This week’s big news that you’ll be able to buy Morrisons groceries from Amazon made me think of SpongeBob SquarePants.
Please bear with me while I attempt to explain.
Like a lot of parents (and non-parents too, I don’t wonder) I’ve watched a lot of episodes of SpongeBob SquarePants on TV with my kids. A lot. I find SpongeBob himself implausibly irritating. The same goes for his pal, Patrick Starfish.
But I really like some of the peripheral characters, especially his neighbour Squidward Tentacles, his boss Eugene Krabs, and the ever-scheming, dastardly Plankton.
So, on those occasions when I’ve watched SpongeBob SquarePants, I’ve paid less attention to the central characters and more to what’s going on elsewhere.
By now you’ve probably guessed where this is going.
Of course the Amazon Morrisons news is important to those most immediately concerned, and also to the rest of the retail sector – I’m not for one minute going to suggest otherwise. But I’m far more interested in some of the other, more peripheral characters in this drama.
What will this deal mean for the existing Morrisons / Ocado deal, for example
When I first read that Morrisons had signed a 25 year deal with Ocado I was certain it had to be a typo. But no, Morrisons is blocked from developing its own online grocery service by the terms of a 25 year contract with Ocado. So perhaps it’s unsurprising the Bradford-born supermarket wants to find explore other online avenues.
Setting aside the drop in Ocado’s shareprice, which had all but recovered within 24 hours, anything that shakes long term confidence and investment strategies is going to be a worry; the value of that 25 year contract is more than the sum of its parts. But Morrison’s isn’t the only game in town, even if it is trying to scale down its dependence on Ocado; I don’t think the bell is tolling for Ocado just yet.
According to digital market intelligence company, SimilarWeb, three of the five major UK online supermarkets has suffered a recent decline in online visits.
Based on combined UK mobile and desktop traffic, Tesco saw a decline in monthly online visits from 49.3m in November 2014, to 40.1m in January 2016.
Asda also saw a decline – from 30.3m to 20.5m in the same period, while Morrisons saw a decrease from 4.48m to 3.7m visits.
By contrast, Sainsbury’s saw an improvement, growing its online traffic from 7.5m to 9.3m visits.
Who else did well? Ocado, which saw increased online visits for the period, rising from 2.2m to 3m.
So what might the Amazon/Morrisons deal mean to Sainsbury’s and its attempts to get its hands on Argos’s delivery capabilities? With Amazon entering the fray, things are likely to get tougher than ever for the big supermarkets, so is Sainsbury’s entering now-or-never territory if it wants to make good on recent gains? If it misses out on Argos, can it find a credible delivery proposition to truly go head-to-head with the food-plus-non-food big players?
And how will Asda and Tesco respond? The former’s toYou service requires fully utilised assets across its network, so anything that might draw business (and busy-ness) away will be a concern. It’s unlikely the rest of the sector will sit on its collective hands watching, least of all Tesco.
As have previously pointed out, there’s nothing new about Amazon acting like a disruptor; it’s something I have written about repeatedly both here on eDelivery and elsewhere. But for many UK grocery shoppers there would be something very new about switching allegiance from Tesco or even Waitrose (heaven forefend) in exchange for Morrisons goods delivered by Amazon. That’s not to denigrate the Morrisons offer in any way, but while price and convenience will win many customers over, will it be enough to keep them? Only if the doorstep experience is at least on a par with that which they are already accustomed to.
Along with some of my colleagues from InternetRetailing, I contributed some of my thoughts to an analysis of what the announcement means. You can read about that here.
Elsewhere on eDelivery, we have exciting news about Alibaba speaking at next month’s eDelivery Expo (EDX16). You can find an overview of Day Two, including the closing keynote from one of the biggest names in global etail here.
We take a look at speed and convenience from two different standpoints. First, research that shows the overwhelming majority of shoppers want same-day delivery. Furthermore, around half of them are willing to pay for it. The second is a guest-authored article that asks what retailers can – and should – do to prepare themselves for ever-increasing customer demands.
Part of the ability to perform at an optimum level is ensuring you have the right people. So how do you attract and retain the right staff in the logistics space? This is a problem that goes beyond the well-aired HGV driver shortage issues. How can you ensure access to enough of the right people, especially when the operations and logistics world is no longer the brown overalls back-room activity it used to be.
I’ve already mentioned eDelivery Expo (EDX16), which takes place on 27 & 28 April. Last year more than 5,000 people attended the two day event, which is co-located with InternetRetailing Expo, and I’m hoping to meet as many eDelivery readers there as possible next month. You can find details on the event, including how to register here.
As always, if you haven’t subscribed to eDelivery yet we’d love it if you did. You’ll get a weekly newsletter summarising the main stories we’ve covered, and we’ll keep you informed of other big announcements. But we won’t spam you – no one’s liked spam since the 1940s, have they? You’ll find details on subscribing here. And if you’re not receiving a copy of the magazine you’ll find details on that too.