When Amazon Fresh announced its plans to expand its online grocery business, many grocers worried about how the actions of the online giant would impact their operations. What many grocers aren’t aware of, however, is that retailers of all sizes can leverage Amazon’s own Cloud Services to beat Amazon Fresh at its own game.
But before I get into that, let’s take a step back for a minute to compare Amazon’s evolution and that of the grocery industry as they relate to technology. While some people may debate the merits of the in-store shopping experience versus the convenience of online shopping, few will argue against the need to better understand consumers’ shopping habits. This was the golden promise behind the loyalty card craze. If we track purchase behavior, we will be empowered to serve our customers better.
And to a small degree, that’s the direction in which retail supermarkets and grocery chains are headed. But if you’re competing against Amazon Fresh, it’s clear that this trend simply isn’t happening fast enough, or with the level of benefits originally promised. Why not?
It turns out that many of the financial investments made were in technology infrastructure, including better scanners and centralised data systems that capture scanned data associated with a shopper’s loyalty card. While selling this data back to manufacturers doubtless has been a profitable venture, most consumers see few benefits other than a handful of coupons printed out following a transaction, or electronically attached via a mobile opt-in.
In other words, while supermarkets and grocery chains have done a fine job of collecting data, most have struggled with actually using this data effectively to create a better shopping experience.
What makes Amazon Fresh so compelling is the wealth of consumer data it actually uses to better inform its customers. The “customers who bought X also bought Y” engine has taken upsell and cross-sell to new heights in the e-commerce world. Amazon also remembers and displays not just your past order history, but also products you spent time looking at, but didn’t end up purchasing.
But in the retail world, Amazon’s Price Check app has had the most devastating retail impact by making the price of any item fully transparent with nothing more than a quick mobile scan using your smartphone’s built-in camera. According to comScore, 4 in 10 shoppers check out products in-store and then buy elsewhere (usually online) for a cheaper price.
How do supermarkets and grocery chains compete with these types of data-driven experiences? By better leveraging the wealth of data they’ve collected. And, ironically, if you want to do this cheaply and effectively, Amazon Cloud Services can help you.
Most companies would love to do more with the data they collect. The barriers are usually prohibitive costs and not having enough time to pilot a few test campaigns. That’s where Amazon Cloud comes in. Amazon commissioned a study with IDC in July 2012 that revealed “IT staff productivity increased by 52 percent [with Amazon Cloud Services]. IT staff are thus able to improve support of mission-critical operations. Amazon cloud infrastructure services had significant impact on application development and deployment, reducing overall developer hours by 80 percent.” Not only that — the average savings per application was $5,18,990.
But Amazon didn’t stop there. It realised that, because Big Data is generally unstructured, its Web Services customers needed an easy way to manipulate this data.
Specifically, most companies were struggling to leverage an open-source platform called Hadoop. For those who’ve been trained on Hadoop, it’s a powerful platform that can be leveraged to quickly deploy Big Data applications. But there’s a catch: To use Hadoop, you need to be trained, and most companies’ internal IT staffs lack the proper training to be proficient. So Amazon launched EMR, a cloud service that enables developers to easily process vast amounts of data.
What this means for supermarkets and grocery chains is that you can now greenlight all of those Big Data projects that were thought to be too expensive and time-consuming to roll out. Rather than being the data broker, as it were, supermarkets and grocery chains can begin to transform their consumers’ in-store shopping experience.
The time has come to rethink the data-driven shopper experience. Within the next few years, your consumers will not only be using their mobile devices to keep tabs on your prices, but they’ll also be walking in with Google Glass and using augmented reality to enhance their shopping trips. The only question is, will they be using your app or a competing one from Amazon?
Ultimately, there’s a choice. Allow Amazon Fresh to chip away at your market share over the next three to five years, or leverage services like Amazon Cloud to beat Amazon at its own game.
About the Author
Bill Carmody is CEO of Trepoint. His white paper, “The 5 Ways CPG Brands Squander Their Marketing Dollars,” can be downloaded at www.trepoint.com