begin quote from:
5 Ways Amazon Can Maximize Its Acquisition Of Whole Foods Market
| Forbes | - |
Has
the news sunk in yet about Amazon's acquisition of Whole Foods Market?
One thing is for sure, Amazon is focused on providing more of the
services that make customer's lives easier and better.
CMO Network #GettingBuzz
Has
the news sunk in yet about Amazon's acquisition of Whole Foods Market?
One thing is for sure, Amazon is focused on providing more of the
services that make customer's lives easier and better. In its
traditional "simplify" manner, the company is taking ideas that already
exist, waving the Amazon wand over them, and making them irresistible to
customers. We've established that other grocers should be concerned.
With already terrible customer experiences Kroger, Safeway will not be
able to compete. Today's large grocery chains will not be able to
continue creating mediocre customer experiences--trying to maximize
profits by cutting investments in customer experience--and expect to be
around in ten years. We've all seen how quickly customers dump companies
and go to competitors that make customers' lives easier and better.
Amazon has been brilliant in its ability to have vision - to think
outside its industry. The company doesn't ever limit itself or its
identity. The company's identify shifts overnight, and is willing to
make risky bets without an identity crisis. The customers benefit.
Amazon's CFO Brian Olsavsky said last year, "We are honing the
businesses that we're in and making them as efficient, as profitable as
possible, while also investing very pointedly and very wisely, we
believe, in things that will enhance customer experience and create
lasting businesses for us down the line." Enter Whole Foods acquisition
for 13.7 billion dollars. Yes there is some chatter that there would be
another bidder, but we all know Amazon would out-bid everyone. Amazon
focuses on three things: selection, price, and convenience. So the
question we need to be asking ourselves is how will Amazon pivot and
benefit from what Whole Foods Market has to offer?
Let's look at both companies strengths to think about how this could play out.
Amazon Strengths:
Amazon didn't invent many of the services it offers today, it simply makes services easier and better. So we must ask ourselves how will Amazon make grocery shopping and related food/eating experiences easier and better for customers? The "easier and better" piece is Amazon's strength. Amazon always builds with the customer in mind. This is their competitive advantage. Most companies don't do this.
Let's focus on how Amazon can make grocery shopping and feeding a family much better than it is now. So what are the things that customers hate about grocery shopping, meal prep and eating in general that Amazon can fix?
1. Wallet-Less Payments
It's likely Amazon will implement its wallet-less payment technology from the Amazon Go stores. Using machine learning and other AI tech, customers won't have to bother with the slow and painful process of check-out. This is huge for not just grocery but retail in general. Self check-out at grocery chains today is absolutely terrible. A local grocery store employee at Safeway recently told me she tells management about how terrible the technology actually is, but they don't care or listen. And this is exactly the attitude that will be the demise of most grocery stores today. They don't care about customer experiences. They throw technology at customers that is half-baked, and don't want to fix the customer experience once it is out the gate. We all know what Amazon is capable of when it comes to using technology to create operational efficiency. They are lethal. How much longer will customers even need wallets? Amazon could be the retail leader to speed up other industries for wallet-less interactions. For example how is it that we still must carry physical driver licenses or passports? Credit cards? CASH?! I am ready to be rid of it all.
2. Growth Of Grocery Delivery Business
When I ordered Amazon Fresh a few years ago I didn't like it. I received my frozen items packed in heavy styrofoam. It was a cumbersome mess. I didn't enjoy trashing the bulky non-recyclable styrofoam. I didn't use Amazon Fresh again and stuck to Instacart - where I would risk the frequent mistakes in the ordering because of the human element of Instacart. Instacart grew quickly. That means many new untrained employees. These new employees don't have much training, and communication between customer and shopper is challenging. While the app has improved since then, it still is more money and headache than its worth. As I said the company grew quickly and as a result tarnished its brand with bad customer experiences that many customers never recovered from. There is an opportunity for a better grocery delivery business other than Instacart. And the quality and logistics issues (packaging etc) that Amazon Fresh had before will be taken care of by the local real estate and inventory of Whole Foods Market.
