wouldve sold etc. Store floor space is at a premium. Vendors will often PAY stores to stock on particular locations (i.e. end of row displays, special promotions etc). Stores will also manage inventory themselves to this effect. Ooh I have 200 units of twinkies that are about to expire I better move them from their normal shelf to an end unit and put a sale up. etc etc.

    Just in time inventory can work if you accurately define what the "just in time" means. I imagine it means something different for groceries than books. Maybe I want my produce to show up every day but only enough to cover 2 days worth of sales etc.
     
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  13. sfsuphysics

    sfsuphysics I don't get it

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    It wasn't that many years ago I walked into a Safeway and I noticed a similar trend of shelves not being stocked on quite a few items, not just the things that were on sale (for real sale too). And I live in a major metropolitan area, not some rural community so the only way I could possibly explain what was going on is that they were cutting down massively on how many goods they store in the back, so when something is out, it is out. So yeah this trend started quite a while back, before Whole Foods started doing it.
     
  14. Kaitian

    Kaitian [H]ardness Supreme

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    People go to Whole Foods for their Super Bowl party? You're funny.
     
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  15. NoOther

    NoOther [H]ardness Supreme

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    You realize that supermarkets already use a system like just in time? This isn't something revolutionary, they do track the things people buy, how often, when, etc. Supermarkets occasionally have runs on things they were not expecting, which is why we have jokes about people buying milk and bread before every storm hits. Just like any other system it takes reiterations of the process to tune it so it starts working better for you.
     
  16. Kyle_Bennett

    Kyle_Bennett El Chingón Staff Member

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    Actually Whole Food's new system is called RRJITIAA, "REALLY-REALLY-Just-in-Time-if-at-All.
     
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  17. kju1

    kju1 2[H]4U

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    I thought it was "P3XNPFSN" - "Pay three times normal price for the store name."
     
  18. xorbe

    xorbe [H]ardness Supreme

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    You just ruined my day, I'm nowhere near retired!!! F*** this frozen shoulder bs I've got.
     
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  19. Derfman

    Derfman [H]ard|Gawd

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    I was thinking more along the lines DGAFSOL system.
     
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  20. sirmonkey1985

    sirmonkey1985 [H]ard|DCer of the Month - July 2010

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    pretty much nailed it.. i don't think a lot of people realize just how much food is wasted in stores and most of them aren't even allowed to donate it because of the bullshit expiration dates. when i worked at safeway we were throwing out thousands of dollars worth of expired goods daily and most of it was food known to be edible for weeks after the expiration date.
     
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  21. Khahhblaab

    Khahhblaab Limp Gawd

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    You make a good point about expiration dates. Most shelved items have enough time between, shelf on-shelf off, that there isnt a real problem as long as the store rotates items every so often. I'm looking at the observation that very few items are mobile. You are able to find your favorite canned good at the same bat time, same bat channel - yearly.

    So what space is being underutilized?

    One way that just in time inventory is supposed to work is by not having unnecessary items sit around waiting to be used and the space that they would be, can be used for something else. Groceries remain in the same place - not to be replaced by other items when it is sold out. Just empty shelf space waiting to be restocked. I just dont see just in time really being a better way to stock items with the exception of slow moving items and a warehouse full of them.

    Just in time then becomes a way to track items, close to what simple stock tracking would achieve.

    Perishables are the exception. Their expiration dates can come fast and if they are just sitting around because no-one wants kale this week, its a waste of kale.
     
  22. nepenthe

    nepenthe n00bie

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    I'm one of those shoppers who goes to multiple grocery stores depending on what I need and I'm finding myself less and less likely to go to Whole Foods since the Amazon purchase. I really only shopped at Whole Foods for their selection of local produce, local meats and local eggs/milk. However it seems Amazon is slowly phasing out a lot of that in favor or their own 360 Organic brand, which is disappointing to me. I fear this trend will continue and Whole Foods will turn into a glorified Amazon 365 Organic store. Which will be pretty far removed from the Whole Foods I grew to appreciate, for certain things at least.
     
  23. Uncle

    Uncle 2[H]4U

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    " I want it and I want it now". This is a work in progress get over it. See!!!!! the new society with instant gratification and short attention span, is rearing its ugly head.
     
    Last edited: Jan 19, 2018
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  24. jphoto

    jphoto n00bie

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    "Whole Foods employees tell the site that these problems actually began “before the acquisition,” and blame shortages on a brutal inventory-management system that rolled out nationwide in early 2017 called order-to-shelf, or OTS."

