The Alphabet Company made waves this July by announcing a deal with Carrefour, the French grocery giant, to partner on…
Amazon acquired Whole Foods about one year ago and has been pouring a great many resources into the grocery market ever since. They’ve introduced one-hour shipping, promoted Amazon Fresh, and experimented with all kinds of technologies and techniques to unite consumers with their food in a more convenient way. We’ve already explored their entry to the FMCG market, and their innovations, but we haven’t discussed the fact that Google was likely to respond.
The Alphabet Company made waves this July by announcing a deal with Carrefour, the French grocery giant, to partner on a plan to offer consumers a chance to shop online. The deal will offer digital training to thousands of Carrefour employees, see Carrefour’s 160,000 employees begin to use Google products, and set up a joint innovation lab in Paris to work on AI solutions. Carrefour has also announced it will allow customers to shop through Google interfaces (such as Home and Assistant) by 2019. While this deal will be compared to Amazon’s acquisition of Whole Foods, there are some notable differences in this agreement.
Amazon recently came to an agreement with the Monoprix stores, another large French grocery chain, to sell groceries in the Paris area through its Prime subscription service, and Carrefour’s marriage with Google is clearly a response to this. But while retailers who team up with Amazon are looking to take advantage of the company’s mind-boggling logistical capabilities, Google is dealing with retailers who already have their logistics in place. As The Grocer notes, Google is a “digital-enablement partner” that will “forge relationships with existing retailers and make use of their pre-existing brand equity and logistical capabilities without the need to develop their own. The Alphabet Company’s financial model will likely rely on transaction commissions and, of course, access to that all-important consumer data, which it can in turn use to fuel ad serving and other data-insight driven products.” Indeed, Carrefour has revealed to Le Monde that the partnership includes plans to share data from every sales transaction with Google.
Another thing to note in this saga is the fact that the French grocery market is years behind its counterparts in the US and UK. Most major supermarkets have just launched home delivery services in the past year. eCommerce, voice shopping, and one-hour delivery seemed far off, but as major French chains partner with savvy tech giants, they are quickly moving along the convenience curve.
If you haven’t already asked yourself why two of the richest, most powerful tech companies in the world are suddenly so interested in when, how, and why you buy your groceries, you should. We have seen technology totally upend traditional distribution models in industries that once seemed completely settled. Blockbuster Video, a company that seemed absolutely dominant in the sphere of home entertainment, recently closed its last two outlets in Alaska. The music industry of today would seem completely foreign to a record executive working in 1993. The evidence seems to indicate that a similarly massive disruption is looming over the FMCG industry.
A fascinating study from facebookIQ on trends for 2020 clearly makes the case for how and why the FMCG industry is ripe for change. Their surveys indicated that “with people’s relationships with businesses mediated by technology, as technology evolves, so too will the “contract” between people and brands. We will move into a new era of continuous negotiation, as technology enables new possibilities, control and advantages for both businesses and people. On the one hand, people will continually expect more from brands (e.g., better mobile experiences and customer service). And at the same time, people’s acceptance of surge pricing demonstrates a growing willingness to pay more for convenience when it’s perceived to be worth the time and effort saved.”
Anyone watching the incredible growth of AI in digital assistants, logistics chains and voice search can see that consumers will shortly have the opportunity to buy groceries in unfathomably convenient new ways. The companies controlling the technology are trying to gain control and profit from the brands and supermarkets who have dominated the industry. The same facebook survey notes that US shoppers were 1.14x more likely to decide how and where to shop based on convenience than price.
If you are a player in the FMCG industry, you should certainly brace yourself for upheaval. Consumers will soon expect to do their shopping in new ways, and their choices will be dictated by the convenience you offer them. As relationships with brands evolve, consumers will get used to ordering their groceries with voice commands and having them arrive shortly. This is likely to matter more than the quality of your washing-up liquid or the smiles of your cashiers. Amazon and Google are aggressively moving to insinuate themselves into every transaction in the FMCG industry, and if you hope to compete with them, or avoid complete dependence on their platforms, you’ll need to find your own ways to reach consumers and offer them a path to buying your product that is just as smooth as Amazon Fresh or a word to Google Home. One such path is our app, Adimo Voice, which allows shoppers to order your product through any leading grocer with a sentence uttered to your digital assistant.