Back in 2011, bookselling giant Borders closed its doors for good. The reason? The rise of online retail giant Amazon made bookstores increasingly irrelevant (how Barnes & Noble has stayed open is beyond me). Since then, Amazon’s reach has grown exponentially, as exemplified by their recent acquisition of Whole Foods. Many have mixed feeling about the acquisition; while the level of convenience for the consumer is undeniable, as exemplified by the recent lowering of prices at Whole Foods, such a move also smacks of monopoly. How will this acquisition impact wholesale distribution? Here are a few things to think about:
The age of just brick-and-mortar is a thing of the past. For retailers to succeed, they can no longer rely on brick-and-mortar, but that’s not to say that they should strictly be an online store. Indeed, to be successful, they need to be a hybrid of both options. That’s why you’re seeing many chains also developing online stores. Amazon’s acquisition of Whole Foods comes in tandem with the new AmazonFresh food delivery service and AmazonGo concept. Food delivery services have historically been a mixed bag; getting groceries to consumers’ homes remains expensive and problematic, and in the past, plenty of businesses have tried and failed, such as Shoplink, or are still in business and offering an ultimately inferior product, such as Peapod. Yet Amazon’s acquisition of Whole Foods offers the company a large, convenient, and already-installed network of over 460 new storefronts that give them a notable edge over those who have gone before them.
These new Whole Foods storefronts could serve as both storage and micro-distribution centers. Whole Foods locations could also serve as a distribution hub for restaurants and other grocers, as well as offer a pick-up and return location for Amazon products. These micro-distribution centers could also provide Amazon’s wholesale distribution business model with the capability to deliver products the same or next day that they’re ordered, and at potentially lower costs, making them a much stronger competitor in the wholesale distribution business.
Such dramatic changes in the consumer world means that wholesalers need to respond and adapt, or else risk going the way of Borders or Blockbuster. Wholesalers have already started to expand their offerings and conveniences to maintain their market standing. And in the digital age, as businesses try to make sense of data and analytics, wholesalers can provide actionable insight for their customers. While wholesalers have always been focused on good customer service, they need to work on finer-tuned strategies backed by analytical numbers. This knowledge will allow them to stand out in the competitive market. What used to be a cool thing people were starting to do has since become a necessity.