The Amazon factor is here. Are you prepared?
Published on August 8th, 2017 on O Globo: https://oglobo.globo.com/opiniao/o-fator-amazon-esta-ai-preparado-21683775
Whoever was amazed by Amazon's acquisition for WholeFoods, an organic grocery store chain, can prepare themselves.
Probably later this year, the e-commerce giant will start selling much more than books in Brazil. This means the buying experience, speed, ease and security that we already know being transposed to other product categories.
It will be a party for consumers. For retailers, a tsunami alarm sounded. Just take a peek outside. Some important American consumer temples are in crisis. Closing stores and thousands of layoffs are planned or under way by Macy's, Sears and JC Penney. It's the "Amazon effect" in action. Or the so-called "digital transformation".
It is increasingly evident that conventional retail is collapsing - and the problems are as clear as the shop windows. How was your last visit to a large store? Probably the sellers were not so willing and friendly, they lacked products or just their size, information as price and features were inadequate, lacked creativity in the setting and the passage through the box took longer than you'd like, despite the small queue. Lines? Yes, in front of people accustomed to buying in a few clicks, on the sofa, we are still submitted to this archaic formation. The advantages - and charms - of the physical store have paled over the past few years. Part of it is because of a shopping experience that, in contrast to what they call the physical retail differential, is often much more enjoyable in the digital world.
This is because well informed, high tech and empowered, the new consumer seeks maximum convenience and interesting experiences. Startup in the spirit to this day, Amazon is highly sensitive to its public, as if it were the family corner market. Supported by powerful data analysis and Artificial Intelligence, it proposes relevant solutions and products that make sense to the consumer. The items supply is immense, fast in delivery and the purchase process is incredibly simple. Soon it will have robots that talk, helping in the day of consumption. No wonder that it already accounts for 50% of e-commerce in the American market.
The acquisition of WholeFoods (WF) marks Amazon’s ability to design the future. For those who did not pay much attention, it immediately moves to: 1) stop a territory almost unexplored from the digital point of view, the fresh food, reinforcing its desire to become a one stop shop, where you buy everything; 2) dominate a rising segment, organic, anchored in the growing concern of people with health and will undoubtedly exploit it as they are more comfortable to acquire it; 3) integrate the customer and consumer bases of the two brands, leveraging Amazon's already proven expertise in data mining; 4) to have 450 physical stores in important centers, increasing its network and distribution capacity and gaining competence for the complex delivery of fresh grocery, already dominated by the WF. In addition, WF will be able to absorb innovations like Amazon Go, a supermarket where there are no boxes or lines, and so many others with Amazon's ability to innovate and invest.
In the opposite direction, Walmart acquired the main American e-commerce of male fashion, the Bonobos. It is an attempt to attack or to stop the advance of Jeff Bezos’ company. About 20 percent of clothing in the United States is already marketed online, overcoming the theory that fitting rooms would be digital-proof. The challenge, however, is greater: to develop the innovative strength of a competitor who was born digital, while Walmart brings in the DNA of thinking and heavy structure woth traditional retail. In Brazil, e-commerce has positive and negative numbers - it has grown in recent years, there is a promise of good performance in 2017, but results are still wishing, overall. It remains to be seen how we will face the "Amazon factor", which more than one company represents a group of digital companies that continue to disrupt models and sectors from the traditional economy.
Alessandro Cosin is the Executive Director of Cosin Consulting Linked by Isobar