Blog Post - Naji El-Arifi, Apr 30 2019

How does Amazon Fresh online shopping compare to grocery stores?

How does Amazon Fresh online shopping compare to grocery stores?

Introduction

Have you ever stopped to think why you still do your grocery shopping in person? Isn't is just a waste of your time? Does it not fill you with dread? Do you enjoy walking around those aisles? Pushing a trolley around like a zombie with a bunch of other zombies?

I used to be like you! Wasting part of my weekend going to the nearest supermarket to do my weekly shop. Then I started doing my grocery shopping online. It was only recently, when I had no choice but to go to one of these big supermarkets at the last minute to buy some wine and a few bits for a dinner party at a friend's place that I realised what a difference to my life it had made. And that's what gave me the idea for this blog.

Grocery shopping and the power of one

Over the past year, I have been a power user trying to buy pretty much everything from Amazon, even dragging my wife, Claire, along for the ride. Looking at my Amazon history, I made 170 orders in 2018, which works out to an average of 3.2 orders per week. You could say we know our way around Amazon pretty well. We did this to see what life would be like if all your stuff came from one company to answer one simple question: does it make your life easier?

The short answer is, yes. For us, we found committing fully to online shopping easier; the service is great, and we get amazon consistency. I can't stress how important the consistency of the Amazon delivery experience is, especially for groceries. Plus, the way shopping exclusively on Amazon integrated with the different Amazon technologies like the Dash Wand (which I love) just made everything a breeze and completely locked out other brands. Even Claire, who was not the biggest fan of Alexa, likes the Dash Wand as she can just scan or say what items to add to our basket.

The main reason I am writing this blog post is that the experiment ended at the end of 2018. Claire wanted to try getting our groceries from online supermarket services so we could compare the experience. This intrigued me, as I always want to better understand WACD (What Amazon Can't Do). Interestingly, for Claire it was all about three things: browsing, price and range.

WACD #1: Browsing

Personally, I am one of those people that doesn't think about shopping until I need something, so browsing isn't really my style. I go into a store or shop online only when I know exactly what I am going to buy. I want to be in and out in the fastest possible time with the ideal being not going at all. This is the main difference between myself and Claire; she prefers to be inspired and browse around. Which brings us to the first problem of using online grocery shopping. If you know what you want, it's great, but it's not really set up for browsing and exploring.

For Claire, there is an advantage to walking down the aisle, seeing some spring onions, and thinking "let's have a stir-fry." She found that kind of inspiration experience missing.

WACD #2: Price

Secondly, Claire wasn't that impressed with Amazon Grocery's prices, which I found pretty weird, as I thought of Amazon as being fairly cheap. It turns out that for branded goods, Amazon is competitive, but what it lacks is a large selection of lower cost own brand items, which pushes the overall prices of a shop up. The example Claire gave me was "if I want to buy some chickpeas, I just want the cheap 50p can and not the branded £1 can - they're just chickpeas." This lack of the super cheap items apparently made each of our shops around £8 more expensive on Amazon compared with supermarkets.

WACD #3: Range

Finally, when it comes to Amazon Fresh, the selection is not as big as other grocery stores. But Amazon is fairly new to the fresh food market, and seems to be working hard to address this.

Another issue with the range is that it can be annoying that some items are available on Prime, but not via Fresh. One example is that if I want to re-order Sriracha, I have to order it via Prime and not through my Fresh order. The two sides of the business are operating as separate silos.

Amazon Fresh Pros and Cons

Pros Cons
Only ever had 1 substitution as Amazon seems to know what it has Poor selection for cheaper shopping due to limited own brand products
Great delivery slots with almost any time you need being available Complicated tiers, with purchases >£60 getting free delivery with Fresh; £40-60 pay for delivery; and less than £40 means using Prime Now
Alexa voice shopping and Dash Wand Browsing is harder with less inspiration
Easy to re-add products No real personalisation
Food very rarely has any issue and is good quality Not available in all cities in the UK
Very easy to get refunds for any issues
Partnerships with other stores like Gail's Bakery

What was our experience with the competitors?

After using Amazon for a year for grocery shopping and more, we decided to try some of the retailers we previously used to see how the compared. We went back to trying three different large supermarkets, ones that we felt should be able to give us the delivery options and price that we want. After trying all three options, we found the easiest way to shop online was on Amazon.

In the end, it was Claire who came up to me and said: "I think we should go back to using Amazon Fresh. I thought we could save some money but it's just not worth it."

