Amazon Fresh Series - Part 3: Assortment
Alexa, how can I make my Customer's Shopping Journey better?
As discussed in the introduction, one of the not so surprising changes was the unsubtle placement of Amazon Devices in Whole Foods stores. The picture below is a clear example of an unabashedly bold placement in the produce section.
(Source: Geekwire)
This is obviously not an example of what most shoppers will think about when they imagine an impulse purchase during their last grocery shopping trek. It isn't what percentage of Amazon devices are purchased through this new distribution channel but it is important to helping them achieve their long-term consumer goals. Capturing a large portion of the market share (in this case Voice-based purchases) by flooding the market with their devices by creating a use case and then maintaining this market dominance by rolling out new device features that reduce friction in the grocery shopping experience, both pre-shop and mid-shop.
An important note to keep in mind - According to the Voicebot.ai 2020 Smart Speak Consumer Adoption Report, Amazon has 53% of the Voice Market Share and over 41% of U.S. Adults device owners, have a smart speaker in their kitchen. So, it is not surprising that Amazon has been able to use learnings from the approximate 20 million Amazon's Echo present in US kitchens to now be able to play two incredibly important roles in their new Fresh Stores. The first is the introduction of Amazon Echo locations throughout the store that help customers with a number of tasks such as finding an item's location. At traditional grocery stores this can become a really difficult part of the customer journey and can sometimes create a massive hurdle to purchase. We have all been there, we need one specific product for a recipe that we spent hours deciding on at home only to be completely befuddled where your grocer of choice has put this item in the store. Reaching a point of frustration you decide to ask an associate where the item is located only to look down multiple aisles before you can find a store employee to help you. You ask them where the soft tortillas are and they too are not sure if it is in the Long-Life Bread Aisle or in the International section or even better at a free-standing display next to the in-store Bakery. Next thing you know 20 minutes have gone by and you are in first place in your Grocery Stores 500 sponsored by a CPG Analytics Third Party Software that guaranteed to place items in the best location within their store, you have given up on Taco Tuesday and are ordering UberEats next to your soon-to-be abandoned full grocery cart. By placing easily findable Echo's throughout the store Amazon has removed this hurdle altogether.
(Source: Business Insider)
Not only can Alexa help you find the seemingly camouflaged soft tortillas but it can also help with other difficult customer purchase decisions. Additionally, Amazon has included two very relatable questions in the example question set above the Echo Show helping to answer the wine pairing questions for when your in-laws are expected for dinner and you only have Coors Light in your fridge and decoding how many jars of your favorite tomato sauce are needed for your recipe requiring 4 cups to be poured into the sauce pan. These three examples will definitely ring a bell with most consumers and goes to show how Amazon has successfully analyzed the questions from the millions of households using Alexa to answer their most pressing food questions.
The second role is digitizing the grocery list both pre- and mid-shop. An overlooked feature of the Dash Cart is that when you sign into the cart to use for your trip your Amazon Grocery List appears on the screen. The Dash Cart then displays the aisle of the item that you have on your list, checking off one of the reasons why you may need to use the Alexa locations in the first place, or at least until your significant other texts you that you don't have enough condensed milk needed for desert recipe.
Source: (Business Insider)
One opportunity that exists both in the in-store shopper journey but also in processing of online orders for most third party delivery applications is ordering the Shopping list by aisle to reduce the dreaded double-back. Having not used the Dash Cart I'm speculating that this picture seems to illustrate Amazon may have this built this functionality into Alexa's Shopping List which would be a big jump in a retailer's ability to reduce friction in the shopper's journey.
