Amazon revolutionizes distribution companies with e-commerce

By J. S. Soler.

The purchase of fruit and vegetables on the Internet is proceeding very slowly and represents a minimum quota in relation to the total volume of fruit and vegetables marketed in Spanish households. But something is changing with the entry of Amazon and the future is exciting.

At present, the online sale of food products is 1.1% of the volume of total purchases for the home and if we specify it in fruits and vegetables only represents 0.4% of total sales to through the different channels, according to the latest report on food consumption in Spain in 2016 from the Ministry of Agriculture and Fisheries, Food and Environment. This figure rises to 2.3% if we talk about processed fruits and vegetables, with a growing presence in the lines associated with new trends to look for easy, convenience products.

The lack of profitability and habit among buyers may be two stops for its diffusion and progression, but despite these difficulties experts also talk about the high expectations of this channel. And based on these perspectives is circumscribed the fact that the American giant of online sales, Amazon, has broken into the sale of fruit and vegetables in Spain through the Internet.

At the moment it has not yet launched its Amazon Fresh service in Spain, but it is only a matter of time. Sell fruits and vegetables for now through its Amazon Prime Now ultra-fast delivery service, exclusively available to date for Prime customers in Madrid, Barcelona and the neighboring towns of both capitals. The Prime Now service also integrates the Mercado de la Paz and Plaza de DIA stores in Madrid – the DIA commercial format that specializes in fresh produce – and the Plaza de DIA in Barcelona.

“Amazon focuses for now on its ultra-fast delivery service Prime now in Madrid and Barcelona, although it could soon enter with the Fresh service”

With just one click, Prime Now helps to facilitate access to almost any product from anywhere and in a short time, being able to choose the time slot that best suits you to receive your order (between 8:00 and 24:00 hours, seven days a week). Thus, any consumer can buy fresh products and receive them in two hours free or in one hour for € 5.90. The revolution is served.

Amazon makes ultra-fast deliveries

Andreu Castellano, Head of Corporate Communications at Amazon in Spain, states that “at Amazon we strive day after day to offer our customers an increasingly wide selection of products. In this sense, the Prime Now service and the two agreements with Mercado de la Paz and La Plaza de DIA allow us to further expand the variety of products we offer and, on the other hand, to offer the opportunity to customers -both in the market, as of DIA-, to enjoy our ultra-fast deliveries”.

Last year Amazon joined forces with the DIA Group after selecting it from a possible list of future events. “The objective was -according to Castellano- to increase the selection and make life easier for customers to access the products they want, at the best price and in the fastest way. This also includes third-party products such as those from the Plaza de DIA. In addition, this alliance allows us to offer the opportunity to customers of La Plaza de DIA to enjoy our ultra-fast deliveries”.

Opportunity or threat?

The entry of Amazon has not left anyone indifferent. From some sources, especially in the marketing part, it is considered that Amazon can be a supermarket to which to supply fruits and vegetables and therefore they see it with optimism. The key to its success will be mainly in logistics, but no one doubts that this is the strong point of the company led by Jeff Bezos and that will surely boost sales of fruit and vegetables online in Spain in the coming years, since either by itself or because its competitors have also put their batteries.

The marketers have it clear, and the distribution? By mouth of them we do not know it because no company has wanted to respond to the questions of this media, except the Valencian Consum, but there are several clues that suggest that it has caused a stir. Consum launched its online store in October of last year, with more than 11,000 users and a very high repetition rate of 40%. It should be noted that one of the strengths of Consum is the bet they make for fresh food. For Consum “all competition is good, as it serves as a stimulus to improve service and consumer prices. Electronic commerce is growing in Spain, but unevenly between sectors, without food being of great relevance for now”. “The main obstacle, in the opinion of the Valencian company, is that Spaniards want to touch the fresh products, examine them and verify their quality, a fact that we can not do through the internet. Only one in ten Spaniards buy fresh food online“, they say.

Mercadona, El Corte Inglés, Carrefour and the rest

Some of the strongest brands in the e-commerce have moved tab. El Corte Inglés has recently extended its online delivery service in 2 hours and the Mercadona leader, despite never betting on online sales but for its physical stores, announces investments in this regard. Its undeniable leadership in the establishments has not been enough to make profitable even the online sales service, losing between 30 and 40 million euros in that channel every year and represent only 1% of the company’s turnover.

