Tag Archives: on-demand

Amazon and Walmart Fight for the On-Demand Grocery Shopper

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On March 28, Amazon fired a shot in its war with Walmart to define the future of the $600 billion grocery industry. The world’s biggest online retailer announced the beta launch of AmazonFresh Pickup, an on-demand grocery service. With AmazonFresh Pickup, customers can order groceries online and have their orders ready for pick-up at designated AmazonFresh Pickup physical locations — in as little as 15 minutes.

The service is a clear response to Walmart’s limited rollout of Pickup and Fuel concept stores, where customers order online and then drive to Walmart to have their groceries loaded into their cars by employees.

Both businesses are racing to win loyalty from the on-demand consumer.

The rise of the on-demand consumer is one of the compelling trends defining the 21st Century economy. As Google has reported, we’re living in the era of the micro-moment, when consumers, armed with mobile devices and apps, can research and purchase goods and services on their own time and terms. On-demand businesses such as Uber have acted as important catalysts. Uber, for all its flaws, demonstrated the power of responding to mobile consumers with an easy-to-use app that provides a service on demand, and the company has had a profound impact across many industries. Businesses ranging from Panera Bread to 7-Eleven have responded to the on-demand consumer with services such as online ordering and drone delivery.

The grocery industry is well suited to an on-demand model. People need to restock groceries often, and obviously perishable goods have a limited shelf life. But as writer Mark Rogowksy notes in Forbes, the on-demand grocery model has been fraught with its share of failure, one of the reasons being that grocery delivery is not as “on-demand” as it sounds. In fact, it’s a lot easier for mobile consumers to order and pick up groceries on the go rather than wait around in their homes for delivery. Hence, Walmart has been experimenting with the Pickup and Fuel stores. Walmart launched the stores in late 2016 amid speculation that the giant retailer had found a way to battle the ongoing Amazon threat.

At about the same time Walmart began experimenting with Pickup and Fuel, Amazon made headlines with the beta launch of Amazon Go, which consists of physical self-service grocery stores where anyone with an Amazon account, a supported smartphone, and the Amazon Go app can simply take what they want from the store and leave with no check-out required. The flagship Amazon Go store is open exclusively to Amazon employees, and so far the frictionless shopping model has encountered glitches as the in-store technology struggles to keep pace with consumer foot traffic when the Amazon Go store gets busy. Amazon has delayed the launch of a public-ready Amazon Go. But as Amazon has demonstrated with its latest announcement, Amazon has many more cards to play.

Both Amazon and Walmart are in a strong position to lead the on-demand grocery business. They both have brand muscle and deep pockets. Amazon is crushing Walmart (and everyone else) in online retailing, and Amazon is successfully moving into our homes and cars with on-demand devices and technologies such as the Dash button and Alexa voice assistant, which make Amazon a more ubiquitous and convenient presence in our lives, as Google strives to be. Walmart, though, possesses many advantages, including scale and a powerful physical ecosystem that includes not only its stores but network of partners, over whom Walmart wields considerable power.

Walmart also has an uncanny knack to experiment and learn. For example, in 2015 the company launched Walmart Pay to make it possible for shoppers to use their mobile devices to check out and purchase goods, and in 2016, Walmart expanded Walmart Pay across 4,600 stores. Walmart has quickly added services to Walmart Pay that cater to the needs of on-demand consumers, such as the ability for shoppers to refill prescriptions and skip pharmacy lines. Here is a company that understands the intersection of the mobile and physical worlds.

In coming months, Amazon and Walmart will continue to claw their way for leadership. And who will win? The on-demand consumer. With each innovation, Amazon and Walmart are reshaping the grocery industry around the needs of mobile consumers — which is good news for shoppers and the businesses that possess the means to service them on shoppers’ own terms.

Image source: Matthew Kane (https://unsplash.com/@matthewkane)

The Four Elements of the On-Demand Economy

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Big brands continue to transition to the $57.6 billion on-demand economy, which is characterized by the complete removal of friction from consumer purchases:

  • Jaguar and Shell recently rolled out a partnership to make it possible for people to prepay for gas from their in-car infotainment touchscreens. By using Apple Pay or Paypal configured in a Shell app, Jaguar drivers in the United Kingdom can select how much gas they want and prepay without needing to take out their wallets. The service will expand globally.
  • Walmart now allows customers to bypass lines at its in-store pharmacies. Pharmacy customers use their Walmart app on their mobile devices to order prescription refills and then use an express lane to move ahead of the customer service line and retrieve their orders. Customers can also track order status and view pricing details.