By shopping on online supermarkets, we gained the bigger range and the cheaper products we'd been looking for, but we realised that both of those factors were not worth the reduction in service. Amazon just kills it when it comes to service, especially around delivery. This completely matches what Wunderman Thompson Commerce's research says, where 25% of issues with online grocery come from delivery. This makes fulfilment a great place to differentiate.

There is, of course, more to service than delivery, and Amazon is great in a variety of other ways, such as what it is like to add products to your basket. One thing that I don't understand is why other brands have not made their own replica of the Amazon Dash Wand. It is just such a fantastic bit of hardware. We have our stuck to our fridge using the built-in magnet. Adding items to your basket is as easy as scanning things in your cupboards or, if you have run out, vocally telling it what products you want to add to your basket. One thing this does lead to, however, is getting locked into the same products. For example, when I'm running out of wraps, I scan the brand I already have and, therefore, keep buying the same ones. This is not necessarily because I am loyal to the brand - they're just wraps - it's just the easiest way to re-order.

As Amazon CEO Jeff Bezos says: "Our customers are loyal to us right up until the second somebody offers them a better service. It's super motivating for us." Right now, no other brand delivers the same service.

The 3 D's: Delivery, Delivery and Delivery

In the end, delivery was a big reason we went back to Amazon Fresh. We like the service because:

  1. It offered better options with a choice of one-hour slots
  2. There is no extra cost as long as you spend over £60 (you are paying £3.99 a month to use Fresh)
  3. Delivery was always on time with a message to let you know that your delivery is next
  4. We appreciate the way the paper bags are all at the front door before they ring the doorbell

A simple thing like bags being unloaded before the driver rings the bell, rather than you having to watch them be unloaded, makes all the difference. With Amazon Fresh, it is as if they trialled online delivery and then fixed all the little things that can be annoying for customers.

There seemed to be less stress with Amazon as we never felt rushed to order to secure a delivery slot. Slots were pretty much guaranteed to be available the next day and sometimes even the same day. Of course, this could be because they have fewer users, but as a Fresh user it doesn't matter. I am still getting a better experience.

What does the future hold?

After all this, I still find it crazy that I have to add milk or eggs to my basket every time I make an order, as they are in every one of my shops. One thing that is going to change is the advent of voice and Programmatic Commerce TM. Programmatic Commerce is where products will be ordered on your behalf. I am pretty sure that Amazon can use the data from my last year's shopping to know exactly when I am going to need more milk. I would also not be surprised if they knew that I was on a Ketogenic diet, which would potentially lead to better recommendations for recipes and products.

In the not too distant future, I am sure that our core items are going to be purchased automatically, with customers receiving an email or message from a chatbot to ask for confirmation that you are happy with the order. With digital assistants also on the rise, I would not be surprised if we end up handing over a couple of meals to an AI assistant where it picks the recipes and buys the products for you.

The future will also be a place where complete focus and understanding of the customer journey will be key. This is why we spend so much time mapping customer journeys for our clients, giving them an amazing foundation they can use to address customer needs and expectations.

For me, the future of grocery is not just online but effortless, taking up little to no time for the user. Voice and Programmatic Commerce will be the standard that all brands will have to adopt as we move to a Zero UI world. Hopefully this means more of you can join me where the grass is greener and never have to go into a generic supermarket to do your weekly shop!

Conclusion

One thing is definitely true; supermarkets are not going to go anywhere anytime soon, but I think their role is going to change as more people move online. I recommend watching this video on the Hema stores in China. More and more people will move to online shopping, especially if you don't have kids and can more easily manage time around deliveries. For those who can't, a click and collect approach might be better for them, which has been taking off in the US.

Finally, if you are a grocery retailer providing a delivery service, I would be kept up at night with constant nightmares of being crushed by Amazon. You might be thinking they can't replicate our supply chain or our knowledge of the industry. Do you honestly believe you can compete with Amazon by just continuing what you are doing now? Against a company that is on its way to a market cap of over $1,000,000,000,000.00 (again) and is completely customer driven?

Maybe it's time to make a few changes to your approach? Especially when you are up against a company whose founder said: "Your margin is my opportunity."

This shopalogue comes courtesy of Wunderman Thompson Commerce's Head of Innovation, Naji El-Arifi, with extra brownie points to his wife, Claire. We look more closely at retail trends in particular those being guided by the interface imperialists such as Amazon and Google, in our Future Trends report.

Download Futures 2019 Report