E-commerce partnerships: The future of the grocery industry
Tuesday, August 08, 2017
Amazon's recent purchase of Whole Foods created an instant buzz that hasn't died down since. It's a big, bold move that will have ripple effects in the industry, right down to each vertical.
There are growing concerns about the power of the e-commerce giant, and it's clear that no one in business can ignore Amazon's rapidly expanding reach. Some executives have even mentioned that the name "Amazon" incites fear unless one finds a profitable partnership agreement to work with the e-commerce platform.
Amazon has affected all businesses, but its impact on grocery may be the most powerful yet. Amazon's massive size, a fierce desire for expansion into all areas and markets, and its willingness to sell at low prices is a competitive threat.
Amid this furor, a new report released by the market research firm Field Agent proved that Walmart.com is actually leading e-commerce for fresh grocery. The report compared four major e-commerce retailers — Amazon, Target, Walmart and Jet.com.
Amazon may have barged into this category — and clearly, it's a threat — but other retailers need to worry about Walmart right now. The report shows that 25 percent of Walmart.com shoppers prefer to purchase fresh foods from the site. In comparison, only 5 percent prefer Amazon when it comes to groceries.
Traditionally, the grocery industry has proven to be a bastion for brick-and-mortar retail. Some inherent and logical reasons behind this are preserving freshness and the logistical challenges of shipping products with short shelf lives.
Moreover, there is an also a consumer reluctance to buy fresh foods without touching or smelling them. Walmart's close ties to brick-and-mortar retail act as a comfort factor for shoppers when it comes to fresh food and grocery.
Walmart enjoys tremendous omnichannel leverage, an advantage for the grocery category. The convenience of online shopping blends well with the instant gratification of brick-and-mortar retrieval for the buyer. For grocery chains that want to beat Amazon and stay in business, the Walmart business model is the one to follow.
Walmart's smart strategies include in-store pickup, curbside pickup and site-to-store discounts. The digital storefront doesn't work in isolation but in perfect tandem with the brick-and-mortar Walmart stores. Jet.com, which was acquired by Walmart last year, topped the list for packaged groceries.
The synergy between the two brands is another big win for Walmart. Together, they have been making significant inroads into grocery e-commerce.
Until Amazon bought Whole Foods. Now, everything may change.
With the Walmart model in mind, let's take another look at the Amazon-Whole Foods deal. For an industry that has been notoriously resistant to digital disruption, this e-commerce partnership could be the killer application that brings far-reaching changes.
Amazon has moved further into the fresh food market with its expanded partnership with Sprouts. These mergers with organic and natural food markets have a high potential of changing the way consumers shop for groceries.
Clearly, the battle between Amazon and Walmart is getting more intense.
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