‘An expensive hobby’: what exactly is Amazon doing with groceries?
Amazon continues to invest in ways to disrupt how people buy groceries. The focus, however, should be on enhancing how we shop for groceries.
That’s the view of David Bishop, Managing Partner at Balvor and Partner at Brick Meets Click.
In a LinkedIn post, he says: “We know from research at Brick Meets Click that online tends to be more a buying function; whereas in-store is much more a browsing activity.”
He adds: “Technology can inspire customers in ways that build a basket or reduce points of friction, but in both cases, the problem that is being solved needs to exist at that time and place.”
“That's what Amazon and other grocers are trying to figure out as shopping behaviours and customer expectations evolve.”
Bishop was responding to a CNBC article stating that Amazon’s grocery endeavours have cost many billions of dollars over the past 15 years but have yet to yield a coherent strategy.
As of mid-December, Amazon.com and Whole Foods accounted for a combined 2.4% of the US grocery market over the past 12 months, according to research firm Numerator.
Walmart controlled 18%.
The latter and other established players such as Target, Kroger and Albertsons are, meanwhile, getting savvier with digital offerings. Whilst Instacart, Doordash and Gopuff are going all in on rapid delivery, Amazon’s sweet spot.
“It’s almost like the grocery business is an expensive hobby,” Jake Dollarhide, CEO at Longbow Asset Management, which owns shares of Amazon, told CNBC.
In his LinkedIn post, Bishop says: “Competition within retail organisations isn't new, but the lack of coordination is concerning in this case.”
“This retrospective raises a fundamental question, "What is Amazon trying to do with groceries?" To sharpen the pencil, the next level question really is, "What does selling more groceries allow Amazon to do?"
“After answering that question, then ask yourself, "What could've been a better way of accomplishing that goal?"
He concludes: “Once you think through these questions, you need to then address, "How and where can Amazon refine its current physical retail initiatives so that it creates a third order fit for the company's overarching strategies?"
This is what Tony Hoggett (who recently joined Amazon from Tesco as Senior VP of Physical Stores) needs to determine, Bishop argues.
