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Carrefour or Dia. Which one will be bought by Amazon?If there is one giant that can turn a sector upside down, then it is Amazon. After ten years of trying, it fully entered the food industry with the purchase of Whole Foods last summer. In a demonstration of power, the company owned by Jeff Bezos is taking over the sector, and it seems that it now wants to refill its shopping cart. Europe is in its sights, with rumours about its interest in the French Carrefour; however, the Spanish DIA is apparently also an option.
The growth of Amazon since its creation in 1994 has been unstoppable, especially in the last year. After the purchase of the supermarket chain WholeFoods for 13,700 million dollars and the success of its Prime Day promotions, the firm saw its revenue grow by 33%, to 43,477 million dollars, in the third quarter of the year.
Its philosophy is based solely on growth and the discovery of new market niches. As regards food, it has been a tough journey. It took it ten years to put pressure on competitors like Walmart. Before, there have been several failed tests. In August 2007, the company launched Amazon Fresh, a fresh product delivery service, which barely saw light in Europe. It didn't even arrive to Spain. In the US, it was more successful, although the service had to be reduced in seven states. It was a difficult project despite the company's infrastructure due to the immediacy required by the food industry.
Therefore, the strategy is clear. If an online chain seeks to grow, there needs to be direct link to a physical point of sale and vice versa. And that is what Amazon has been doing: searching for physical points of sale in the world of food. Why? Because the tests with Amazon Fresh have not paid off, but with the 473 Whole Foods stores, the tests are working. Only two days after its purchase, the number of customers grew by 25%.
The idea is to allow the consumer to place the order through the platform and allow them to pick it up at their nearest store, and this without having to go through the till, thus saving unnecessary waiting. It is similar to the 120 lockers that the company has across Spain, or the Amazon Go model, which is only available in Seattle.
With this plan ready in the US, now all that remains is to hold a footing in the European market. The fact is that Europe is a reflection of what happens in the US. Every great operation that takes place there has repercussions or is repeated again in the Old Continent. And to achieve that, it needs infrastructure and a previous investment in fresh food distribution centres. The solution: buying another food group.
Publication date: 1/10/2018
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