What did Amazon Buy?

by ENGAGEcx on July 12, 2017

The inevitable has happened.

Amazon finally decided to stop experimenting and made a move that every retailer on the planet has feared – they bought a brand with a significant physical presence.  Or did they…

Not to suggest Amazon isn’t interested in the stores.  They most certainly are… and not only for the bricks and mortar.  No, Whole Foods Market (WFM) also provides the kind of customer experience that is necessary to win in the cutthroat retail world of today. WFM states, “We go to extraordinary lengths to satisfy, delight and nourish our customers. We want to meet or exceed their expectations on every shopping trip. We know that by doing so we turn customers into advocates for our business.”

So, not only did Amazon by stores, they bought a brand and a culture that excels in delivering a physical experience that creates loyalty and advocacy with its customers.  In fact, in some ways you could argue that WFM is the physical analog to Amazon’s digital prowess.

Interestingly, a Morgan Stanley survey shows about 62% of Whole Foods shoppers are members of Amazon’s Prime service, opening the door for cross-sell promotions to entice customers who shop at both to spend more.

But here is the rub – Amazon, who knows every detail of how its customers shop online,  doesn’t know how those customers shop in stores — a gaping hole in its visibility to more than 300 million shoppers.

So, is this what Amazon is buying – a brick and mortar retail business that has a recipe for remaining relevant, with a loyal customer base, where there is overlap with two-thirds of the customer base?

Unfortunately, having common customers doesn’t easily translate into the seamless shopping experience those customers expect.  Amazon’s advanced commerce platform isn’t designed to support a physical venue where shoppers browse products by walking, not clicking.

Gartner recently stated in its Digital Commerce Cool Vendor report, “Many businesses operating at physical venues don’t know what customers do on-site, thus missing revenue opportunities and lacking visibility into on-site activities.”  This is the world that Amazon has entered.  One where its digital advantage is not integrated to its new physical venues.

Despite the real difficulties, one would think that this large overlap of a highly loyal customer base is a perfect opportunity to deliver a seamless digital and physical customer experience.

Imagine a scenario where Amazon’s daily email includes an offer for a 4-person meal with a Salmon entrée and your favorite wine because they know you were looking at fish in your favorite Whole Foods the day before.  And as a loyal Prime member, they’ll ship it to your door free of charge.

The true game changer will be when Amazon announces they have not only merged the businesses, but more importantly merged the commerce platform to see their customers’ complete digital and physical journeys to enable a truly one-of-a-kind experience online and in-store.

Amazon has taken a bold step that changes the future of retail.  The clock is ticking for all brick and mortar brands.  To learn more about what we are doing to power retailers of the future,  find us here.

ENGAGEcxWhat did Amazon Buy?