3. Focus On Exotic Customer Experiences
My local Whole Foods Market in Oakland is gigantic. Imagine that an Amazon customer easily replenishes its standard kitchen items through the Echo or the Amazon Dash technology. If we don't need all those products displayed on Whole Foods shelves, Whole Foods can use that real estate to focus on its exotic in-store attractions such as the butcher, seafood and cheese counters. One customer experience that won't disappear includes eating out. And now Whole Foods can accommodate more customers. I can imagine a scenario where Whole Foods brings in special guests such as experts that will cook for you and teach you something. If the normal bananas, toilet paper and baguettes are being delivered automatically, the rest of the real estate space can be used to create exciting and satisfying customer experiences, similar to what we might see on Airbnb's new experiences website section. Imagine a wine tasting with a famous sommelier. Dine with a famous chef. Or learn to make sushi with a famous sushi chef. These are the experiences many Amazon users, or Whole Foods customers would go for. Millennials are certainly interested in experiences over the accumulation of things. On a totally different angle, Amazon could use WFM to further its focus on health, wellness and healthcare in general - with speculation that Amazon will move in the prescriptions space competing with CVS and Walgreens.
4. Entering Meal-Prep or Meal-Delivery Space
When you talk to young people today, with kids or without, they probably tell you they don't have extra time to cook. With longer commutes, more demanding hours and competition from colleagues and robots - people are working harder than ever. They often spend very little time in the kitchen. I remember when I was a teenager I went to stay in Germany one summer with an exchange student. I was amazed that lunch was a meal the father came home for. Well that certainly isn't happening lately, particularly in the U.S. And fast food hasn't been great for American waist-lines. We are fatter and unhealthier than ever. While there are some healthier fast food options, they still aren't the fresh meals you would make at home. America is ripe for disruption when it comes to feeding the family. We saw what Amazon is capable of when it comes to educating customers with its Amazon smart home offering, where Amazon consultants come to your home for free to teach you how to make your home smarter (more efficient using Alexa and an ecosystem of products). Meal-delivery is getting big, but there are limitations. For example my husband and I eat a low-carb ketogenic diet and that means we need to be picky about our ingredients. Many of the current players in meal delivery don't give customers that much choice, and the customer doesn't always know every single tiny ingredient in the food. The meal delivery often arrives in a ton of packaging, so there's the waste issue. Will Amazon disrupt Blue Apron, Gobble or Sun Basket, or buy them? It's possible. There is certainly a demand for fresh ingredients, for customers knowing where their food comes from, for the luxurious Whole Foods customer experience provided today.
I write about customer experience.
Opinions expressed by Forbes Contributors are their own.
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TIMOTHY A. CLARY/AFP/Getty Images
Let's look at both companies strengths to think about how this could play out.
Amazon Strengths:
- Capital and no pressure from stakeholders to turn a profit soon
- Logistics savvy
- Self-service technology/operational efficiency
- Wallet-less payment technology from Amazon Go
- Immense data base
- Echo voice recognition technology
- Ability to provide low cost, fast products and services to customers
- Experience rolling out in-home consulting from Amazon Smart Home program
- Real estate with 431 physical stores in the U.S., U.K. and Canada
- Affluent customers
- Brand recognition
- In-store customer experiences
- Amazing products
- Local fresh ingredients
- Experience in retail and in-store dining
Amazon didn't invent many of the services it offers today, it simply makes services easier and better. So we must ask ourselves how will Amazon make grocery shopping and related food/eating experiences easier and better for customers? The "easier and better" piece is Amazon's strength. Amazon always builds with the customer in mind. This is their competitive advantage. Most companies don't do this.
Let's focus on how Amazon can make grocery shopping and feeding a family much better than it is now. So what are the things that customers hate about grocery shopping, meal prep and eating in general that Amazon can fix?
