08/28/2016
Amazon Upping its Grocery Game? Industry Insiders React
As the grocery market continues to search for the best way to blend the physical supermarket experience with the convenience of digital retailing, a new player might be stepping in to lead the way.
Rumors are circulating that Amazon is building a 10,000-square-foot facility in Seattle, which will allow shoppers to pick up their online grocery orders in a drive-thru format. The news was broke by GeekWire, and although the project has yet to be confirmed by Amazon it has many similarities to an already confirmed project current under construction in San Francisco.
While details are scarce at this point the emergence of Amazon in the physical grocery market could have wide-reaching implications. The majority of consumers have yet to jump on the digital grocery shopping bandwagon for a number of reasons — the physical experience of walking the grocer's aisles and selecting their food quickly and first-hand foremost among them. But if anyone is going to be able to lure shoppers away from their local grocer and into browsers and smartphones it is likely to be Amazon, with its millions of users and reputation as the preeminent leader in all things digital experience.
To help make sense of the rumored move RIS polled a handful of industry insiders on what Amazon's foray into phygital grocery retailing might mean for the company and the industry at large. Below is a snapshot of their responses:
Barry Clogan, SVP of Business Consulting Services, MyWebGrocer
There is a battle brewing between Walmart and Amazon, with grocery as the battlefield. The question is, how should grocers respond? The bottom line is that retail giants, such as Walmart and Amazon, are sending grocers a clear and final warning as they continue to aggressively enter and expand online grocery channels. Grocers who do not enter the online grocery space and find ways to compete now, risk getting caught in the crossfire and losing business down the line.
Chris Bryson, CEO, Unata
Amazon’s move into the physical space makes one thing very clear: first-mover advantage is critical. Amazon will almost always be able to win on price and logistics. That means that once the shopper tries and likes Amazon, and realizes that it is a viable source for fresh grocery, it will be near impossible to get the shopper back. The only way to defend against that is for grocery retailers to engage their current shoppers with a click-and-collect solution first, and to do so with a high-quality experience that feels comparable and that drives customer loyalty.
Jennifer Sherman, SVP, Product and Strategy, Kibo
Just as retailers are delving into ship-from-store omnichannel fulfillment, or in-store pickup, Amazon sees an opportunity for this in the grocery sector and who better to capitalize on the opportunity than the seller with one of the largest distribution networks in the world? This move is just further proof buy online, pickup in store is popular, and is the wave of retail’s future.
Jenn Markey, VP Marketing, 360pi
Successful retailers know that the majority of shoppers follow a multi-channel path to purchase. For traditional brick & mortar retailers this has meant becoming serious about e-commerce to survive and thrive. And now we're seeing quid pro quo for e-tailers. For categories like grocery where immediate gratification (as in tonight’s dinner) means one-hour delivery is often not enough, let alone a full day, a store-based model makes sense. As well, Amazon likely knows that grocery is the ultimate trip driver and very difficult to replicate online — after all, everyone knows not to go shopping on an empty stomach! It will be interesting to see how Amazon’s strategy to further increase their share of shopper wallets unfolds with their own omnichannel approach to market.
Dianne Inniss, Principal Strategist, Retail Strategy and Customer Experience, ThoughtWorks Retail
Retailers think channels, customers don’t. Amazon understands that better than most and is always exploring new ways to make the shopping experience truly seamless and channel agnostic. Buy online pick-up in-store is one of the fastest growing trends and this will likely allow Amazon to experiment more with fresh grocery. What we find most interesting about this news is that it demonstrates Amazon’s willingness and ability to experiment quickly and consistently, which we believe will be one of the hallmarks of successful modern retailers moving forward.
Adrien Nussenbaum, U.S. CEO and co-founder, Mirakl
Amazon continues to be all about convenience and customer experience. By giving consumers flexible ways to purchase and receive groceries, Amazon has the potential to disrupt this business the way it has disrupted retail. Many retailers underestimated Amazon and its marketplace model only to be beaten by it. Amazon’s marketplace model is a win for Amazon, customers and sellers alike. It is interesting to note that the specific logistics of groceries along with the growth of local sourcing creates a natural ground for marketplace (speciality foods, local producers) as Amazon already does with Amazon Fresh.
