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Technology in the distribution channel

Distribution tech

Technology and innovation in supermarkets

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There is a lot of innovation in distribution. Technology applied to supermarkets will change very soon how we buy products. It is interesting to see the marketing strategy that the protagonists are following.

Amazon and Alibaba are the two big ones, and each one has its area of influence. They have both presented a video where they explain their first steps in that field. If we analyze them, we can see the marketing distribution strategy behind them.

Amazon explains Amazon Go

Amazon distribution tech

This is the official video of Amazon Go. The date is relevant: December 5, 2016. Here are the key points:

- The buyer enters the supermarket with the Amazon app.

- He picks up products, and the app adds it to the cart. If the user changes his mind, Amazon updates the cart.

- When he leaves, Amazon charges the user’s account and sends a receipt to the app. There are no checkouts.

The big innovation is that there are no registers. No person controls the buyer or the products in the cart. That removes the friction in the buying process. There are no lines. It is beneficial for the user; the process is fast and more comfortable. It's good for Amazon too; people will buy more quantity more frequently.

Amazon related services

Amazon also has other services that send supermarket products to the home:

- Amazon Pantry. For products that are not fresh.

- Amazon Fresh

They both are only available in some areas and for some products.

Voice assistant

If we are going to talk about technology in supermarkets, we should also talk about Echo. In fact, it is kept at home, but it will help buy more supermarket products. With Amazon Go, they remove the lines in the physical supermarket. With Amazon Echo, they remove the website, the keyboard, and the computer in the online buying process.

If you want to know more about Alexa, see my post: Amazon Assistant, the marketing behind

Go, Pantry, and Fresh will help Amazon grow supermarkets and distribution centers for online shopping. Go, Pantry, and Fresh will also improve the selling of Echo devices. As Scott Galloway says:

"Grocery / commerce via Alexa will create the utility that Alexa needs to maintain its lead over Google and Apple’s home / voice offerings as they try to play catch-up."

(Scott Galloway is professor of marketing at the New York University Stern School of Business, and author)

Grocery will help Alexa, and Alexa will help Grocery and other products. I think the end mission is to sell anything. As Amazon says:

"Our vision is to be Earth's most customer centric company; to build a place where people can come to find and discover anything they might want to buy online."

Source: https://www.facebook.com/pg/Amazon/about/

(I think that they will soon have to eliminate the word online there. A general "buy" will be more accurate.)

Test

Amazon Go has only one store. It is in Seattle, the same city where Amazon has their main offices. At first, it was only for Amazon employees. Some months later, they let other people buy there as well but with a lot of restrictions.

With Go, Pantry, and Fresh, Amazon works on a small scale. They are testing the technology against consumer habits and preferences.

Alibaba explains Hena

Alibaba distribution tech

The Chinese giant calls his supermarket chain Hema. The official video presentation was on July 16, 2017.

- The Hema app can read the barcode that is on every product. The user can get information about the product. He will also have recommendations of similar products based on what he has in his hands.

- Customers can also buy from home. They will place orders through the app and workers will go around the store collecting items for delivery. They give service in a radius of 3 km, about a mile and a half. Hema manages orders in 30 minutes.

- A membership club. When the customer joins, the app remembers all the purchases so it can personalize and improve the shopping experience the next time.

Alibaba is also testing different ways to shop without checkout. There is no official announcement as far as I know.

Amazon and Alibaba tech in supermarkets

It is interesting to compare the two videos. They are the official videos made by the respective companies.

They are both working in similar areas. We cannot be sure about the degree of development in the technology in each case. What we can see in the videos are the marketing priorities.

Amazon presented the video on December 5, 2016. Alibaba presented Hema on July 6, 2017.

Amazon is ambitious. They are trying to remove the checkout point. Amazon works first on a small scale, making a lot of experiments. Then they iterates fast, learn from the mistakes and improves the product.

Alibaba-Hema works with something that is more approachable and can be applied soon. The key point is making the phone the center of the shopping experience. The customer can have detailed information about the products on the phone. Hema will learn from the buyer's habits and could enhance their experience

Hema is less ambitious than Amazon, but they can apply their innovations in technology now. That video presents the first of 13 locations in China.


I have several posts related to Amazon and their role in the marketing distribution:

- Distribution tech. Technology and innovation in supermarkets
- Amazon and Nike, partnership or war?

I have also talked about Amazon Echo and their marketing strategy in front of other voice assistants:

- Voice Assistant, the marketing behind
- Amazon Echo, the marketing behind
- Voice Assistant, the graphic

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