“Our website sucks”,  Mercadona president Juan Roig has said explicitly, expressing aloud what many people think since it has few references, an outdated image and orders that take too long to reach the market. client, to the boss as they call it. For this reason, it has announced a digitalization project for the company with the renewal of its website and a more modern, visual and dynamic platform. “We believe a lot in the digital reality, we are convinced that the information technology is very good, but there are things that we have not yet been able to do profitably”, explained Roig in the presentation of the results of his company a few months ago. The expansion of Mercadona’s online sales channel has left it in the hands of her daughter, Juana Roig Herrero, at the head of a management team that will start up that project throughout 2018.

“Mercadona is also a leader in e-commerce, despite never having bet on that channel. As of 2018 he prepares changes”

Although it may seem a lie with these figures and the little bet made to date, Mercadona is also a leader in the e-commerce channel, perhaps because of its strength in physical stores, since one out of every five internet buyers do so on its website and nine out of ten households made a purchase on their website, according to the consultancy Kantar WorldPanel. The sales of the online channel of Mercadona rose by 8% in 2015, reaching 169 million euros, compared to 20,831 million euros in the global.

The El Corte Inglés Group signed an agreement last year with the European Investment Bank (EIB) of 116 million euros to promote the R + D + i processes in which the company is immersed. Among the projects that are carried out, the new digital integrated platform for online commerce stands out, which will allow the promotion of multi-channel sales, through the Internet and mobile phones, and create efficient synergies with the physical store business. At the same time, this project allows it to adapt and optimize its supply and distribution processes to improve cost management and to be a more competitive company. The technological transformation project, which is in the process of being implemented, will also strengthen the company’s IT infrastructure to facilitate continuous adaptation to consumer preferences and agile management of the logistics chain.

During 2016 the online business continued to increase significantly with an increase of 60% in the number of orders, 40% in billing and 25% in traffic to the website. It stands out the 20% growth in food where the El Corte Inglés Supermarket is a leader in the online channel. Its president, Dimas Gimeno, said at the Shareholders’ Meeting a few months ago that “the omnichannel concept is our great challenge because there is no other challenge more suggestive or more urgent than linking the traditional store with the new electronic channels, that is, integrating the physical stores and the online world“.

Carrefour has reinforced the offer of its fresh products and the reward has been to double sales. Javier López Calvet, e-commerce director of Carrefour Spain, points out that “7 out of 10 of their online customers buy fresh products, with the highest growth of all our categories. Basic elements for this are guaranteeing the cold chain thanks to the tritemperatura trucks that transport them, to the special packaging, the proximity that gives priority to work with local suppliers and the freshness”.

Their next objective is that the customer can buy fruits and vegetables online by pieces and that they can choose maturity because it will mean more flavor. Another of Carrefour’s online bets is the bio offer, which has more than 1,000 references on its website and will continue to increase the catalog.

Amazon goes shopping

The giant of the online sale Amazon continues to leave corpses on the road and the following example serves as a reference to analyze the future of the American company in our country. The American toy company Toys “R” Us has recently signed bankruptcy in a court of Virginia due to its debt of 5 billion dollars, mainly due to the competition of the company of Jeff Bezos. Online sales of toys and baby products – Toys “R” Us – accounted for 912 million dollars in 2016, while those of Amazon were 2,163 million dollars. It is another sector different from agri-food, although it is significant after all.

In Spain, its alliance with the DIA Group means applying the model already followed in the United Kingdom, where it partnered with the Morrisons chain, the fourth supermarket chain in that country. It has also bought the US supermarket chain Whole Foods for 13,700 million dollars, introducing for the first time in the food segment with physical stores that serve as a platform to also collect the purchase made online. It is a chain that did not enjoy good economic health, but that has a great territorial distribution and that is specialized in fresh and ecological products. What will happen here in Spain? Time will tell but with the pace it imposes on all Amazon, we will soon know.

YOU MIGHT ALSO LIKE:

➡️Sánchez Haro: “e-commerce is a great opportunity for the Andalusian olive sector to go further”

➡️Internet, the perfect tool to strengthen exports in the agri-food sector