Hacker News Reader

Comment by joering2 | Hacker News Reader

Slightly OT but I just won a bet with a buddy of mine who works at Wholefoods. Somewhat knowing Amazon for huge variety of products, he assumed Amazon will even add more products to Wholefoods palette. I told him to the contrary - Amazon is a hard core analytics company with simple website [todays standards] and incredibly rich physical delivery network. We bet $100. Yesterday I visited him at work. Year later Amazon hs cut off its 365 brand of awesome organic stuff unique to Wholefoods and is on plan to cut 20% more products according to internal email he received. Whatever didn’t hit “moving average” high enough is getting sliced - no more 25 types of meat, just one vacuum packed not even prepared at Wholefoods. Amazon is on its path to destroy the brand. Soon there won’t be anything there that you canmt buy at Wallmart at 10% discount. / rant

View on HN

That sounds depressing. Seriously. Similar kind of thing happened at a bakery I work at. We used to make so many varieties of baked goods, but they've been cut down to the items that sold well. I mean, that means less food goes to waste in the end, but it is still disheartening and I think is a shame as the glass displays looked so much more pleasing with the plentiful variety it had before.

You can please 80% of customers with 20% of products, but that 20% is different for every customer.

Sure but there is always a tension between being able to address as much of the potential customer base as possible and profitability. On one end of the spectrum you have grocers like Aldi or Lidl that have slashed prices and margins by reducing SKUs (among other cost saving measures). Whole Foods probably has some room to shed unprofitable inventory so long as it preserves its upscale, ecologically conscious brand.

80% of customers go to Walmart for the cheapest thing they can find to get the job done. I don't think anyone thinks it's a good idea for Amazon to become Walmart (except for investors maybe).

Whole Foods was collapsing when they were purchased. They were going to have to make changes regardless.

And at any rate, white label organic foods are just generic foods (like you find in bags at the bottom of the cereal aisle) that were grown using different types of fertilizers. It's not like "365" is an actual company. It's a label slapped on any number of generic stuff.

Your second paragraph is overly dismissive. People buy brand-name 'Tylenol' for a high markup over generic acetaminophen, even though they are pharmacologically identical.

Instead, your argument seems to reject the idea that Whole Foods - or any brand - has a brand image, and associated cachet, which people are willing to pay for.

Manufacturer's brands are meaningful. White label brands are not. "Rolex" means a watch made by a specific manufacturer. If instead Rolex just bought arbitrary Chinese watches and put their logo on them, the brand would mean almost nothing.

This is the difference between manufacturer's brands and white label brands.

So your view is that Tylenol is able to charge excess because McNeil Consumer Healthcare / J&J makes the acetaminophen themselves? Even though there is no meaningful difference in the product vs. a generic brand?

Using your brand model, can you explain why Unilever paid $1 billion for Dollar Shave Club, when Dollar Shave Club razors are Dorco products?

Speaking of Chinese watches, people by MVMT watches for the brand, yes?

(Yes, it's not an 'arbitrary Chinese watch' as MVMT does quality assurance. But brands aren't created on "arbitrary Chinese watches" so I assume you were using hyperbole rather than making a meaningless statement.)

You can spend your money how you like, but you should know that white label products are literally generic products with somebody else's label on them. In fact, the same generic product will often be sold under a number of different labels in some cases. In other cases the same label will have products from entirely different manufacturers. White Label brands tell you nothing about the product.

Yes, I know what white label goods are.

But your statement "white Label brands tell you nothing about the product" is not correct.

I gave two examples (razors, watches) where people buy white label goods and pay more because of an attached brand.

That's because brands don't provide only a product but can also provide a service. That service might be quality management, or it may be cachet, as in "selling a lifestyle".

Hence why I point out there's good market evidence that your original statement is "overly dismissive" of brands.

I don't mean to dismiss brands. Just white label brands. All it means is that somebody somewhere has decided to slap a label on it. It's like buying a product because one person gave it a good review. Not worthless, but pretty close.

Again, I pointed to several examples where people are willing to pay for white label brands.

These are also cases where the label was more than "slapped on".

Therefore, your original use of terms like "just generic foods" and "slapped on" were indeed overly dismissive of white label brands because it ignored those white label brands which did not follow the practices you described.

Indeedm, the 365 brand is one of those which is not simply "slapped on" - https://www.thedailymeal.com/eat/10-things-you-didnt-know-ab... .

The problem with hacking the bell curve like this, is that the bell curve will continually adjust itself within the new parameters. There will always be 'fringes' until the sample space of "things being measured" is too small for the bell curve to apply.

In this case for Amazon, it's reaching a limit of capitalism: only selling the most common and profitable items in order to maximize profit and minimize waste (which itself maximizes profit). This will have the side-effect of making the "things they no longer sell" have greater value due to their scarcity, and in turn greater profitability as a 'boutique' product.

Similar theory to the unrelated topic of coal versus renewable energy, in that as renewables gain popularity the demand for coal will go down, and therefore the price goes down as well, lowering the point at which coal and renewables compete for being the cheaper source of energy (carbon price notwithstanding).

Another example, although far more theoretical, is that of personality profiling. What are the fringes? Once you've removed the "terrorist"-level fringes, does the system re-adjust to a new normal and give a new set of fringes to target?

Forced normalization as an end-result of pure data analytics (AI, ML whatever you want to call it).

I'm assuming these effects are covered by fairly basic economic theory (which I haven't studied, but somehow find more and more interesting as I get older).

Reply on news.ycombinator.com