Ecommerce can take a bite out of nonfoods sales. It is time to fight back against the Amazon.com’s of the world.
By Seth Mendelson
Who is your biggest competitor in the nonfoods categories? While you may be looking down the street at Walmart, CVS or even other supermarket chains, the answer may actually be found on the Internet, at a site that was previously known more for selling books than deodorant.
Amazon.com has come a long way in a few short years. Today, many industry officials say the giant ecommerce site has set its sights on growing its health and beauty care business, among many other areas.
Unlike much of the hoopla surrounding the Internet and how it is going to kill traditional brick-and-mortar businesses, this bit of hype may turn out to be true. Amazon.com has developed a business model that not only gets consumers to visit its well-traveled and well-developed website, but also has businesses clamoring to be included in its thousands (millions?) of pages of products. According to virtually every piece of consumer research, Amazon’s name is as familiar to the American shopper as Pepsi, Kraft or Walmart.
Consumers see Amazon.com as a cost-efficient alternative to traditional retailers, often at prices that even the great Walmart cannot touch. Businesses see Amazon.com as another way to reach an ever-increasing number of shoppers who want to consider what the Internet has to offer as they purchase products for themselves and their families.
If you do not believe me, just visit the site. By typing in toothpaste, for example, you will find hundreds of choices from such brands as Colgate, Crest and Aquafresh. A search for batteries finds all of the latest products from the key companies and in the sizes and varieties that make the most sense. This goes on in virtually every single category and, frankly, it looks pretty darn scary.
But all is not lost. Amazon.com’s downside is that it still takes time for the items to get from its warehouse to the consumer’s front door. And, as we all know so well, American consumers are nothing if not demanding of instant gratification. Plus, Amazon charges shipping for many of its products, meaning an item purchased for 10% less than at the food store may actually end up being more expensive once it finally arrives at your stoop. Amazon does advertise free two-day shipping, but if you are like me waiting two days for something to arrive is like watching grass grow during a drought.
The thing we cannot lose sight of is the fact that Amazon.com and its few financially healthy competitors in the digital world are the future of sales for some commodity items. Traditional retailers must react to these new contenders by making it clear to the consumer that they are getting a competitive deal at their store and, more importantly, they can take the product home with them and begin using it within minutes.
Location and signage become vital to this effort. The Internet has not had a huge impact on food sales because of the consumer’s need for immediate fresh ingredients and products, usually for dinner that night. Therefore, the supermarket is in no danger of going out of business anytime soon and traffic will remain strong.
However, the food store is locked in a battle with an opponent that plays by a completely different set of rules in a world that simply did not exist a decade or so ago. To keep pace with these types of companies, supermarkets must make it clear that they are a solid alternative for consumers seeking a convenient way to purchase a nonfoods product at a competitive price-point.
Welcome to the digital age. Retailers had better have a strategy for survival.