A really difficult question for Market Research companies to answer is what items a shopper reported as planned versus impulse. Most times this is done post-shop where recency bias can make the Reese's Peanut Butter Cups that were picked up at the checkout lane to be reported as a planned purchase when it was definitely an impulse to reward yourself for ultimately finding the soft tortillas. Amazon's Shopping List Feature now gives them one of the best ways to measure not only in-store impulse purchases but to inform **these purchases**. Impulse purchases are not only an item that you didn't have on your grocery list but can also be ambiguous shopping list items. Future enhancements of the Dash Cart could include arrows on your screen to help guide you through the store and when you are close to the area in aisle where ambiguous shopping list items such as "Lasagna Noodles", shown on the Shopping List in the picture above. Brands or even Amazon could offer personalized offers to the shopper that could be quickly added to the checkout via the on-screen menu influencing your final item's decision. Or for those shoppers that like to compare items, the Dash Cart screen could list potential matches in a list format that could be filtered or sorted by Nutritional Facts, Allergens and even Customer Ratings to help them make their decision and ultimately show them the packaging of the product to help them quickly find their selection on the shelf. Customers often make these type of decisions at the shelf and chose to either block the area in front of the item they are reviewing or stand on the opposite side of the aisle surveying their potential options before approaching the shelf to make their final decision making other customers moving down the aisle having to clumsily navigate around or through this shopper decision. Often this leads to consumers making decisions more quickly because they are trying to be courteous of the other shoppers around them or causing the other customers trying to move around them to become frustrated that they are slowing down their grocery shopping trip. Amazon's ability to implement a marketing engine with a truly seamless UX within the cart coupled with their experience in consumer hypothesis testing should set off flashing red lights at their competitors headquarters as well as brands that will need to evolve their trade spend capabilities in order to best return on investment from these trade dollars.
The Everything (Grocery) Store
Introducing the Fresh Store, Jeff Helbling VP of Amazon Fresh Stores, discusses the wide assortment that will be available to shoppers in the Amazon's newest brick and mortar venture. He does not however make mention of the other non-traditional grocery store assortment items that will be available in the store such as books, electronics and other household items. As mentioned in Part 2: Customer Decision Making, one of the most important features of Amazon's previous brick and mortar stores was their ability to curate top selling, highly rated products for their consumer within the store. This strategy is obviously paying off as they have again implemented this marketing and assortment tactic within the Fresh Stores.
(Source: Business Insider)
A quick glance of the items shows that Amazon has made a concerted effort to bring items to the store that will either help the shopper create their menu (Recipe Books) or execute an already selected recipe (Air Fryers, Mixers, Tea Kettles). They have even dedicated important end-cap real estate to add additional shelf space for items that also exist in this aisle as seen below to replace the Air Fryer you received from your grandmother for your birthday and regifted in a Secret Santa when she is coming to dinner and sent you a recipe that requires it. (Full Disclosure to my Wife’s Godparents - We love our Air Fryer and have used it dozens of times!)
(Source: Business Insider)
Chicken - It's what's for dinner
I know that isn't the saying but hear me out:
One of the most recognizable items in the US Grocery industry is Costco’s Rotisserie chicken. At $5, the rotisserie chicken has become a staple for Costco members looking for a quick, easy and reliable dinner option that can be transformed into a significant amount of dinner options. So many of these rotisserie chickens are sold each year at Costco that they had to invest in the vertical integration of this item into their company which has helped them to maintain very aggressive $5 price point. Many customers go to Costco just purchase this item, and Costco hopes that by placing these items in the back of the store, these customers will inevitably throw something else into their cart/bag/hands before they checkout. Amazon’s Assortment team has obviously taken note of the importance of this item to consumers and replicated it, albeit at a discount to Costco. Working to Amazon’s advantage, Costco is not known to be reactionary to competition which should allow Amazon maintain this slight price discount.
As we know Amazon is extremely dynamic and will make significant changes to the rest of their assortment as they learn and adopt to how their consumers change their purchasing behaviors and so I’m going to avoid diving into individual categories this close to the their first store’s opening.
If you’ve made it this far - thank you. Throughout this series I’ve drawn a lot of conclusions and made a lot of hypotheses about what and how Amazon is going to be deploying their already existing strategic advantages to this physical space. The most important thing that I hope the industry takes away from this is, do not sleep on Amazon. Because of the speed at which Amazon has historically made changes, it is important to not only add them to your competitive set but to make sure that you are reviewing the topics that I have highlighted regularly throughout the next 12-18 months. Amazon will ultimately be successful in this venture it is just a matter when the general consensus deems them successful 1 year, 5 years or 10 years from now.