Product preordering is hardly new. As I have discussed on my blog, brands such as Starbucks and Panera Bread have been offering preorder services for a few years. But businesses such as Jaguar and Walmart help legitimize preordering, which is one of the elements of the on-demand economy. Meanwhile, many brands continue to develop services that deliver products to consumers on demand. Amazon removes friction from online (and offline) buying with Dash buttons and Amazon Go stores. Retailers such as (Walmart among them) have launched services that make it easier to either pick up products or have them delivered to your home. Uber deserves credit for being the on-demand catalyst. Now the legacy brands are learning and adapting.

The Four Elements of the On-Demand Economy

The “on-demand brands” typically adopt one or more of the following four elements of the on-demand economy:

  • Making it possible for consumers to prepay and avoid needing to reach for their debit cards or for cash, a model that fueled Uber’s rise. Prepay works especially well with high-volume products that rely on repeat purchases and low consideration, as is the case with Panera, Starbucks, and Walmart’s pharmacy. Typically customers know what they want before arriving at the store and don’t want to spend a lot of time choosing among products.
  • Delivering products to consumers on their own terms, often at their own homes, faster than ever before. For instance, Amazon has launched drone delivery in the United Kingdom to speed up product delivery and is preparing to do the same in the United States. UberRUSH partners with brands such as Nordstrom to offer product delivery, and business such as Heal in Los Angeles bring doctors to your doorstep. These types of services appeal to a variety of demographic segments, ranging from busy parents to urbanites who don’t own cars and lack time to pick up their products. But fulfilling product orders in an on-demand fashion does not need to require the brand to deliver products to the home. Walmart is experimenting with Pickup and Fuel concept stores, where customers order online and then drive to Walmart to have their groceries loaded into their cars by employees.
  • Relying on mobile devices such as phones and wearables. One cannot overstate why mobile has been integral to the rise of the on-demand economy. Mobile searches overtook desktop searches two years ago. There are almost as many mobile phone subscriptions as there are people on earth (which took only 20 years to happen). As Google noted, mobile phone users typically want things done in the moment — what Google calls micro-moments of demand. During micro-moments, people make instant decisions about where to go, what to do, and what to buy: about 76 percent of people who search on their smartphones for something nearby visit a business within a day, and there was a 2.1x increase in mobile searches for stores open now and food open now from 2015 to 2016. Those findings make intuitive sense: when you’re on the go, you don’t have a lot of time to do complex research for things to buy.
  • Using on-demand marketplaces in which people tap into a pool of available inventory to get what they want. Examples of on-demand marketplaces include Uber, Lyft, and Zipcar for either getting a ride (Uber and Lyft) or renting a car quickly. A number of on-demand marketplaces have popped up in local markets to service different industries. For instance, in Chicago, ParqEx connects people who want to rent their parking spaces with people looking for parking in the moment. Many pundits associate Airbnb with the on-demand economy. But I think Airbnb’s success has more to do with opening up a broader inventory of lodging options as opposed to making them available on-demand. Browsing Airbnb is more of an “I am traveling and want an interesting alternative to a hotel” than “I need a place to stay now.”

Voice and Self-Service

The on-demand economy is evolving rapidly in a number of ways, mostly notably through the rise of voice search. Voice search ads a layer of complexity to on-demand transactions: with our voices, we can request more complex services and products. We can ask Alexa, “Tell me where I can watch the movie Get Out this afternoon and use my Stubs discount card” or “Where can I get barbeque ribs in the west Chicago suburbs?” Businesses that want to be found during those open-ended searches need to optimize their online content and data so that they are visible for voice search. Businesses that understand how to make themselves visible for voice will capture more on-demand queries, thus being part of the on-demand journey, from awareness to consideration to purchase and service.

Another major development is the use of buy buttons such as Amazon Dash to enable self-service on-demand. The Amazon Dash button turns any object into a smart device for replenishing items such as laundry detergent. Amazon reports that the Dash buttons, available to Amazon Prime members, have taken off. According to Amazon, Dash button orders occur over twice a minute, and for many popular items, more than half of orders are done via Dash buttons. The list of brands signing up for the program include Campbell’s Soup, Cascade, Clif Bar, Mentos, and Quilted Northern, to name but a few. All told, more than 200 Dash buttons exist.

It’s easy to foresee a time when Amazon will turn the Dash button into an auto-order device that uses sensors to replenish certain products without the consumer even needing to click a button. Auto on-demand may take hold in other industries and forms for products that are ordered often. For now, brands are responding when consumers call — and faster than ever.

Image source: nextjuggernaut.com