IPO will test Blue Apron’s ability to command the loyalty enjoyed by brick-and-mortar outlets
As we observed in The Red Queen Effect, market disruption is about adoption, not technology. And adoption is based on loyalty—how sticky a product or service is. And that’s why Blue Apron should be nervous about Amazon acquiring Whole Foods.
Especially since, as Blue Apron indicates in their prospectus, “Over time, our customers on average order less frequently or sometimes cease ordering, as evidenced by the declining increases.”
And there’s the issue of the age demographic. Both Whole Foods and Blue Apron peak in the 25-34 and 35-44 bands, but Whole Foods remains strong in all other age bands while Blue Apron drops off dramatically, especially in the under-24 band.
All reasons for concern, and there is a bigger reason for Blue Apron to start sweating—unified commerce. In a recent RIS study, Scott Galloway, founder and CEO of L2. observed, “Single-channel retail is dead, either online or brick-and-mortar. Only multi-channel retailers will survive.”1 An A.T. Kearny study found that 95 percent of all retail sales are captured by retailers with a brick-and-mortar presence and two-thirds of consumers who purchase online use the store before or after the transaction.2
Beginning with a Walmart-era focus on price, adding in frictionless delivery/shipping with a supply chain digitally connected with its ecosystem of suppliers, and applying hyper-personalization via reams of customer preference and buying behavior data, Amazon raised the bar for achieving customer loyalty. But they didn’t stop there.
The future of retail belongs to the retailer that offers its customers an integrated omnichannel shopping experience, giving the advantage to brick-and-mortar retailers. More specifically, the advantage goes to retailers with a physical presence and a digital presence.
Amazon set its sights on brick-and-mortar years ago, starting with bookstores and more recently experimenting with the zero-checkout convenience store. With the acquisition of Whole Foods, Amazon adds hyper-localization to the mix by extending its logistics/procurement nervous system to enable delivery from the 450+ “food warehouses” it is acquiring, thus kicking the bar up a few more notches, especially for online-only retailers. And for good reason.
[clickToTweet tweet=”The differentiator used to be competitive agility, now it’s alacrity, how fast you can achieve agility” quote=”The differentiator used to be competitive agility. Now it’s about alacrity, how fast you can achieve agility.”]
Fortunately, brick-and-mortar retailers have already done the heavy lifting of establishing a distributed physical infrastructure. The next step is to intensify customer loyalty through a modern commerce strategy built on an agile network that can power the increasing range of applications required to create a dynamic, personalized customer experience.
And just as importantly, the network must be able to preserve the significant legacy network investments while providing a bridge to next generation applications. All with minimal to no field level IT/security staff across all locations.
As we mentioned in The Red Queen Effect, SD-WAN has achieved rapid, disruptive adoption because it provides the distributed digital infrastructure to allow you to raise the bar in your market with alacrity by becoming a leader in providing a hyper-personalized customer experience through a unified commerce strategy.
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1 RIS News 26th Annual Retail Technology Study
2 “On Solid Ground: Brick-and-Mortar Is the Foundation of Omnichannel Retailing”, A.T. Kearny