With its recent foray into the world of groceries, ecommerce giant Amazon UK has shown the world that there’s no market it won’t consider getting involved in. However, unlike books, bicycles and baby clothes, there’s one key difference about groceries; their perishable nature.
If Amazon wants to make a success of this new webstore, it will have to concentrate heavily on the logistics – it’s not simply a case of putting the catalogue online.
Lest we forget, it’s not an easy market to make a success of. Even Ocado, the much lauded delivery service working with Waitrose, has still never seen a profit.
On top of this, despite millions of pounds invested in a state of the art warehouses, it’s lacking the cutting edge automated robotic systems employed by Zappos and Amazon. If you don’t believe me, check out the amazing video of this in action below.
At the other end of the market, there is Sainsbury’s that isn’t even really pushing its online shopping function simply because the costs are much higher to fulfil online instead of in store.
This reluctance to cannibalise is understandable, but if it holds back too much, the risk is growing that the likes of Amazon will entrench its brand in the space immovably.
Is the future bright for Amazon?
But to get there, Amazon faces an important question: are people ready to do their weekly shopping online with a brand more associated with books than flour and eggs?
For now, I suspect not, but if it continues to increase the efficiency of its logistics and service, perhaps gimmicks like “same day delivery” would be enough to start swaying people…
What can other retailers and ecommerce solutions providers learn from this Mexican standoff? For a start, there’s the fact that Amazon’s best asset in the area might not actually just be related to robotic powered warehouses. Alongside these efficiencies, it’s the excellent customer experience records of such brands that may propel their quest for market share.
Indeed, even for brands already operating in the space like Ocado, I suspect the company’s focus on customer experience is the one aspect that is fuelling its high valuation, even if profits are yet to be fully realised.