Shopping is a physical and sensory experience, humans evolved doing some sort of physical ‘shopping’ even if for most of our history, the similarity of that activity to a trip to the supermarket has been fleeting. Much as we might hate the queues at the checkout, difficult parking, reducing range as the retail gorillas replace our habitual brands with their own house-branded, and increasingly ‘Bandit branded’ (retailer owned ‘brands’ masquerading as proprietary) Sku’s, there is still an emotional and social element to the experience.
It applies even more in more specialist retailers, the more specialist, the greater the degree of sensory engagement necessary.
This is all breaking down, and quickly, as even high fashion, and highly personalised fashion like Shoes Of Prey, which can designed and bought on line.
So what can we expect from Amazon that would justify $US13.6 billion for Whole Foods?
Virtual and Augmented Reality is coming at us like a train. Just as shoes of Prey allows you to design your own shoes, Warby Parker has become a billion dollar company in 6 years by helping you to choose your glasses on line, Amazon (surprise surprise) is playing with Prime Wardrobe , and Ikea is experimenting with a virtual furniture app. it seems a short step to using Virtual reality from your couch to ‘walk’ through, select, place and order and schedule delivery from a grocery ‘store’.
Almost a year ago my second son bought a VR set for a few hundred dollars, and when I fiddled with it, thought I had seen the future of market research. Even so recently my imagination did not take me that next small step to an actual ordering and delivery management system, but why not?
Crowd sourced logistics.
The biggest stumbling block to digital grocery growth has been the logistics, both timing and cost. Fresh and frozen produce where timing and cold chain integrity is paramount, requires a different set of logistic standards to shelf stable commodity categories. Shoppers are very price sensitive across homogenised commodity categories of temperature agnostic products, and it does not matter much if they remain on the front step for a while, diametrically opposed on both counts to produce.
Timing of delivery has been particularly problematic in multiple income homes, and building delivery certainty creates considerable cost.
Both have been solved by the sort of technology Uber uses. Pretty simple to have a crowd sourced delivery service where the vehicles just have a refrigerated unit in the boot hooked into a power source in the car, combined with the delivery scheduling Uber has amply demonstrated works.
Payment security while it should be a problem, as the level of fraud increases rapidly in Australia, from 16.2cents/$1,000 in 2013 to 24.5 cents/$1,000 in 2015, (according to the Australian Payments Clearing association), it seems not to be for most of us. However, It will be very soon. Blockchain technology will remove much of the risk, and in the early stages of development, seems to be ‘fraud-proof’. Amazon has been experimenting extensively with Blockchain , collaborating with many large financial and digital innovators to better facilitate and secure web based financial transactions.
It seems to me that these are the three building blocks Amazon needs to make a huge dent in the traditional supermarket business, struggling to identify the sustainable sources of growth and profitability. Whole Foods is only the stalking horse, as there is a lot of expertise in procuring quality fresh produce in predictable volumes, and Whole Foods is already an expert in this. Amazon will add the Whole Foods expertise onto what they are doing already, and bingo, another disruption coming your way.