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It’s Amazon vs. Google as We Enter a New Era of Online-to-Offline Commerce

As Amazon crosses over and becomes the ultimate omnichannel juggernaut, traditional retailers are at an existential crossroads.

The major advan­tage that tra­di­tion­al retail­ers had over Ama­zon was the avail­abil­i­ty and imme­di­a­cy of stores. You could see and touch prod­ucts and take them home the same day. You could return prod­ucts more con­ve­nient­ly than ship­ping them back to Ama­zon.

Over time, how­ev­er, Ama­zon has chipped away at these advan­tages with Prime, Prime Now, Lock­ers, pre­paid returns, and final­ly, with its near­ly $14 bil­lion pur­chase of Whole Foods. On the first full day of Ama­zon con­trol over the high-end gro­cer, it cut prices over 40 per­cent and start­ed sell­ing Echo devices in Whole Foods stores.

Is that a sur­prise? We’re in a smart speaker/virtual assis­tant land grab right now — and Ama­zon is win­ning.

Ama­zon Prime mem­bers will see addi­tion­al pric­ing and oth­er ben­e­fits at Whole Foods. Reduced prices and Prime ben­e­fits will bring new cus­tomers into Whole Foods and add new Prime mem­ber­ships, rein­forc­ing loy­al­ty to both Ama­zon and Whole Foods.

Oth­er gro­cery chains should be very, very afraid.

Ama­zon will also like­ly use Whole Foods stores for oth­er pur­pos­es beyond sell­ing Echo devices. For exam­ple, the 400+ stores could eas­i­ly (and will like­ly) become Ama­zon return cen­ters.

In some ways, Ama­zon is now the ulti­mate omnichan­nel jug­ger­naut — no oth­er sin­gle retail­er or inter­net com­pa­ny can match its infra­struc­ture or dis­tri­b­u­tion. Only a small num­ber of com­pa­nies, among them Google and Face­book, rival Ama­zon in brand strength and con­sumer affin­i­ty.

The Whole Foods acqui­si­tion is a “come to Jesus” moment for retail­ers, which have been wring­ing their hands for years over declin­ing store foot traf­fic and oth­er chal­lenges. They will be forced to make some dra­mat­ic moves — or else. One such exam­ple is Walmart’s voice-com­merce alliance with Google Assis­tant and Google Home. It’s both an offen­sive and a defen­sive move for Wal­mart.

All of this points to some­thing larg­er for tra­di­tion­al retail: the need to more ful­ly embrace Google and Face­book as part­ners and chan­nels to com­pete with Ama­zon. (Some retail­ers may want to sell through Ama­zon as well.) While this will not be suf­fi­cient, it now appears nec­es­sary.

Google and Google Express may soon become a retailer’s best friend. Whole Foods is part of the Google Express ros­ter, but it may not be for long.

Local inven­to­ry is still a sig­nif­i­cant weapon tra­di­tion­al retail has over Ama­zon. How­ev­er, local inven­to­ry is not uni­form­ly exposed. I imag­ine we’ll see many more retail­ers adopt­ing Google’s Local Inven­to­ry Ads, and beyond this, uti­liz­ing a wider range of tools that Google and Face­book offer for vis­i­bil­i­ty and tar­get­ing. For exam­ple, they should be using store-vis­i­ta­tion ana­lyt­ics to con­nect online ads to foot traf­fic in stores.

They must also improve the in-store expe­ri­ence, empha­size ser­vice, enhance their mobile sites/apps and offer com­pelling loy­al­ty pro­grams. In short, tra­di­tion­al retail­ers will be forced to step up across the board if they hope to sur­vive, let alone thrive.

Where retail­ers may once have been ambiva­lent about giv­ing their data to Google, they now have lit­tle choice. The ene­my of my ene­my is my friend.

With Ama­zon cross­ing over from online into the real world, they need to exe­cute with­out hes­i­ta­tion. An exis­ten­tial moment has arrived.

Win­ter is com­ing.

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By |2017-12-08T11:46:03+00:00September 4th, 2017|Industry News|Comments Off on It’s Amazon vs. Google as We Enter a New Era of Online-to-Offline Commerce