By Martin Heubel, Amazon Strategy Consultant at Consulterce
First Morrisons, then Iceland – now Waitrose? The grocery chain is reportedly in talks with Amazon to start selling on its online marketplace.
Here are three reasons why Amazon would want to partner with Waitrose:
1. Amazon Fresh lacks distribution (unlike Waitrose)
Although Amazon operates 19 physical Fresh shops in the UK, its stores lack distribution.
Waitrose, on the other hand, operates 329 shops across the UK, providing an attractive expansion opportunity for Amazon.
Why?
Because…
2. Retail partnerships allow Amazon to create a true omnichannel experience
Onboarding retailers like Waitrose allows Amazon to expand its reach gradually. First through the onboarding of selection to its Core and Fresh channels.
But potentially also beyond.
Similar to how Walmart uses its store network to offer shoppers curbside pickup, a partnership with Waitrose could offer Amazon a store network to create a true omnichannel experience.
While Amazon currently offers Fresh curbside pickup only in its stores, partnering with other retailers seems like a no-brainer.
But as the latter will ultimately pose a risk to Waitrose’s business model, it will unlikely be rolled out immediately.
However, considering the John Lewis group’s difficult turnaround process, Amazon may have more leverage in these onboarding discussions than at first glance.
3. Expansion with retailers follows a proven third-party model
Amazon is no stranger to operating a marketplace. While it can be attractive to negotiate terms and cost prices directly with manufacturers, partnering with Iceland, Waitrose & Co allows Amazon to leverage their existing economies of scale without having to deal with hundreds or thousands of supplier negotiations.
Instead, Amazon only has to negotiate contracts with a few retailers that carry an extensive catalogue and include them on its platform.
The upside of this? Amazon can improve its availability and serve shoppers with more products without having to equally increase resources in its retail team.
For further insight and support, contact Martin Heubel here
