Amazon Gets Chemistry, and It’s Winning Consumers Because of It.
Amazon’s Whole Foods experiment will create a lot of good chemistry between disenfranchised shoppers and the food they love.
Five million hits in less than a second. A whole lot of words have been written about Amazon’s purchase of Whole Foods last month, a fact validated with one Google search. But there’s still more to unpack about this acquisition and the profound effects it will surely have on our grocery shopping experience.
Why Shoppers Don’t Like the Supermarket
From the consumer perspective, there are problems with the current grocery model. Searching for items can be cumbersome, there are inventory issues (they’ve discontinued your favorite seaweed chips? What?!?), new shelf sets and footprint changes, waiting in the checkout line (self-serve and otherwise), and then there’s that cart with the wonky wheel that you always seem to pick.
Simply put, a trip to the grocery store can be a real headache.
Amazon saw those issues, too, and is looking to its Whole Foods acquisition as an opportunity to create the modernization that shoppers (across all demographics) are demanding and to reimagine the food shopping experience.
Who’s in Charge Here (Hint: It’s Going to Be You)
One of the key tenets of the acquisition (besides profit) is Amazon’s ability to turn grocery shopping into a much more consumer-driven experience, stripping retailers and CPG companies of the power they once held and giving it to the consumer.
And that’s long overdue because as we’ve already witnessed, grocers have not kept up with consumer’s increasing demand for healthier, organic products. Consider how these options are typically still sectioned off and rarely given prime real estate.
Amazon, however, can integrate these items more effectively into their overall food mix—and shoppers are hungry for that. In fact, Amazon research has shown that the site has four-times the base of shoppers seeking organic offerings, which lends credence to the idea that Amazon Fresh/Whole Foods can be the true fresh/organic platform for perimeter items.
And perish the thought that perishables will be a problem. Amazon has a backend platform/supply chain that allows them to deal effectively with spoilage, another factor that helps drive consumer control in the shopping experience.
Offering more fresh and organic options isn’t the only shopper-driven aspect to the Whole Foods purchase. Some analysts are saying that if Amazon were applying its traditional business strategy to grocery (or, more specifically in this case, perimeter grocery) the company wouldn’t have needed a venue like Whole Foods at all. But the acquisition benefits its consumers because Amazon now offers a full solution: Pantry, Fresh and the traditional aspect of brick-and-mortar.
In many ways, though it doesn’t appear to be an overt plan on Amazon’s part, the Whole Foods acquisition can be seen as a great chemistry maker with tricky and mercurial millennial shoppers. It’s a demographic that craves experiences and, although certainly nowhere near as brand loyal as previous generations were (and remain), it’s shown a predilection to seek brands that show a willingness (real or imagined) to “get to know them” and to stand for the same things they do. And few retailers know them as well as Amazon with its amazing algorithms that collect macro and micro data that hones consumer needs and desires.
Of course, it’s going to be up to the brands that sell on the Amazon platform to meet these audience needs—millennials and otherwise—with smart, creative and right-time experiences. More on that in a minute.
CPGs Adapting Too
Of course, consumers won’t be the only ones benefitting from Amazon’s acquisition. Amazon has a lot to gain from the existing Whole Foods stores, as well. Just think of the test-and-learn opportunities—Amazon can gain intelligence on not just purchase patterns but can also dig deep on the sorts of insights that will help them create consumer chemistry for years to come.
What they learn will certainly impact how CPG companies continue to evolve, too. More and more, success for sellers today means success on Amazon. Advertising and branding agencies are increasingly hiring Amazon experts or starting specialty Amazon-focused boutiques. The need for an Amazon solution is nothing new for CPG practitioners, but the foray into grocery simply ramps up the need to engage all the more.
Brands must become agiler in their tactics and much more savvy at attracting an eRetail consumer. Whether it’s making faster decisions on package design, getting positive influencer reviews, or creating meaningful content (that doesn’t reek of overt marketing), a willingness to quickly adjust will be one of the immediate future’s most critical coping skills.
Perhaps most important, CPG companies will need to purchase Amazon data and then partner with experienced people who make decisions based on it.
Because make no mistake, it’s Amazon’s world we’re now living in. The company is winning in search, winning in data and winning in product diversity, too.
The faster companies with a product to sell and a brand to promote understand the nuances to mining the data and connecting with consumers on the platform, the better they’ll be able to win.
The reality is that this is chemistry. Leveraging meaningful data can create a real bond between brand and consumer. Media agencies have long been skilled at creating this chemistry between brands and customers via the magic of data, and the shift to an Amazonian world is no different.