As Amazon continues to pursue major market share across numerous industries, electronics retailers, pharmacies, consumable manufacturers, department stores, food delivery companies and grocery stores stand among those sectors most impacted by the e-commerce giant’s expansion.
The fourth-largest company in the world by market cap, Amazon is a contender on both the B2C and B2B fronts—a reality that at some point will likely impact the food and beverage service industry. Take restaurants, for example. Unlike institutional customers (i.e., hospitals, schools, military bases, etc.), which usually buy on contract, restaurants would be a fairly easy chunk of business for Amazon to bite off in the future.
In fact, for the thousands of independent eateries and smaller restaurant chains that arent buying from any one supplier, Amazon’s offer of an easier, more streamlined way to shop for food and beverages would be a no-brainer. After all, these buyers are consumers themselves, and they’re used to shopping like that anyway.
Here’s the disruptive part: even if customers know that they’re not getting the best possible price, the reason they stick around is because they know the experience will be convenient and easy—and that delivery will be quick. They’ll put a few items in their shopping carts and, at some point, hit the “buy now” button, knowing that their goods will arrive in the next day or two, guaranteed. It’s this “once I’m in, I’m in” mentality that keeps Amazon moving steadily into new industries. In other words, a buyer for a local restaurant isn’t just a buyer for that establishment; he or she may also be an Amazon Prime member who would like to extend the B2C experience into the restaurant’s procurement strategy. It’s the evolution of consumer expectations making the leap into B2B procurement that food and beverage distributors should keep in mind.
Stepping Up to the Plate Now
So, what can food and beverage distributors be doing now to ward off any potential threats from Amazon? For starters, one of the best strategies will be to offer support that rivals Amazon’s own offering. For example, Amazon’s secret sauce lies not only in its e-commerce shopping cart, but also in the logic behind that cart in terms of creating the right flow, process, and product at the right time. Making that happen requires both e-commerce and a complete logistics infrastructure. Amazon has the infrastructure in place that allows it to store the sellers’ products (i.e., Fulfillment by Amazon or “FBA”) and fulfill orders very rapidly and efficiently.
Here are four more important steps that all food and beverage companies should be taking now:
Right now, food and beverage distributors aren’t seeing much competition from Amazon. The idea has reared its head from time to time—a 2017 report from JPMorgan claimed that at the time Amazon wanted to “dive into food service distribution, potentially shaking up an industry now dominated by three large players”—but has yet to transpire. Spurred on by the Whole Foods acquisition, which took place around the same time, consultants like Caryn Hecht were predicting a similar fate for wholesale food distribution.
“Amazon will continue to leverage increased buying power and lower volume cost, provide a greater product selection, and now have the infrastructure for faster delivery completely by-passing wholesalers,” Hecht wrote in How Amazon Acquisition Impacts Wholesale Distribution.
“The faster to market advantage of traditional wholesale distribution will be threatened by this new model,” Hecht added. “To remain relevant in the new frontier of retail, wholesale distributors must be ready to differentiate their offerings and services through a deep understanding of their industry and customers.”