Amazon Buys Whole Foods: The Future of Food

Embrace your robot overlords! Amazon bought Whole Foods Market for a record $13.5 billion dollars. So what’s next?

Amazon will be using Whole Foods Market as a staging ground for its plan to decimate traditional retail. Sounds scary? Well, yes and no…

The good news on the Amazon deal

In 2012, Amazon offered a program called Amazon Fulfillment. This program stores, picks, packs, and ships items for small producers in exchange for a small fee. The only work done by the person manufacturing the product is creating their listing and shipping them to Amazon. The rest of the heavy lifting – including customer service – is provided by Amazon.

This program has made it much easier for small businesses to get off to a running start. Amazon provides all the infrastructure required to sell at a very low price, and the seller only needs to provide the actual product. This allows many small businesses to avoid the costs of selling to bricks and mortar stores, and ship directly to consumers. It’s been especially valuable to people creating small quantities of unique products that would be harder to sell to giant retail chains.

The food market is one of the last areas that has managed to avoid this type of competition, since most consumers are still buying groceries from a local store.

But Amazon’s partnership with Whole Foods will transform this paradigm. By offering the potential to remove middlemen from the equation, Amazon’s Whole Foods Partnership may make it possible for small organic farmers to sell directly to consumers in a way that hasn’t been possible for decades, apart from small Farmer’s Markets.

As a farmer, it’s worse to have your produce rot because you’re unable to sell it for a reasonable price. I therefore anticipate that a change like this will actually be welcomed by many farms.

The challenges of automation

The bigger challenge will be the automation (and accompanying job loss) this change will bring. Everybody needs to eat, and for years this has meant a giant grocery industry devoted to providing food for our homes.

The US Bureau of Labour Statistics reports that in May 2016 2.7 million Americans were employed in the grocery industry.  A brief review of the numbers reveals that nearly 1 million – 867,920 – of these employees are cashiers, while an additional half million – 512,690 – are stock clerks. These two occupations are sure to be mostly eliminated in the near future, thanks the efficiency of Amazon Robotics (formerly Kiva Robotics, which Amazon purchased back in 2014). Between robots and some well-written apps, Amazon should virtually eliminate both categories of employees from Whole Foods stores in the very near future.

Of course, neither cashiers nor stock people make high wages. But middle management does, and since robots require a lot less management, many of these positions will likely be lost as well. Of course, some new jobs will be created along the way. For example, Amazon uses humans to place orders in boxes once the robots gather the products, as you can see in this video.  But the trend is definitely towards automation and increased productivity (which basically means as few humans as possible).

Don’t fear the future, prepare for it.

I’m not a big fan of Luddism. It doesn’t work very well. So instead of protesting automation (which is inevitable), why not focus on the positive?

Firstly, the Fulfillment by Amazon will likely introduce many sellers (including farmers) who have been previously shut out of the retail grocery market. That’s good news. And even the jobs that will be lost aren’t exactly the most enjoyable jobs on the planet. Does anyone really enjoy risking back injury to place heavy items on shelves in the middle of the night?

But changes like this are just the tip of the iceberg when it comes to automation. The robots are coming for your job, that’s just the truth. And they work harder, faster and more consistently than you, and require far fewer resources.

This places employers in a difficult position. Obviously Amazon and Whole Foods want the most efficient, affordable workforce. That means machines. But if every corporation slowly replaces their workforce with robots, who will buy their product? Probably not the unemployed.

Optimists will argue that new jobs will be created, and certainly there will be some. But not as many.

Universal Basic Income

Once again, this is where I would introduce the idea of Universal Basic Income (UBI) a minimum, living wage paid to every person regardless of whether they work or not. If this sounds a little too leftist and Utopian to you, please remember that Milton Friedman argued a very similar policy back in the 1970s. His version was “negative income tax”, and resulted in an income for persons making under a certain amount. I believe this is the single most important social issue of this century (particularly for any nation that doesn’t already provide free, Universal medical care to its citizens), and I will address the issue further in the next episode of ModVegan.

And while some will argue UBI encourages laziness, etc., I think the opposite is true. Our current system robs the underprivileged of the right to decide for themselves how to spend their social assistance (thanks to a grossly inefficient, but well-meaning welfare state that wants to make things as complicated as possible in order to have the most employees possible, because without government workers, many people would be…unemployed). But persuading people UBI is better than the current system is challenging, even though many feel it should appeal to both sides of the political spectrum. 

Bottom line

Ultimately, the future of food and of work itself is going through a significant transformation. It’s up to us to decide how we’ll respond. We’ll we try to stave off the inevitable? Or meet these challenges head-on, with strategies to help us thrive in a changing world?

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