It is a fact that all retail industries are involved in the digital transformation, except one: the grocery industry, probably because the instant gratification concept doesn’t work quite well with fresh food.
However, over the past years the e-food industry has globally experienceda period of growth and continuous innovation which could trigger the definitive boost that enables e-food business to go mainstream.
The last move, which took everyone by surprise, was the deal between Amazon and Whole Foods through which the online giant acquired the popular organic supermarket chain for $14 billion. This could not only revolutionise the whole grocery market in the US, but could also have implications worldwide. Will Amazon’s new formula for digitalising the grocery industry be successful?
The key is to dominate both worlds
Combining the best of two (or many) worlds always brings enriching results.That’s perhaps what Amazon has in mind. On the one hand, the online shopping experience has multiple advantages in comparison with the traditional purchase at the store.
Exploitingthe main advantages of e-food
Taking into account the preferences of the shoppers that have already purchased groceries online and also after analysing the medium, we can say that delivery, product information, time saving and price are the biggest growth drivers.
The internet is especially useful for finding products faster and easier through category filtering, leading to better informed decisions and time and energy saving in an everyday activity.
Valuing traditional stores
On the other hand, stores offer something that the internet cannot deliver yet: the sensorial experience on site and better storage conditions for fresh food. Moreover, online shopping experiences have big cons that hamper shoppers to use this channel, as you can see in the graphic above (and, look, all are concentrated on the same critical phase: delivery).
Actually, according to a report conducted by Bitkom, nearly half of the respondents (47 %) would like to have the products immediately and don’t want to wait for delivery, and 28 per cent don’t want to pay any delivery costs.
Amazon’s great plans look at redefining the grocery store
Delivery is one of the best chances, but also one of the pain points that separate the e-food industry from success, because its requirements are extremely demanding. Fresh food should be delivered as soon as possible and in perfect condition, and also be received by someone. That can be especially tricky for those that want to optimise delivery routes and bundle items to maximise efficiency, like Amazon does.
Perhaps that is why Amazon has shifted from figuring out how to deliver fresh food to redefining the grocery store. The first step was Amazon Go and afterwards AmazonFresh Pickup, through which customers order food online and then drive to an Amazon drive-in (store) where employees bring the bags right to their cars in only 15 minutes, while their direct competition needs two to four hours for the whole process from ordering to delivery.
The next step is getting even closer to the consumers. And here is where the purchase of Whole Foods can play a decisive role. Amazon will be able to use the entire network of Whole Foods stores as “possible” distribution points with the objective of being closer to the consumers and ultimately encouraging their awareness of this services’ great convenience.
Services and convenience at the centre
During the last days it has been speculated why Amazon made this strategic purchase. Does Amazon intend to become a grocer? In my opinion, the answer is emphatically no. This step (like all others) is beyond industries and markets.
They are and will be a service provider that cares about customers and strives for making their shopping experience easier: the very last example is called Wardrobe.