This June, Amazon triggered a tidal wave after announcing its plans to break into the $800 billion food and beverage industry with its purchase of Whole Foods. But, to the keen observer, this move comes as the inevitable next step in the escalation of digital retail -- adding to the retail giant’s arsenal of products, locations and technology.
When delving into grocery, Amazon did not arbitrarily choose Whole Foods. In 2015, Whole Foods began using enterprise technology from my company, Infor, to monitor its merchandising and supply chain -- working to create a system to gather, process and apply big data to discern patterns and best practices for the entire organization. With digital advancements already underway, Whole Foods is positioned to complement Amazon’s long-term objectives.
Amazon’s momentous investment in Whole Foods is a wake-up call for any grocery store that is not investing digitally and points to what all retailers need to master to succeed in today’s world: ease, efficiency and accountability.
So, what does this mean for small businesses?
Amazon may be the largest internet retail company in the world, accounting for over half the increase in U.S. e-commerce sales last year, but its decision to buy Whole Foods presents implications, lessons and significant opportunities for even the smallest retailers.
The looming threat to all store owners is clear: Adapt digitally or die. As a small business, however, you have a unique advantage above the competition, especially your more sizable counterparts. The reason: Larger organizations often experience greater difficultly implementing digital operations and adopting new technologies due primarily to existing systems and the need for extensive cross-departmental approvals.
By acting fast and taking advantage of simple processes, small businesses can adapt quickly and leapfrog larger competition, rivaling the Amazons of retail for customer convenience and loyalty. Here’s what you need to know:
The personal supply chain is coming.
Whether it’s delivery, self-checkout or traditional shopping, a combined Amazon and Whole Foods will offer customers products when, where and how they want. Investing in technology that provides a holistic view of various suppliers allows companies to track and control products at every point of their lifecycle -- equipping businesses with the tools to make quick decisions, avert mistakes and personalize product creation. It is this sort of freedom and flexibility that will attract, and keep, customers. In fact, 67 percent of millennial customers, today’s largest consumer base, cite supply chain issues as a top reason to turn on their favorite brands.
With more retailers offering direct-to-consumer delivery, small businesses must be on top of their supply chains, ready to create custom goods without delay. Advanced back-end resource technology provides business owners of any size with the ability to orchestrate custom goods directly from the manufacturer to the customer -- without even passing through a store.
The meal-delivery service Hello Fresh, a rapidly growing young business with approximately 1,200 employees, is a perfect example of a company mastering the direct-to-consumer concept. Instead of sending pre-cooked meals, the company delivers fresh ingredients, recipes and instructions straight to subscribers’ doors. The service charges a monthly fee -- listing shipping as a complimentary part of the package, not an extra cost. Even more, customers are given complete control over the flow of their subscription online, encouraged to “pause, modify or cancel” their orders at any time.
Constant changes in customer preferences regarding frequency, timing, size of delivery and dietary needs combine with the varying expirations of perishable foods sourced from multiple locations to make for a volatile supply chain. This sort of complex coordination will soon be standard in the industry and must be managed digitally.
Seeking technology tools to provide complete visibility and autonomy over the process from farm to doorstep is what Hello Fresh and Whole Foods seek to do, and what all small businesses must consider.
Brand convergence is the “next big thing.”
For consumers, retailers with private label products and traditional brands with direct-to-consumer capabilities are converging. Look no further than Amazon’s absorption of Whole Food’s 365 private label brand. This line is one of the most highly regarded natural brands in the food industry, and undoubtedly served as a key strategic asset of the acquisition. Similarly, Nike’s decision to partner with Amazon to sell its products, joining the likes of Adidas and Puma, illustrates the same trend. And if Amazon’s recent emphasis on private label in fashion, home goods, electronics, pet food and batteries is any indication, this brand convergence may soon intensify into groceries.
Brand convergence presents an opportunity for small businesses to shine with highly unique, personal and streamlined shopping experiences across all touch points. Take, for example, Birchbox, a brand creating a distinct, custom experience by putting the element of surprise into the shopping experience -- sending customers personally crafted boxes of beauty products every month. Using data sourced from previous purchases and online personality tests, the company has perfected the art of predicting individual preferences to create products that make each customer feel like the only customer. The company has even set itself apart by opening select brick-and-mortar stores, where customers can test products and speak to specially trained consultants.
The bottom line is that small businesses occupy a league of their own and should not be intimidated by, but instead learn from this acquisition. By nature of their size, small businesses can move with agility to out-pace bigger companies, and swiftly match the innovations of trend-setters like Amazon and Whole Foods. The key is finding ways to differentiate through distinctive and captivating in-store, online, and mobile encounters.
Yes, the Amazon-Whole Foods deal will transform the grocery store business, but that is only the tip of the iceberg. The ecommerce revolution pioneered by Amazon is set to leave its mark across the entire retail industry -- and companies of all sizes will have no choice but to adapt.