Amazon is no stranger to innovation. It’s precisely what has helped the company to grow and develop so well over the years. With its Amazon Fresh shops concept, the online retail giant has recently set its sights on the grocery industry – and in direct competition with supermarket chains and independent food retailers.
Amazon is a prime example of how to future-proof your business by innovating and implementing changes that anticipate future needs. So, what can food retailers learn from Amazon Fresh about adapting to survive?
Are Amazon’s Business Strategies Competitive or Aggressive?
Amazon has almost single-handedly been responsible for changing the consumer online retail experience. To compete, small businesses must minimise prices while simultaneously providing better buying experiences and ever-faster delivery times.
It’s a hostile environment that squeezes the margins of smaller retailers. So, as the adage goes, “if you can’t beat them, join them”. And that’s precisely what thousands of retailers have done, by selling their goods through Amazon’s Marketplace. But even here, Amazon comes out as the eventual winner. There are reports that once Amazon recognises the strength of a particular product, it creates a competing item under its Amazon Basics brand and undercuts the price of the original product.
On top of this, some retailers have claimed that Amazon has then suppressed their listings, ensuring that the Amazon brands are the only ones visible to buyers. They do own the platform, and the associated data, so it might be reasonable to think that this is perfectly acceptable. But using sellers’ data to help its own label business is anti-competitive. In response, the EU has planned a legal challenge against Amazon for anti-trust practices and a US House of Representatives report has accused the company of abusing its ecommerce monopoly in regard to its third-party sellers.
Of course, Amazon disputes these practices. But it has also bought out companies that have been doing well on its platform, which perhaps points to the fact that it does at least have access to the data it needs to be able to ascertain which products are proving successful.
Whether you view these practices as simply competitive or as outright aggressive, they are undeniably innovative and have nevertheless contributed to Amazon’s success. With its laser-focus on customer-centricity, Amazon has managed to grow to enormous revenues – just under $14k per second – and yields a high revenue per visitor.
Amazon Fresh Disrupts the Grocery Sector
How does all this relate to the grocery sector? It had seemed that the established supermarket chains had a grip on grocery sales in the UK and were therefore impervious to any change. But even here, Amazon is innovating. The company’s foresightedness and investment in technology has allowed it to introduce its Amazon Fresh stores brand, which looks set to be just one of the ways that Amazon can access this vertical and instigate massive changes in the way food and drinks companies do business.
Five Amazon Fresh stores have opened in London, using the same technology used in the Amazon Go stores. The shops operate without checkout tills and without taking any on-site payment. After scanning the Amazon app on entry, shoppers are free to simply take what they want from the shelves and it is automatically recognised. The “just walk out technology” uses computer vision, deep-learning algorithms and sensor fusion to recognise who has taken what. It then bills their Amazon account and emails them their receipt.
When Amazon Fresh began in the UK, it was just as a home-delivery service, offering supermarket produce for sale via the Amazon online. Now, with physical stores, Amazon is pushing harder into the grocery store space. It even has its own range of everyday essentials produce, branded as “by Amazon”. The company says it plans to open further stores in Greater London, but nothing has been announced as yet.
Adapt to Survive
Another recent innovation is from a company that offers vending machine products – such as sandwiches, snacks and even headphones. But instead of paying for them with cash, you give up your data – an email address and some answers to some questions, with the more “expensive” products requiring you to provide more of you data. It’s designed to be used in B2B situations and uses artificial intelligence to adapt the questions to the user’s job role. In an environment where data protection is a priority, gathering buyer data and information on their behaviours like this can be as valuable as earning revenue.
Companies need to adapt to disruptions such as this and the Amazon Fresh model in order to survive the evolution and transformations of markets, buyer conventions and economic situations.
One means of adapting is by having appropriate technology and systems in place. These allow retailers to better service customers, enabling them not only to compete on an equal footing, but to also give them the right system that can support their own foresight and innovation. There will always be innovations that change the landscape of an industry and if you’re not one of the innovators, then you at least need to be prepared enough to respond.
NetSuite is the perfect tool to run your online commerce and retail systems, whether you are in food and drink, general retailing, or fashion. The unified business system runs off a single database, to streamline your operations and maximise efficiency across your operations. For more information, book an appointment now or contact us for a free business consultation.