Tuesday, June 27, 2017

Recent News in Agribusiness: Whole Foods and Amazon

Its about the data.

From: https://blog.dataiku.com/big-data-is-the-big-news-in-amazon-whole-foods-deal

"If you consider the use of data and data projects as the end goal, the recent acquisition of Whole Foods makes perfect sense; no one would dispute the fact that Amazon knows the online customer backwards and forwards, but when it comes to understanding the brick-and-mortar shopper, they lack insight. Amazon didn’t buy Whole Foods for the business - they bought it for the data."

"this is almost certainly a win for Whole Foods customers as well…. But Amazon can also bring its data innovation, scientists, labs, and creativity to Whole Foods, which ultimately can mean the next generation of grocery stores even for shoppers that aren’t interested in grocery delivery services. Think Amazon-like optimization of stocking using real-time data or predictive analytics to streamline the experience for shoppers and suppliers alike (and all while potentially helping to eliminate food waste, a massive problem in the United States today)."

Its about platform strategy (which inherently is related to data)

From: http://mitsloan.mit.edu/newsroom/articles/platform-strategy-explained/?utm_source=mitsloantwitter&utm_medium=social&utm_campaign=platformexplainer
 "Arguably, your platform strategy is more critical to success than the idea behind the platform itself. Building a platform, especially after a decade of buzzworthy attempts and a few huge successes (Amazon, eBay, Uber, Airbnb), is really, really hard. There are countless ways to flub this. A solid platform strategy will answer two key questions: How will you attract customers? And how will you make your technology the core of an ecosystem?"

Traditional Retailers Will Continue to Thrive

From: https://www.bloomberg.com/view/articles/2017-06-20/the-amazon-approach-to-groceries-won-t-replace-stores

To some extent there may be significant overlap between customers:

“For a certain kind of urban professional, Amazon and Whole Foods are brands that define the consumption of staple goods: the weekly trip to pick up cheese, produce, maybe some pasture-raised organic beef; and the nice UPS man dropping off everything else, from toilet paper to truffle oil. On Friday, those folks learned that they are facing a future of truly one-stop shopping: Amazon.com Inc. plans to acquire Whole Foods Market Inc. for $13.7 billion.”

However, other retailers will maintain an appeal to a much broader customer base:

“the Dollar General customer is, in general, a very, very different kind of person than the folks who regularly shop at Whole Foods, or for that matter, at Amazon.”

Still why Whole Foods? Were they cheap? (their performance has not been that great this last year). Why not purchase a retailer that already has a more mature data strategy (like Kroger and the Kroger Plus Card etc.)? Perhaps as mentioned in the dataiku and BloombergView article, there is some idea that there is significant overlap between Amazon and WholeFood customers. As far as other retailers, they are not standing still. Points and loyalty programs as well as online offerings and ready to pick up grocery services are just some of the ways they are continually innovating to create value for customers.

No comments:

Post a Comment