Disruptive Innovation: Amazon Wants To Sell Us Everything!

September 19, 2017

By George Latella

In the last blog we discussed “Experience” and how we can learn a great lesson from brands like Starbucks, Wegman’s, Apple and Disney. In addition to visiting the Starbucks Roastery, I also checked out the Amazon “Go” store in Seattle right outside of their corporate offices.

They were beta testing this concept with their employees. While they excelled at books, electronics and center store items, they still had not figured out perishables like fruits, vegetables, meat, seafood and bakery. It is easy to work on thin margins when the products don’t go bad. All food retailers have to mark these items up to cover their shrink.  But it’s clear that this has been their area of focus even before they announced that they would acquire Whole Foods.

They are now getting the same attention that we gave Walmart 25 years ago when they launched the Supercenter concept. Amazon has reached 100 billion in sales faster than any other company in the U.S. About 50 percent of all households are Amazon Prime members. These members have a higher average household income than both Walmart and Target, and they also skew younger. And, they have passed Google as the number one search engine starting point for consumers who are buying something online.

As we continue to see a shrinking middle class, the “Haves” and “Have Nots” continue to drift further apart. But Amazon is not alone in “disruption”. Uber is the world’s largest Taxi company yet does not own any vehicles. Facebook is the world’s most popular media outlet yet creates no content, and Air BnB is the largest provider of short term living but does not own the real estate.

So what does this mean to you and your business?  You need to understand how your customers think about your brand and products, how they interact with you and how they influence the behavior of the others. (What to drink, where to buy it, what day/time, pictures, recipes, selfies etc). All consumers have a mission, needs/wants, and they have different time and place requirements.

Over the next few years, we will be able to watch what Amazon does with Whole Foods and see if they are able to integrate both cultures. Time will tell, but if history is our guide, once they become “King of the Hill” everyone will try to know them down. Just like Walmart, Sears, A&P and many other retailers who were at the top of the hill.

Whether you are on-premise or off-premise retailer, you need to make sure that you understand your consumers and build your products, merchandising and marketing programs around them. It will positively impact your bottom line!
 
And remember, Marketing is a race with no finish line.

 

 

 

George Latella teaches Food Marketing at Saint Joseph’s University in Philadelphia. Food Marketing which is the largest major at Saint Joseph’s University recently celebrated its 55th anniversary. George is also a partner in Beacon Marketing group which provides Marketing planning, research, and e-commerce/direct marketing communications for food and beverage companies. George can be reached at glatella@sju.edu or 610-660-2254.

show visited