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The Players Technology Newsletter 15.0 — 03/10/19

STOP BULLYING ME 


On June 16, 2017, minutes after Amazon announced it was buying Whole Foods Market Inc. for $13.7 billion, grocery store stocks plummeted, and everyone was crying death for every grocery chain imaginable. 

You can’t build a consumer brand in 2019 and ignore the 800-pound-gorilla that is Amazon.

Not only does Amazon control nearly 50% of e-commerce sales, but the company has also clearly set its sights on physical retail, having opened multiple retail stores last year. Amazon’s technological innovation in traditional retail is an “earthquake” for any sector they enter. 

But it was recently announced that the Company appears to be struggling in its grocery business as the number of Amazon Prime members who shop for groceries, at least once a month, declined in 2018 compared with 2017. Meanwhile, WalMart cited supermarkets as the biggest drivers of its e-commerce business, both last year and going forward, and the company plans to expand grocery pickup to an additional 1,000 stores. Studies also found that households using grocery delivery and pickup services from physical retailers spend about $200 per month and place orders more frequently than Amazon grocery shoppers, who pay $74 a month.

Although Amazon is gearing up for their biggest year ever, it’s clear that other businesses aren’t afraid to compete for their customers. In most of the sectors, the Company has recently entered, whether it be groceries or streaming video or India, Amazon is far from dominant. 

Amazon mightly struggles whenever they have to build an entirely new set of capabilities and integrations. Perishable goods and groceries are an excellent fit for stores, not distribution centers. Companies focused on personalizing their products, going niche over mass, and committed to values, are outlasting Amazon’s pressure. Amazon nearly destroyed Best Buy, but Best Buy retreated and reshaped almost every piece of their business, and is now the playbook for companies hoping to survive in the Amazon age.

For businesses in electronics, consumables, department store, high-end retail, food delivery, bookstore, grocery, healthcare, pharmacy, and delivery & logistics industries, the end isn’t imminent if you don’t want it to be!

Sincerely,

Rudy

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“The greater our knowledge increases the more our ignorance unfolds.”
- John F Kennedy

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