Amazon has already proved its metal in the ecommerce space and in distribution sector. Earlier in the year the company also staked its claim in the digital freight brokerage industry. Now, it has set its sight on the grocery sector. 

Amazon’s Grocery Connect

For the uninitiated, Amazon is not new to the food business. It has been silently wading in the sector with Whole Foods which it acquired in 2017, Amazon Go stores and its fresh grocery delivery service. However, unlike its other ventures, the retail giant’s foray into the food and grocery business has not been profitable. According to news sources, in its latest quarterly results, “sales from physical stores, which CFO Brian Olsavsk says: are principally Whole Foods revenue were actually down 1.3% from the previous year.” 

Going forth the ecommerce leader is looking to get a big slice of the global grocery and food retail market which is estimated to be worth USD 12.24 trillion by 2020. To do so, along with its existing  food and grocery business, Amazon is planning to launch another brand of grocery stores. It announced its plans for the new brick and mortar stores in November 2019. The first new store is set to be launched in Woodland Hills, California. 

What will be different in the new venture? 

While Amazon has a presence in the food business, its reach has been limited. According to news reports, with the new venture Amazon is looking to reach a wider consumer base. While Amazon’s Whole Foods business caters to the high-end consumer, the new stores will be designed to cater to the mid and low income households. The new stores are expected to help it offer its customers a range of products more in line with other large retailers like Walmart, Costco, and Kroger.

In an article in Forbes the author - retail expert Neil Stern, explores in depth what the consumer can expect in the yet to be named grocery venture. Based on the plans for the new venture, which Neil has had a chance to look at, he shares that: 

• the new store will be omni from the beginning
• it will have ample space for in-store picking and holding facilities
• the focus will be on mainstream products
• it will be more price competitive than the Whole Foods business 
• it may focus more on Amazon’s private label 

Will technology be a part of the new venture? 

Anything that Amazon does is powered by technology. So it goes without saying that technology will be a large part of the newly announced grocery venture as well. In his article, Neil shares that while technology will be a part of the new store plan, it might not be as tech savvy as the facilities available at Amazon Go stores. He further adds that technology in the new store might not be immediately scalable. 

Another article in Forbes, quotes retail expert, José Vicente Aguerrevere, Takeoff Technologies, saying that “Amazon will surely try to leverage technology to create an unsurpassed shopper experience. The new store will send fast-moving consumer goods from center-of-store aisles to back-of-store automated micro-fulfillment centers.” The author of this Forbes article also believes that Amazon will do its best to make use of technology in the brick and mortar stores to provide its consumers the best possible shopping experience. 

Irrespective of the level of savviness, we can safely assume that technology will play an important role in the store, if not initially, then going forth. 

What’s in it for you? 

Business opportunities. 

Anyone associated with the business world knows, Amazon works on a large scale. The new grocery venture which is being planned for the mid-low income segment of consumers will sell a wide range of products. Even with the focus on the private label, it may need to source products from other suppliers to offer a variety of products similar to its competitors. To run this operation smoothly, effectively and efficiently, Amazon will need to enlist a large number of suppliers. 

Working with a large scale operator like Amazon has its perks. It also has stringent requirements with regards to keeping the inventory for the required products ready in time and planning timely deliveries. Given that the ecommerce giant is a technology driven company, it will look for tech savviness in its business partners as well. 

It’s not only Amazon. The food and grocery retail landscape is set to change with new technologies being adopted by the retail leaders. To cater to them and work alongside them, their suppliers will also have to deploy modern technology in their business. 

This is where we can work with you to make your supply chain - Amazon - ready or for that matter any food and grocery retail business ready. Our whitepaper: 

To know how we can assist you in getting there, just connect with our team here.