The independent and up-and-coming brands that were once a hallmark of Whole Foods Markets’ success – particularly during the early days when it was still a privately-owned brand based in Austin, Texas – are on the verge of a revolt against the store now that it’s under new management as Amazon tries to squeeze every last penny out of one of its most high-profile investments.
Several small brands complained to Business Insider that WFM recently hiked the fees its vendors are expected to pay, making them responsible for more of the costs of shipping and stocking their products. The company has also started instituting higher fees for prime shelf space, as well as additional fees if smaller brands want to hold product demonstrations in Whole Foods’ stores.
It’s also forcing smaller brands to pay additional fees to a small, Connecticut-based “retail consulting” shop while also dropping “minimum shipment” guidelines that helped stores experiment with small batches of new products.
The hostility of the brand’s new corporate overlords has made some smaller sellers nostalgic for the good ol’ days when WFM was still an innovator in the world of independent food brands and locally sourced products…
“I once drove to every Whole Foods store in the Portland area and dropped off jars of our nut butters” for stores to sell, said the founder of a brand of natural nut butter. “That’s over, that’s done. That’s not ever happening again.”
Another vendor intimated that their brand is on the verge of pulling out of WFM because, with the added fees, the company is now losing money on some of its shipments…
“They have pissed off their employees, they have pissed off customers, and they have pissed off their vendors,” said a Whole Foods vendor of eight years who asked to remain anonymous for fear of retribution. “From a financial perspective, we can only take so much abuse before we say this just isn’t working for us anymore.”
And while the company didn’t officially comment, it’s likely that these higher fees are meant to offset massive price cuts that Amazon instituted almost immediately after taking over WFM…because even Amazon shareholders can only tolerate massive losses for so long…
But the irony is, by squeezing small brands past their breaking points, Amazon risks destroying the one competitive advantage that helped bring WFM to national prominence: It’s offerings of local and independent brands. In the old …read more