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Retail has really come a long way, and is on the forefront of the intersection between tech and commerce. This has become a battleground, where the stakes are high – trillions of dollars in revenues – and the competitors are constantly trying to outwit and outflank each other to achieve global domination. Here, we’ll look at some of the moves, both strategic and tactical, that are going down in this exciting war for wallets.
We’re Going Global, Baby
E-commerce giants are aggressively seeking growth with international expansion, and cross-border activities. Amazon, for example, expanded in Australia, and is growing in Singapore with the recent launch of its membership-based Amazon Prime program. This expansion brings it into direct competition with several local players, as well as international competitors like Netflix. Walmart, for their part has seen significant growth in its international operations, as it seeks to keep up with Amazon. International operations brought in a hefty 24% of total revenues for 2017, as the company has strengthened business in China (partnering with JD.com), Mexico, Canada and UK (particularly with its Asda acquisition).
Mexico has seen several big players vying for a piece of lucrative pie. Wal-Mart de Mexico (Walmex) saw 3rd quarter sales jump 9.2%, driven by brick and mortar stores but particularly online business, and the company has seen its shares climb 18%. Amazon introduced Prime to its Mexican market this year, and currently owns 5.5% of the e-commerce market in the country, with a view to being the dominant player in the not-too-distant future.
Popping Performance Pills
One of the largest markets that these online giants are targeting, is the Pharmacy/Prescription drug retail market. This market is due for major disruption, as Amazon targets business in this space. The potential synergies are clear; as Linda Pissott Reig puts it, “a patient with depression is also seeking out self-help books, or particular products. Amazon, with a giant marketplace, has a lot of ability to collect information”.
Walgreens meanwhile, has allied with the UK’s Boots to acquire a 40% stake in Chinese pharmacy chain GuoDa, which operates more than 3,500 retail pharmacies in approximately 70 cities across 19 provinces.
The “Grocery Wars” are being taken to a whole new level. As industry expert Tom Popomaronis notes, “We’ll see more brands adopt a subscription mentality with part of their product inventory. This trend will continue to grow as retailers realize they must compete with subscription offerings if they hope to adapt and survive.” Danny Halarewich Founder & CEO of LemonStand puts it this way, when discussing trends for 2018: “Many online retailers are finding a lot of success by adding subscription models onto their traditional eCommerce model”.
Nowhere is this more apparent than with the fight raging between Amazon – with its grocery delivery service Fresh, and its Pantry for Prime customers – and Walmart’s Jet.com, which Business Insider described as their “$3.3 billion greatest weapon against Amazon”. Will we see a winner any time soon?
The Scramble For Digital
Everyone is both scared of the threats that tech upstarts can have on their businesses, as well as excited about the opportunities that are being opened up. The big CPG’s for example are using e-commerce to fuel sluggish growth, and keep upstart competitors like Glossier and Blue Apron, or bigger players like Amazon, at bay. L’Oréal will open a brand-new innovation center in Paris, inviting startups to pitch to them, and Unilever’s Foundry platform runs over 100 tech and startup programs.
According to Accenture, CPG brands investing in technology and digital transformations in the next decade are set to gain $2.95 trillion in revenue and efficiency savings. And the benefits aren’t only in the short-term bottom line; the data that e-commerce offers is invaluable to the big CPG brands.
Amazon, meanwhile, has been wooing the CPG brands with their own proposal; “CPG companies should be selling directly to consumers, and they should do it with Amazon”. The CPG’s, for their part, are still trying to push their direct-to-consumer influence (see Unilever’s $1 billion acquisition of Dollar Shave Club), as they know that a short-term lucrative deal with Amazon could reduce their control over their consumer relationships. This could spell the beginning of the end for the traditional ways that CPG’s do business, and hand a whole lot of power over to what is probably their biggest threat: the global behemoth that is Amazon.
Amazon understands that once they control the relationship with the consumer, they have all the leverage when it comes to pricing, substituting their own brands, and requiring the CPG’s to generally stay in line.
Rise Of The Machines
AI and machine learning will continue to heavily influence – and improve – the customer journey. Technologies like Chatbots and Blockchain-based solutions for example, if used smartly, will continue to give smaller players the leverage to keep up with the bigger guns. The rise of Machines in e-commerce will level the playing field, and allow almost any participant to compete smartly with the likes of Amazon and Alibaba, as well as enabling companies like Walmart and eBay to win back hundreds of millions of dollars every month from Amazon.
E-commerce shopping is also getting more personalized, as virtual personal shoppers and AI-powered personal recommendation technologies are becoming more popular.
What’s Certain for 2018
As this global battle unfolds, companies are asking themselves where they fit in, where they can add value, how they can take advantages of these sea changes, and how they can leverage or compete with the global giants.
What’s certain is that partnering with a company like Market Beyond is critical to any e-commerce company’s ongoing success. You’ll need the incredible access to data, the real-time, product-level information, and the actionable insights to help you stay ahead.