1. Wallet-Less Payments
It's likely Amazon will implement its wallet-less payment technology from the Amazon Go stores. Using machine learning and other AI tech, customers won't have to bother with the slow and painful process of check-out. This is huge for not just grocery but retail in general. Self check-out at grocery chains today is absolutely terrible. A local grocery store employee at Safeway recently told me she tells management about how terrible the technology actually is, but they don't care or listen. And this is exactly the attitude that will be the demise of most grocery stores today. They don't care about customer experiences. They throw technology at customers that is half-baked, and don't want to fix the customer experience once it is out the gate. We all know what Amazon is capable of when it comes to using technology to create operational efficiency. They are lethal. How much longer will customers even need wallets? Amazon could be the retail leader to speed up other industries for wallet-less interactions. For example how is it that we still must carry physical driver licenses or passports? Credit cards? CASH?! I am ready to be rid of it all.
2. Growth Of Grocery Delivery Business
When I ordered Amazon Fresh a few years ago I didn't like it. I received my frozen items packed in heavy styrofoam. It was a cumbersome mess. I didn't enjoy trashing the bulky non-recyclable styrofoam. I didn't use Amazon Fresh again and stuck to Instacart - where I would risk the frequent mistakes in the ordering because of the human element of Instacart. Instacart grew quickly. That means many new untrained employees. These new employees don't have much training, and communication between customer and shopper is challenging. While the app has improved since then, it still is more money and headache than its worth. As I said the company grew quickly and as a result tarnished its brand with bad customer experiences that many customers never recovered from. There is an opportunity for a better grocery delivery business other than Instacart. And the quality and logistics issues (packaging etc) that Amazon Fresh had before will be taken care of by the local real estate and inventory of Whole Foods Market.
3. Focus On Exotic Customer Experiences
My local Whole Foods Market in Oakland is gigantic. Imagine that an Amazon customer easily replenishes its standard kitchen items through the Echo or the Amazon Dash technology. If we don't need all those products displayed on Whole Foods shelves, Whole Foods can use that real estate to focus on its exotic in-store attractions such as the butcher, seafood and cheese counters. One customer experience that won't disappear includes eating out. And now Whole Foods can accommodate more customers. I can imagine a scenario where Whole Foods brings in special guests such as experts that will cook for you and teach you something. If the normal bananas, toilet paper and baguettes are being delivered automatically, the rest of the real estate space can be used to create exciting and satisfying customer experiences, similar to what we might see on Airbnb's new experiences website section. Imagine a wine tasting with a famous sommelier. Dine with a famous chef. Or learn to make sushi with a famous sushi chef. These are the experiences many Amazon users, or Whole Foods customers would go for. Millennials are certainly interested in experiences over the accumulation of things. On a totally different angle, Amazon could use WFM to further its focus on health, wellness and healthcare in general - with speculation that Amazon will move in the prescriptions space competing with CVS and Walgreens.
4. Entering Meal-Prep or Meal-Delivery Space
When you talk to young people today, with kids or without, they probably tell you they don't have extra time to cook. With longer commutes, more demanding hours and competition from colleagues and robots - people are working harder than ever. They often spend very little time in the kitchen. I remember when I was a teenager I went to stay in Germany one summer with an exchange student. I was amazed that lunch was a meal the father came home for. Well that certainly isn't happening lately, particularly in the U.S. And fast food hasn't been great for American waist-lines. We are fatter and unhealthier than ever. While there are some healthier fast food options, they still aren't the fresh meals you would make at home. America is ripe for disruption when it comes to feeding the family. We saw what Amazon is capable of when it comes to educating customers with its Amazon smart home offering, where Amazon consultants come to your home for free to teach you how to make your home smarter (more efficient using Alexa and an ecosystem of products). Meal-delivery is getting big, but there are limitations. For example my husband and I eat a low-carb ketogenic diet and that means we need to be picky about our ingredients. Many of the current players in meal delivery don't give customers that much choice, and the customer doesn't always know every single tiny ingredient in the food. The meal delivery often arrives in a ton of packaging, so there's the waste issue. Will Amazon disrupt Blue Apron, Gobble or Sun Basket, or buy them? It's possible. There is certainly a demand for fresh ingredients, for customers knowing where their food comes from, for the luxurious Whole Foods customer experience provided today.
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