    This is common to many articles about this story. Not Amazon's thing.
     
  25. misan-thrope

    misan-thrope [H]ard|Gawd

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    Agreed, multiple sites and reports are that this was a cost-savings program implemented by Whole Foods to cut down on their costs and OPEX.
    Basically a system, which appears to be short sighted or not researched and analyzed well, to cut spoilage to near 0 at the expense of lost sales due to shortage.
    Most articles state that Amazon is actually trying to undo much of this.
     
  26. kju1

    kju1 2[H]4U

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    I would hazard a guess that 80%+ of a grocery stores inventory is "slow moving". Still there is an opportunity cost to stocking more of one slow moving item than another. If i buy 60 cans of yak soup (selling only 1 a week) I have to stock and store a years worth of yak soup. Whereas if I sell 6 cans of beef and lamb soup a day I should reallocate my storage from yak soup to beef and lamb soup. I can use JIT to predict when I should reorder yak soup so I dont miss a sale but still service my customers who love eating yak soup (and thus draw them into the store since nobody else in their right mind would eat that shit).

    Yes using it with perishables you will see a more immediate impact. But again there is a cost to having to inventory a larger amount of non perishables. Ask any store owner if inventory on hand costs you money and they will say yes its called carrying costs. Many factors go into it such as the cost of using up capital that could be used for other purchases, taxes, etc. You want to make sure you have enough on hand to move items quickly or your risk the market value falling below what you paid for them. Take pickles as an example: when walmart crashed pickle prices how many grocery stores do you think lost money because they had a large stock of pickles at the time that they paid a higher price for than walmart was selling them for now?

    Buying local can actually be pretty bad for the environment. It might seem like a good idea but when you really dig into the costs of a small farmer producing a limited amount locally vs a vast mega farmer achieving economies of scale you quickly see how local ends up being worse.
     
  27. clockdogg

    clockdogg Limp Gawd

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    And killing the ones they run. Seems like Amazon is hooked on killing. First the fresh produce, then your privacy. Or the other way round.
     
  28. mynamehere

    mynamehere [H]ard|Gawd

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    The irony is strong with this one.
     
  29. kju1

    kju1 2[H]4U

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    Probably could use some vitamin d though.
     
  30. otherweeb

    otherweeb Gawd

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    Reverse Psychology, if you cant beat them, buy them, destroy their PR and customer base, scare off the good conscientious workers, then bulldoze the building for a Fulfillment Center.
     
  31. ///AMG

    ///AMG 2[H]4U

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    Grocery stores are not quite like factories. Rarely can you be deterministic about services etc. I do see what they are doing, but using JIT to stock grocery stores will always be imprecise especially if they don't use sufficient safety stock. But I bet some bean counter high up modelled the lost goodwill and sales vs the spoilage costs and decided it was more profitable to do so.
     
  32. TwistedAegis

    TwistedAegis [H]ardForum Junkie

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    Seems like they f'ed up big time here though. Kind of like a network effect; if you don't have the carrots and lettuce I need regularly, then I'm not going to stop in for toothpaste and shampoo, too, and you lose that person's business entirely.

    Well, good thing Amazon has deep pockets now, it sounds like quite the expensive mess they've created for themselves. Maybe they should just sign up for Prime and start ordering Amazon groceries direct to the their own stores? ;)
     
  33. Semantics

    Semantics 2[H]4U

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    You probably never noticed this but most grocery stores don't much or any inventory in the back of most items, they just fudge the on floor location for many things. Backroom in grocery stores tends to be for items in transition; place to stage items from any trucks they had recently that hasn't been worked and a little bit of where vendors can keep some stock if the store allows it.

    Walmart has cut down/eliminated grocery backstock, look at the top shelf that's obviously too high for people you'll notice that's their overflow. JIT has been used for food stores for awhile now, they're just doing it poorly so they need to work out their supply chain. Companies just RFID tag everything now and they just get pretty accurate inventory numbers from the floor to fit their models.

    Most retailers are moving to eliminate the backroom, some companies are looking long term to using the space in the backroom to actually compete with amazon and ship product out from the back to cut down on expedited shipping. Making every store a shitty version of a warehouse to ship out from.
     
  34. Spidey329

    Spidey329 [H]ardForum Junkie

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    I'm going to guess that the higher volume from the lower prices Amazon put into place may have found a deficiency in the inventory system. It's possible that the high-price/lower-volume business model of Whole Foods past may have worked fine. If they aren't selling a ton of X, the inventory system doesn't need to be as rapid to replenish X.


