Amazon’s disruption of the grocery, food delivery and home-care industry could spark unlikely alliances. And these alliances could help take the fight to disruptors.
With Amazon’s expansion of its grocery deal with Morrisons, its launch of Amazon Restaurants, and a rumoured housekeeping service, incumbents could see unusual partnerships as a means to fend off the retail juggernaut.
Amazon’s recent advances into the homecare and food delivery market, have followed the much vaunted expansion of its pre-existing delivery deal with Morrisons. The company has also recently announced plans to introduce ‘Amazon Go‘, a shopping experience without checkouts.
There is also a rumoured launch of a new housekeeping service, as well as Amazon Restaurants and Amazon Fresh services. These moves could result in incumbent players taking drastic measures to combat the e-commerce giant.
This is according to Nick Miller, head of FMCG at Crimson & Co, who predicts that Amazon’s competitors could form unlikely partnerships in order to avoid losing ground.
Shopping on the Go
Amazon announced a couple of weeks ago that it would be extending its existing delivery deal with Morrisons’ to offer one-hour grocery deliveries to selected postcodes in London and Hertfordshire to Amazon Prime Now customers. The service has been named “Morrisons at Amazon.”
Meanwhile, advertisements were seen in the US media two weeks ago for ‘Home Assistants,’ who would work with customers to tidy people’s homes, do laundry, put groceries away and “assure that customers return to an errand-free home.”
If true, this new service would be another convenience to Amazon Prime Now customers. These customers already have access to Amazon Restaurants (a home food delivery service), as well as both Morrisons at Amazon and Amazon Fresh for same-day deliveries on a massive range of fresh and frozen grocery goods.
When you further consider the potential for an Amazon Go grocery store in the UK, it’s clear the online giant is keen to expand its reach.
Convenience is King
Miller commented on the moves, and what it means its competitors. “It’s pretty clear that Amazon’s aim is to be the one-stop-shop for all domestic-life conveniences. Whether that be shopping, groceries, takeaways or cleaning, they want to lead the market. It’s an incredibly obvious and yet aggressive strategy,” says Miller.
“Convenience is the key word. The customer, for an annual fee (a Prime subscription), has a central platform where they can access a wide variety of services and products at their leisure, and with confidence in Amazon’s established reputation.
“As this service becomes more and more engrained amongst users, loyalties to competitors will increasingly be challenged. Why go to four places when one does it all?”
While on paper these plans are impressive, there are questions Amazon needs to address. The key consideration is that these markets often entail more complex service demands and delivery requirements.
Services like Handy and Hassle are dominating players in the homecare market. Deliveroo, has developed a leading position in London’s ‘last-mile’ food delivery market, but this has recently seen threats from Uber with the entry of UberEats.
Meanwhile, many of the big supermarkets maintain grocery delivery services. Ocado, the online grocery specialist which supports Morrisons’ website, saw its shares fall by 8.5 per cent in the wake of the Morrisons news.
Innovating to Remain Competitive
As Amazon refines and expands its services, these incumbent players will likely need to innovate to remain competitive. Ocado, for example, is likely to suffer considerably as Amazon moves into the food delivery market.
Companies looking to remain competitive will have to match Amazon on convenience, as well as breadth of offering. However, there is potential for innovation across the space that could help organisations here. And this is also where the unusual alliances could come in.
Miller highlights how a ‘last-mile’ deliverer, such as Deliveroo, could partner with a supermarket to offer grocery shopping and takeaways in one service. There’s strong potential and attractiveness in making this service possible. It could also put both in a position to challenge Amazon on ‘Restaurants’ and ‘Fresh’.
As Miller also states, both parties would see major benefits from such an alliance. Deliveroo would access a wider customer base, while the supermarket would get expertise in ‘last-mile’ delivery.
It goes to demonstrate how unlikely partnerships could provide a route to superior service in delivery. Joining forces with local transport businesses, such as taxi firms, could also provide a boost to delivery speeds.
Either way, thinking laterally and tapping into pre-existing networks could help companies to compete with Amazon.
Still Obstacles for Alliances
These ideas, however, do not come without their own obstacles.
Miller commented on some of these, “These kind of innovations would undoubtedly bring a number of logistical challenges. Not only the alignment of the delivery chain to enable the fastest and best possible experience for the customer, but also the coordination of logistics and digital platforms between two companies.
“However, approaching the problem from this angle could prove vital for any company attempting to see off Amazon.”