Whole Foods may be alienating local suppliers (AMZN)

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Whole Foods is introducing new rules for its suppliers to try to lower costs and centralize its operations, but it may be hurting small businesses that sell at the grocer in the process, The Washington Postreports.

The new policies may make it harder for local vendors to succeed at Whole Foods.Additional costs, accompanied by less control over inventory, are likely to adversely impact sales — small businesses’ products may lose their personal touch, while the suppliers may have more difficulty turning a profit.

With tastings and demonstrations now costing money to conduct, as many of them will go through Daymon, it may be harder for new brands to gain exposure. And much of the exposure they do receive will be through Daymon, potentially making it less effective because the company likely won't be able to bring a personal touch to every brand. Meanwhile, the forced discounts, while good for the consumer, may not be sustainable for local suppliers.

While the opportunity to streamline operations is valuable to Amazon, it may lose its locally sourced products, one of its calling cards, in the process. Filtering all brand inventory management through one firm should create a more cohesive image for Whole Foods, as it will have more control over its products than ever before. This is a risky proposition, however, as Whole Foods built its reputation as a haven for local brands, and these new policies could drive those brands away.

This initiative has been in the works for two years, but it still may be another example of Amazon shifting control of the grocer over to the Whole Foods national office.Amazon has previously moved Whole Foods’ purchasing decisions to the national office, and these new policies continue its apparent move away from local brands.

This will create a more consistent Whole Foods experience, but may get rid of one of its core values in the process. And with consumers questioning its quality of late, and prices not dropping as promised, it’s possible that Amazon is moving away from what made Whole Foods successful.

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Whole Foods may be alienating local suppliers (AMZN)

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