Talkin Tech: Amazon Effect
After the June announcement that Amazon is in the process of acquiring Whole Foods, with the exception of a provocatively-titled article by Brad Rosen, CEO of Drync, “Did Amazon Just Kill Liquor Retail As We Know It?”, there was not much speculation about how this acquisition may impact wine retailers. Retailers, however, should be making preparations to contend with Amazon now. Grocery chains that sell alcohol have always posed a serious competitive threat to independent retailers, and Whole Foods themselves was one of the biggest with more than 350 liquor licenses across 41 states. That massive brick-and-mortar footprint, however, is now in the hands of the largest eCommerce company in the world, who has clearly been preparing for this moment. Amazon aims to erase the lines between brick-and-mortar and online shopping, and you can see this in their most recent innovations. In the last year alone, they’ve opened up two of their own branded “drive-up” brick-and-mortar stores in Seattle, WA where you buy online and can pick up your groceries within 15 minutes. They’re also planning on opening another Seattle store called Amazon Go, where there are no cashiers; phones automatically and accurately handle payment. In the last two years they’ve also made further improvements with local delivery and have expanded Amazon Prime Now, a service that offers limited 1-hour delivery. Imagine now a future where those recent innovations mature and are able to be incorporated into another 350+ brick-and-mortar locations across the country, and where Amazon can lobby extensively (they spent $11M+ on lobbying in 2016). How do independent retailers contend with this future? Having a conveniently located store with decent prices will not be enough. With the emergence of 1-hour local delivery via apps like Drizly, consumers are becoming more aware of alternatives to going into a brick-and-mortar store to get a bottle of wine quickly. Amazon can and will push the boundaries on this channel; independent retailers cannot hope to outmatch Amazon in this area. Wine retailers, however, can outperform Amazon (and other grocery chains) in customer service—especially when it comes to recommending products and inspiring consumers to become excited about what they’re buying. This, coupled with leveraging current and emerging technology to keep up an online presence, should be among the fundamental strategies used by independent wine retailers competing with Amazon and other massive corporate retail players in the future.