Despite the chatter we’ve been hearing about prices, traffic and private label integration, I’m not sure we’ve yet seen the true grocery (specifically fresh produce) impact of Amazon buying Whole Foods.
Amazon’s still working out how Whole Foods will give its lagging fresh grocery a boost. Selling Echo dots in the produce department at Whole Foods…yeah. That’s not it. I’m waiting for the reemergence of AmazonFresh -- or Prime Pantry stores, or another to-be-revealed brand for fresh grocery.
It’s only a matter of time before Whole Foods’ brick and mortar stores become Amazon’s fresh grocery pickup locations.
The biggest affect we’ve seen so far, from my perspective, is the vast expansion of e-commerce among retailers who were reluctant or slow adopters.
And the winner in all of that? It’s San Francisco-based Instacart.
The third-party service launched five years ago in San Francisco. Here in Austin, Texas, it’s been available for several years, thanks to Whole Foods being an early adopter.
But even as recently as 2015, when we had one of the company’s business development directors join a panel of e-commerce leaders at The Packer’s Midwest Produce Expo, there were many in the audience not familiar with how the service worked, and who were openly skeptical of the company’s expansion.
Fast forward to 2017. What has Instacart done lately?
Here’s a roundup of headlines:
- Amazon’s acquisition of Whole Foods was the best thing that ever happened to Instacart
- The Amazon-Whole Foods deal could have killed Instacart. Instead, the startup is stronger than ever
- Instacart signs up Albertsons in delivery partnership that takes on Amazon-Whole Foods
That’s just a taste of what’s out there, but the last one is the key. How many major retailers have either expanded their relationship or signed up with Instacart in the last six months?
Regional powerhouses like Wegmans, Publix and H-E-B use Instacart, and with the Albertsons deal Instacart now delivers for pretty much all of the top chains in the U.S., except Walmart Inc.
That includes Kroger, Albertsons, Ahold, Publix and H-E-B. Let’s not forget Costco, and the expansion to Canada with Loblaw Cos.
Apoorva Mehta told CNBC the Amazon-Whole Foods deal changed the company.
“After that deal happened, we were every major retailer’s first call,” he said.
But can the gig economy last in grocery?
I’m not sure.
I’m not sure this whole thing where consumers expect someone to personally shop for their groceries for them and deliver or pick-up free (with a minimum order) or for a small fee is sustainable in the long term.
Long term, how can we justify the labor of stocking groceries – particularly “difficult” items like fresh produce -- on a sales floor only to have either a third party or in-house shopper walk the aisles and pick, bag and prepare orders?
If you’ve been to a grocery store the day before a massive holiday, like Thanksgiving or Christmas, (or here in Texas the Friday before Hurricane Harvey was a particular madhouse) in the past few months since e-commerce has really taken off, you’ve probably seen the grocery pick-up shoppers elbowing their way through aisles with the rest of the shoppers.
I recently went to H-E-B and saw more grocery pickup shoppers than actual shoppers.
I saw it at Walmart, too.
This kind of thing makes no sense logistically.
Is it a matter of time, a matter of making consumers more comfortable with the idea of e-commerce, before we transition to a more efficient warehoused system rather than shopping sales floors?
And who can name the best, smartest, most logistics-savvy company out there for warehousing and prepping orders?
Amazon, hands-down.
So, while Instacart may be winning right now, helping grocery retailers with their initial ventures into e-commerce, the long-term strategy is still up in the air.