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Distribution disruption: Marketing lessons from Amazon and Whole Foods

This morning Amazon announced the acquisition of Whole Foods – likely THE MOST disruptive marketing industry news of the year. Frankly, despite trying to refrain from using this word in my vocabulary these days, this news is HUGE.

First the facts: Amazon has purchased Whole Foods, a chain specializing in natural and organic foods in Canada, the US and the UK, for $13.7 billion. Whole Foods has 460 locations in the US and 13 in Canada. The company had been struggling with quarterly results recently and had postponed expansion plans while looking for an outside injection of funds.

Both Amazon and Whole Foods are extremely focused on customers and service. While Amazon has certainly competed on price in the past, it’s not something Whole Foods (or whole pay check as they are affectionately known) was particularly known for. However, the marriage of Amazon’s culture of innovation, along with a steady build up of distribution warehouse centers, their own airline, courier company and even drone delivery along with offerings like Amazon Prime which makes possible same day delivery, and 2 hour delivery in many cases, makes for an extremely disruptive force in the grocery category. Food is a staple in life, and this move should have all grocery stories, home delivery companies, and even retailers like Walmart who have gotten into grocery sales recently, quaking in their boots.

But the disruption goes beyond just groceries. With this single acquisition, Amazon has ramped up their distribution network considerably, and it is completely conceivable that they will move into other retail industries in the future as well. In fact, why wouldn’t they?

Back in 1994 when Amazon was created, they were an early entry to the online bookselling industry. Arguably they have now moved into a mammoth of online retailing in general, and are so far ahead of others in terms of their delivery and distribution network, they will be a category killer unless competitors find a market niche and serve it relentlessly with outstanding customer service.

So what are the marketing lessons in all this?

1. Disruption will increasingly come from outside your industry. Look to technology to accelerate that trend. What this means is we need to be scanning far beyond our traditional borders of competitors, to consider how technology could allow a completely different new entrant into the space.

2. Customers own your message. In an age of online communication and social media platforms that allow easy sharing of information between customers, what you say matters increasingly less compared to what your customers say. That means that great customer service is the new marketing.

3. Speed now matters. The ability to meet the needs of an “immediate gratification” generation with speedy deliver is now the new normal. Forget about next day delivery, think same day, or within a 2-hour window.

Consider today how you could disrupt your own marketing mix before someone else does. Our marketing mix is that combination of price, product, promotion and distribution (also known as place) when marketing folks talk about the “4Ps”. Both Tesla and Amazon are majorly disrupting distribution, but price, product and promotion are other great areas to consider as well. Disruption can be positive, when you own it before others get there.

So is it time to wander off to your local coffee shop, order a brew and then imagine with reckless abandon how you could do things differently? Yes, I think so. In fact, that is what I intend to do for my own business over the coming month. How about you? I’d love to hear your ideas. Leave a comment below!

 

 

 

 

Mary Charleson

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