How to Co-exist with Amazon

How to Co-exist with Amazon

December 20, 2017
Annette Maggi
Retail Industry Insights

By RDBA Executive Director Annette Maggi, MS, RDN, LD, FAND

Today, 45 percent of online sales are through Amazon; 58 percent of shoppers start their product searches on Amazon compared to 20 percent through search engines and 18 percent on retailer websites.  When they shook the industry by purchasing Whole Foods, all grocers took notice.  In a webinar presented by Brad Bane and Alexander Rink from Market Track, discussion surrounded the idea of how retailers can co-exist with Amazon, given their dominance in the marketplace.

In reviewing shopper patterns through Amazon, brick and mortar retailers are well positioned for now. According to Market Track data presented in the webinar, Amazon has just 0.3% of the grocery market and for key grocery categories, most shoppers prefer to purchase them in store.  For example, 94% or more consumers indicate they prefer to shop in-store for all of the following categories:  fresh meat, dairy, frozen meat, frozen produce, deli items, produce, and bread/bakery. While Amazon started in books, their top five categories of sales are computers, electronics, housewares, entertainment, and hardware. These categories are a long way from food.    

While their purchase of Whole Foods suggests strong movement into grocery for Amazon, it also creates channel conflict within their own company.  With recent price slashing, some products are now less expense in-store than online, which may shift loyal shopper purchasing away from their e-commerce entity.

Strategies for grocery retailer co-existence with Amazon suggested by webinar presenters included:

  • Create a game plan.  It’s essential for retailers to know and focus on their strengths.  Retail healthy living programs are a great differentiator from Amazon as they aren’t currently providing guidance to shoppers related to health, creating a strong selling point for RDs looking to grow and advance their programs.
  • Differentiate:  Grocery retailers can differentiate through exclusives, private label, pack sizes, and bundles.  Webinar presenters also suggested services as a way to differentiate from Amazon, which is where retail RDs fit in.  
  • Personalize. The shopper is looking for a customized experience when shopping.  By leveraging shopper insight and loyalty card data, as well as patterns in health and wellness programs and services, RDs can identify ways to create a more personalized experience with their shoppers.
  • Curate Lists.  Shoppers are seeking expert opinion, and this is a key reason they choose brick and mortar stores over online shopping.  Find ways within the store environment to curate lists that engage the shopper, making it easier and more enjoyable for them to shop for items that meet their healthy lifestyle needs.

Even Amazon has challenges in their business, and grocery retailers have a multitude of opportunities to drive business and co-existence with this retail giant.