morai-logistics-blog-supermarket-amazon-go

In last week’s post, we covered the reveal of Amazon Go.

This week, we’ll cover the steps Amazon’s competitors have taken to stay competitive. We will also be going into why with just a teaser video, Amazon may have already won the war for the future of retail.

Before we begin, we need to do a recap about what we know so far.

What the Reveal Video Tells Us

Amazon Go will work like this:

  • Amazon Go aims to give customers a ‘grab and go’ feeling similar to how its digital shop operates.
  • You enter the store by waving your smart phone across a scanner.
  • You will need an Amazon account (likely Amazon Prime) to use the store.
  • If a customer changes their mind about an item, he/she just puts it back.
  • The store will be using AI and facial recognition technology similar to that found in a self-driving car.
  • Seattle will be the first test city which makes sense given the city is also home to Amazon’s head office.

The video is meant to cement the idea of a friction-less retail experience. Simply go in, get what you want, then leave. The video makes the idea believable, influences buyer expectation, and affects the future of the industry.

Let’s look at the strategies Amazon’s competitor’s have been testing to expand their market share.

Competitor Response

Big retail and food companies are using a number of different strategies to stay competitive. Companies such as RetailNext, Euclid, Nomi and others are part of a trend that provides brick-and-mortar stores with analytics that looks similar to website traffic reports. The aggregate data is used to project purchasing trends, decide how to build a layout, and produce more detailed reports for shareholders.

Food heavyweights such as Tyson Foods Inc., Campbell Soup Co. and Hershey are taking a page from UberEATS with their strategy. They are trying to get into the home delivery and meal kit market as Wall Street Journal correspondent Kelsey Gee explains. They are working with online couriers to challenge companies like Blue Apron and HelloFresh that have carved out a $1.5billion market delivering parcels of fresh ingredients.

Wal-Mart is also making an aggressive push into online groceries. Wal-Mart Pickup and Fuel lets customers order their items online and pick them up when they are ready.

Future of Retail—Has Amazon Already Won?

While the strategies used by Amazon’s competitors are innovative, they haven’t had the same media buzz. With just a video, Amazon has created an expectation amongst consumers. They will expect greater convenience in the way the video promised. Companies using alternative models will need to work harder to convince their consumers that their way is superior.

However, being king of retail may not be Amazon’s true goal. Amazon Go is more likely to be a proof-of-concept and a retail model it can sell to other businesses as this video speculates.

Conclusion

The reveal of Amazon Go is recent, but it’s already beginning to disrupt the retail industry. Time will tell which new retail method becomes the standard, but one thing is certain—retail will be undergoing a drastic evolution very soon.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

morai-logistics-blog-omni-channel-fulfillment

With so much discussion over omni-channel fulfillment being the future, it is interesting then that only 19% of the top 250 retailers are currently fulfilling omni-channel demand profitably, according to a new the third annual Sands Future of Retail Report.

Despite such a small percentage of top retailers making a profit from omni-channel fulfillment, the service is in high demand by customers and growing.

For example, for nine out of ten consumers, free shipping was reported as the top incentive to shop more online. This number has grown to become the top consideration. One-day shipping (69%) and free returns (68%) also continue to be top drivers.

The Future of Retail and Logistics

There were other key findings of note in the study:

  • Nearly a third of consumers (31%) now shop online at least once a week, an increase of 41% from two years ago.
  • Only 9% of consumers have used same-day shipping in the past year, but almost half (49%) say same-day shipping would make them shop more online if it were offered more frequently.
  • 40% of consumers expect to receive their first drone-delivered package in the next two years or less. Less than a third (31%) think it will take more than five years.
  • Among consumers who don’t trust drones to deliver packages, theft and damaged packages are the top concerns (72% each), but safety (68%) and privacy (60%) seem less risky than they were a year ago.

A theme throughout the study from customers was the expectation of greater and greater speed of the supply chain. This can be seen by the finding that consumers who shop online more than twice a week are twice as likely to be persuaded by same-day shipping as consumers who shop online only a few times a year (63% vs. 32%).

The main reason that so few top retailers are yet to make a profit from omni-channel fulfillment is simply that they have yet to figure out how.

According to the 2015 Third-Party Logistics Study, fully one-third of all respondents (nearly 800 manufacturers, retailers and 3PLs) say they’re not currently prepared to handle omni-channel fulfillment.

Tim Foster, managing director, Asia-Pacific, with supply chain consulting firm Chainalytics weighed in on the discussion.

“Forester believes manufacturers and retailers will address this market transformation by eliminating non-value-adding activities within the supply chain. He cites the example of pharmaceutical distribution, where the traditional supply chain flow from manufacturer to wholesaler to retail pharmacy is being replaced by either a direct flow from manufacturer to retailer, or a loop with the 3PL in the center” summarizes Material Handling and Logistics News in this article.

3PLs have some time to catch up to customer demand. Privacy and security concerns are hampering the demand for omni-channel distribution in the areas of mobile phone payment. “This could explain why adoption has essentially remained flat year over year, with about a third of consumers having used these applications. Still, U.S. mobile payment transactions are expected triple in 2016 to $27 billion, a sign that a few eager early adopters and the growth of Apple Pay could eventually force more widespread changes in consumer behavior” concludes the article.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.