Rumors are circulating that Amazon is building a 10,000-square-foot facility in Seattle, which will allow shoppers to pick up their online grocery orders in a drive-thru format. The news was broke by GeekWire, and although the project has yet to be confirmed by Amazon it has many similarities to an already confirmed project current under construction in San Francisco.
While details are scarce at this point the emergence of Amazon in the physical grocery market could have wide-reaching implications. The majority of consumers have yet to jump on the digital grocery shopping bandwagon for a number of reasons — the physical experience of walking the grocer's aisles and selecting their food quickly and first-hand foremost among them. But if anyone is going to be able to lure shoppers away from their local grocer and into browsers and smartphones it is likely to be Amazon, with its millions of users and reputation as the preeminent leader in all things digital experience.
To help make sense of the rumored move RIS polled a handful of industry insiders on what Amazon's foray into phygital grocery retailing might mean for the company and the industry at large. Below is a snapshot of their responses:
Barry Clogan, SVP of Business Consulting Services, MyWebGrocer
There is a battle brewing between Walmart and Amazon, with grocery as the battlefield. The question is, how should grocers respond? The bottom line is that retail giants, such as Walmart and Amazon, are sending grocers a clear and final warning as they continue to aggressively enter and expand online grocery channels. Grocers who do not enter the online grocery space and find ways to compete now, risk getting caught in the crossfire and losing business down the line.
Chris Bryson, CEO, Unata
Amazon’s move into the physical space makes one thing very clear: first-mover advantage is critical. Amazon will almost always be able to win on price and logistics. That means that once the shopper tries and likes Amazon, and realizes that it is a viable source for fresh grocery, it will be near impossible to get the shopper back. The only way to defend against that is for grocery retailers to engage their current shoppers with a click-and-collect solution first, and to do so with a high-quality experience that feels comparable and that drives customer loyalty.
Jennifer Sherman, SVP, Product and Strategy, Kibo
Just as retailers are delving into ship-from-store omnichannel fulfillment, or in-store pickup, Amazon sees an opportunity for this in the grocery sector and who better to capitalize on the opportunity than the seller with one of the largest distribution networks in the world? This move is just further proof buy online, pickup in store is popular, and is the wave of retail’s future.
Jenn Markey, VP Marketing, 360pi
Successful retailers know that the majority of shoppers follow a multi-channel path to purchase. For traditional brick & mortar retailers this has meant becoming serious about e-commerce to survive and thrive. And now we're seeing quid pro quo for e-tailers. For categories like grocery where immediate gratification (as in tonight’s dinner) means one-hour delivery is often not enough, let alone a full day, a store-based model makes sense. As well, Amazon likely knows that grocery is the ultimate trip driver and very difficult to replicate online — after all, everyone knows not to go shopping on an empty stomach! It will be interesting to see how Amazon’s strategy to further increase their share of shopper wallets unfolds with their own omnichannel approach to market.
Dianne Inniss, Principal Strategist, Retail Strategy and Customer Experience, ThoughtWorks Retail
Retailers think channels, customers don’t. Amazon understands that better than most and is always exploring new ways to make the shopping experience truly seamless and channel agnostic. Buy online pick-up in-store is one of the fastest growing trends and this will likely allow Amazon to experiment more with fresh grocery. What we find most interesting about this news is that it demonstrates Amazon’s willingness and ability to experiment quickly and consistently, which we believe will be one of the hallmarks of successful modern retailers moving forward.
Adrien Nussenbaum, U.S. CEO and co-founder, Mirakl
Amazon continues to be all about convenience and customer experience. By giving consumers flexible ways to purchase and receive groceries, Amazon has the potential to disrupt this business the way it has disrupted retail. Many retailers underestimated Amazon and its marketplace model only to be beaten by it. Amazon’s marketplace model is a win for Amazon, customers and sellers alike. It is interesting to note that the specific logistics of groceries along with the growth of local sourcing creates a natural ground for marketplace (speciality foods, local producers) as Amazon already does with Amazon Fresh.