    I don't doubt that'll be the shift many make. You can get higher density inventory in the backroom versus a store shelf, and you can do more advanced control mechanisms (robot retrievers). So switching to a more advanced near-real-time inventory management system would allow you to downsize the shelf space in the storefront while maintaining the same amount of products and a better quantity of inventory to handle online orders.
     
  35. Khahhblaab

    Khahhblaab Limp Gawd

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    Yes. But wouldnt it be a more streamlined process to pinpoint these items and give them less shelf space to begin with? The 'super'market that I go to mostly has placed organics and other 'gaining ground' items in their own aisle. This way, its an easy matter to see how these products move. Campbells, vitamin water..........Budwiser have a constant motion. As soon as stock gets low, you see folks reaching to the back of the shelf and store security thinks that someone is doing something wrong because of the customer reaching to the back of the shelf to get one of the few left to be bought.

    Time to restock!

    These items dont need specific tracking. Most 'name brand' items dont need specific tracking. Ok. Not all, but consumers have a way of only wanting the brands that they are familiar with. Advertising works very well. Yes again. It depends on the location of the store. 'Whole foods' in SOHO NYC, will sell 1000 times more of a certain product than "Pricechopper" will of the same item.

    JIT, will help the SOHO 'whole foods' store more than 'Pricechopper' because 'Pricechopper' wont stock blue moon items.

    All stores must warehouse fast moving items. So I guess grocery stores with a large stock can benefit from understanding through Just-in-time where to focus their warehouse space. Yet, I am still having a difficult time with the idea that JIT works as well for a supermarket as does a manufacturing plant. You show that it can be a valuable tool. I feel that understanding your fast moving items can work as well.


    With a name like semantics, I bet you can see how JIT wont allow a store to start thinking about what to do with the extra space that JIT should provide. Its just a matter of making sure that the warehouse has the items that the midnight stock crew will need to fill the shelves. Not a way to put more variety on the shelves by reducing the size of the warehouse and expanding floor space into the unused space that the warehouse gave up.

    This can happen in manufacturing. Not so much in a supermarket. IMHO.



    Cattle=Bovine=Cow=Ox=Yak. Oxtails is a pretty good soup:rolleyes: F*ked up that steer have no balls:rolleyes:
     
  36. Semantics

    Semantics 2[H]4U

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    Well actually the space reallocation and utilization is more to do with general stores like a walmart or target. Grocery stores don't really have that.

    Grocery stores for a long time have had the goal of next to no backstock because grocery moved to just in time fulfillment because grocery items have razor thin margins. Between lack of large markup, along with shelf life considerations and people love to damage groceries means not maintaining a backroom and just making sure to sell though what was bought has become a priority so that also meant shifting store space to dedicate more to the floor and shrink the floor size of the backroom.

    Also grocery stores don't really have an overnight team, they'll work part of the truck early in the morning but that's maybe 2-4 hours before the store opens not over night, just something like 4am. If even some stores practice unloads mid day, and they'll just work freight throughout the day they reduce the cost of having people be in the back. If there is nothing to pull from the back during the day the person/persons who would be doing mid day fulfillment of the shelves can just push freight.

    You can hide empty shelves by flipping labels and spreading out inventory. Grocery stores for a long time have not had any real backroom inventory.
     
    Last edited: Jan 19, 2018
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  37. lostin3d

    lostin3d [H]ard|Gawd

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    Not even a remote fan of JIT. I know in some circumstances it can make sense but in any situation with real time, face to face customers, it's an idiotic strategy that ultimately just creates a negative experience for the customer, and often exceedingly higher labor costs for the employer. I'm also still baffled by Amazon's new strategy of getting into retail. It's a bummer this has happened to Whole Foods. Maybe it'll encourage a new upstart in that market.
     
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  38. DarkStryke

    DarkStryke [H]ard|Gawd

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    Myers Super Foods > Whole Foods
     
  39. ewb302

    ewb302 Gawd

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    In my area, there are 4 different brand grocery stores in a 2 miles radius. Competition is good. Whole Foods will shape up or ship out.
     
  40. BlackManx

    BlackManx n00bie

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    Итак, это очень хорошо, очень хорошо. Really? Perhaps I should go give Whole Foods a try, Lucky's and Safeway do nothing to remind me of the food stores we had back in the Cold War days in the Glorious CCCP.

    But really I don't shop at Whole Foods very often since I live equidistant between two of them. Each is over 3.5 miles away making the other markets way more convenient. Thanks for the info, I will avoid the long trek just to be greeted by empty shelves and upset employees.