Amazon: What’s their next move in grocery?

A.K.A: what they could do next, and what grocers need to do to stay relevant:

Amazon, the behemoth none of us can ignore, is diving into the meal kit business head first. A colleague emailed me yesterday, “Didn’t you predict this two years ago?” I sure did say that. Bless her heart for remembering.

That doesn’t mean I know what’s coming next, but it doesn’t take a rocket scientist to predict the moves Amazon will make. Actually, a rocket scientist likely couldn’t predict the moves. For that, you need the geeky grocery sociologists like me who study people’s behavior and embrace the grocery business.

In my area of the world, grocery shopping options are brick and mortar retail (and I’m not shy to brag about how great my choices are), Instacart, Amazon, Amazon Fresh, and Amazon PrimeNow. I tried Fresh back when one could make purchases one at a time without an annual membership. I did so twice and was terribly disappointed in quality both times – not in everything, but in a few of the choices which were important enough that they caused me to need to leave the house and go shopping: defeating the purpose of online grocery shopping. I’ve also had that experience both with PrimeNow and Instacart, but neither of those options cost me hundreds of dollars in an annual membership fee, and to be fair to PrimeNow and Instacart: the poor experiences are rare. Naturally, if I’m at a wonderful store, I make my own choices (and I typically choose more than what was on my list!).

Amazon’s businesses:
There are many areas Amazon handles effectively: efficiency is at the top of the list of factors for shopping with Amazon. Grocery shopping isn’t very efficient for most people: Amazon solved that. People hate running small errands. Amazon solved that. Many grocery items are available on the main site and can be delivered in two days or fewer for Prime members. Grocery shopping requires transportation. Amazon solved that. Amazon will bring groceries to you. Grocery shopping allows for little real-time consumer ratings. Amazon solved that. Ratings are available at your fingertips.

Still, there are areas where Amazon fails or doesn’t even attempt to compete with your favorite grocer. In years past, they haven’t been very open to tapping into industry expertise or incorporating our well-known methods of increasing sales into their businesses. Their way was to capitalize on reinvention – and there is significant merit to reinvention. But that method has also left them with some holes.
Retailers need to expect Amazon to solve for every single area in which it lacks:

• Sampling: today, in-store demonstrations are nearly synonymous with Costco. While Amazon isn’t presently operating traditional grocery stores, expect this to be something they’ll learn from Whole Foods (assuming that transaction is completed). If they don’t learn it there, they’ll learn it elsewhere. Just because a sampling program is absent today doesn’t mean it will stay absent. Imagine a world where your groceries are delivered and your purchase of “Product X” is accompanied by sample sizes of coordinating products, or coupons for dollars off purchases of full sizes redeemable only at Amazon. This is a fairly simple thought process, and they are very technologically based: I would imagine my “next” grocery purchase login could remind me of my coupon codes. The coding could cost them a small investment, but the funds themselves would come from the vendor community. This isn’t limited to any one of Amazon’s businesses nor is it limited to grocery. Sephora, for instance, is a spectacular company known for its trial program – why not borrow ideas from the best of the best?

• Evocative language, sexy photography: make me interested, will you please? Amazon Fresh was much better than Amazon and Amazon PrimeNow – at least Fresh had pretty pictures and a little bit of verbiage to make a reader feel like someone ate food once (unlike Amazon which is so clinically dry). It looks like this has been moved by the wayside in favor of efficiency. A click on “gourmet food” brought back search results dominated by allergy medicine. They’ll get better. Instead of just showing items, they’ll learn to help shoppers want them.

• Recipes: someday, I believe you’ll choose from a library of recipes, type in the number of servings you need to create, click enter, and boom: here’s the recipe and shopping list à add to cart individually or add all items to your cart. Retailers: why aren’t you already doing this? Alternatively, I believe Amazon of the future will be adding recipe cards into boxes of groceries with coupon codes to stimulate return purchases and they will expand their…

• Private label: with their buying power, they’ll grow private label exponentially. They need to learn how to manage a private label well. Perhaps by now they’ve grown to respect industry knowledge rather than eschew it, but the room to grow sales and profit is virtually limitless.

• Menu creation: they’ve got a great start on meal kits now – $20 main dish, side, etc. But we’re living in a very “me” world where everyone wants the choice that they want when they want it. Amazon has the volume to change it up: 20 main dishes to choose from, 30 sides, and 30 desserts. Amazon can suggest pairings, and people can still choose the kits that work for them: think “entrée kits” rather than “meal kits.” Retailers have been missing loyalty programs – if you look at my meal kit post here, you’ll see that I suggested a loyalty program specifically for kits. Amazon has the means to get technology implemented and make that work. Buy a dozen dinners, get a big gooey dessert for free – people love free! Look how many cars wait in line at Starbucks every morning, addicted to earning their stars. All of those people have been retrained to think a 12-15 minute wait is convenient all to earn a free drink. Retailers have huge opportunity here, but I predict Amazon will capitalize on it before most others.

• Expert personalities: to curate and give online recommendations, wax poetic about special finds, and generally increase sales.

• Community events: X% of today’s purchases support… They’ve never done this, who’s to say they can’t – especially with local items sold within a specific market?

• Catering: oh come now! This isn’t in their wheelhouse at all! To that, I say: Today it isn’t.

• Surprise and delight: if Amazon goes this far, they’ll own the world. No joke. People want their dopamine hits. Any retailer, in any format, which starts surprising customers here and there with the pleasantly unexpected: here’s a free pint of ice cream, here’s a code for Jay Z’s new release, here’s a code for People Magazine online, here’s early access to whatever new business they’re testing, “We notice you buy diapers every week. Diapers are really expensive for a family, here’s a pack of 48 on us.” ← Amazon will have a customer for life.

It’s a lot to think about, I know. But you know who else can take steps to win over customers today and forever? You can.

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