French supermarket giant Monoprix, flagship of the Casino Group, is set to sell its products via Amazon Prime Now to its Parisian customers.
Monoprix becomes the latest in a growing roster of retailers using marketplaces to sell their goods, not least in the grocery space, where Morrisons in the United Kingdom has pioneered working with Amazon to help it fulfil online grocery deliveries and take Morrisons into the food delivery business without the huge capital outlay.
The news also comes hot on the heels of the US department store Kohl’s partnering with Amazon to try and play with, rather than compete against, the marketplace.
For Kohl’s there is the hope that by offering its stores as a place to collect and return Amazon purchases it will drive up footfall for the store. However, the partnership will only work if Amazon benefits from it too – and the jury’s still out on that for now.
The Monoprix deal, like the Morrisons one in the UK, is a double edged sword. According to Jean-Paul Crenn, founder of VUCA Strategy, an e-commerce and digital transformation consulting firm in France, the upsides to the deal for Monoprix will be short lived.
“Just like Morrisons, the weakness of Monoprix [partnership] is that it is giving the keys of the French online food market to Amazon. Because, by providing Amazon with access to its fresh products and its customers, Monoporx can indeed find a short-term interest by increasing its sales in the e-commerce. But this short-term movement condemns it in the medium-long term because it allows the ‘Seattle octopus’ to capture the loyalty of Monoprox customers for their online purchases of food products, to know the product mix purchased.”
– Jean-Paul Crenn, founder of VUCA Strategy
And Amazon’s track record with such partnerships often doesn’t auger well. The fails of Borders, Target and Toys R Us were among the most innovative distributors in the United States in the 2000s. Now they are either bankrupt or much reduced. Their common point? According to Crenn, they have all created a partnership with Amazon to outsource their e-commerce operations. That these companies did not understand or accepted 15 years ago the importance of e-commerce and decided to subcontract it has led to their demise.
“To ally with a partner as powerful as Amazon, having such capacities to collect and especially analyze and act according to the collected data, goes beyond the risk taking or even of the bet. Indeed, Amazon needs Monoprix much less than Monoprox needs Amazon. The agreement between the two companies is inevitably in favour of Amazon if the latter would not have accepted it.”
– Jean-Paul Crenn, founder of VUCA Strategy
Taken together the moves to cosy up to Amazon by Kohl’s and Monoprix shows that in the world of retail, Amazon is going to try and eat your lunch. Joining forces with the ‘Seattle Octopus’ makes sense on many levels, but you have to be prepared to fight your corner.
For many retailers, using Amazon to sell their products is a must – and can lead to extra sales. However, there is always the risk of cannibalising their own business.
The other approach, to partner with Amazon, can see the retailer or brands squashed under the wheels of the mighty marketplace, which could well just take your customers and you become one of a plethora of suppliers.
The option of doing nothing will see you dwindle and lose out to Amazon and the others anyway.
Whatever you choose, retailers compete with Amazon – and that is never going to be a fair fight.
