A new physical grocery store and the world’s largest e-commerce site might dazzle consumers with technology and abundance, but from Amazon’s point of view, it’s all in service of an elevated quality of experience it believes to be its inherent advantage—and a key to victory—in a growing U.S. grocery business, Stephenie Landry, worldwide VP of grocery for Amazon, said in a livestreamed interview with Vox Media’s Jason Del Rey as part of Vox’s "Code Commerce" series.
“The way that I focus my own energy and my team’s energy is to be completely obsessive over what customers want,” Landry told Del Rey in the interview, which aired live Oct. 7. “In grocery, part of what is required in order to earn customers’ trust is a ton of consistency around quality. And so if you were to talk to my team anytime in 2019—before safety of customers and employees became our No. 1 goal—the No. 1 goal that I would drill into my team prior to that is we have to just up the quality of the delivery experience; we have to have a great quality experience.”
Asked by Del Rey to expand on “quality,” Landry discussed navigating the multitude of potential hazards inherent in carrying out online orders—which now are becoming real-world challenges as Amazon launches a physical presence behind the new Amazon Fresh store that opened last month in Los Angeles and is expected in multiple location in the months ahead.
“Every time you order, you have a perfect experience—not one thing is wrong [and] lots of things can go wrong,” she said. “We might deliver things early. We might deliver things late. You might miss a bag. We might miss an item, and I don’t make the switch. There’s a lot of things that could happen that can make people’s trust in the system degrade if we don’t deliver a perfect experience. And so we are really, really rigorous about making sure that our quality has gotten tremendously better. …We give consumers the option to rate us every single time they shop, and we pay attention to those ratings, and if they have a bad experience, we try to remedy it immediately.
“And so I think quality, although kind of pedestrian, it really is one of the ways that we seek out to have a great experience for customers that they come to trust and love. I would say that that is probably where the bulk of our organizational effort goes,” she said. “We want people to have a super consistent high-quality grocery experience. And I think that that is something that makes us stand out and makes us a reason that customers keep on coming back to use our services.”
Asked why Amazon is now pursuing physical stores in addition to its existing plays in the field—which include Whole Foods Market stores now doing Amazon-enhanced pickup and delivery and the direct Amazon Fresh offering where available—Landry provided a simple answer: It’s how customers want it.
“It is super clear that physical shopping is intensely important in the grocery space,” she said. “People love shopping in physical stores. And there are aspects of food that … having an in-person experience is really positive. And so I do think that you’ll see there’s obvious evidence that we care about this—our acquisition of Whole Foods is probably the biggest from a financial one.
“I will say though, we really want to do things that we think are innovative,” Landry continued. “We don’t just want to be in the physical store space for the purpose of being there. We want to provide something that's an alternative to customers that we think is really advancing the experience.”
A Stressful and Important Time
Landry and Del Rey spent a considerable portion of their conversation reviewing the events of the pandemic, where safety measures enacted to blunt transmission of the coronavirus triggered a massive surge in demand for e-grocery. Landry said Amazon knew it needed to be prepared for consumer behavior changes as it monitored COVID’s arrival in the U.S.—which happened to be in Seattle—but confessed that the speed with which those behavioral changes arrived, coupled with the need to make rapid operational changes related to keeping workers and shoppers safe in distribution centers and Whole Foods grocery stores, posed a considerable challenge.
“We did recognize early that there would be some things that we would need to investigate and prepare for, but we did not understand how fast it would move, nor did anyone else,” she said. “So it was a very stressful and important time for us to mobilize as a team.”
Amazon, she added, was “prepared for a wide range of scenarios,” but said she regretted that the company was unable to meet customer demand for delivery slots in all instances. That, she said, has since been solved for and should demand spike again, Amazon would be ready.
“One thing that if I could have a magic wand and do over [was in] the early part of the pandemic, a feature that I wish that we had right out from the bat, is a way for when we run out of capacity, meaning, we’ve booked out [delivery] three or four days, every single slot, we don’t have a view into when the next slot is, we want to give customers an equitable and fair way into reserve a place in line, because what happened is that consumers were sort of scrambling for a delivery slot was just an unfortunate situation that we didn’t want customers to get into.”
The new feature—which has only been used in places where demand has since called for it, mentioning San Jose, Calif., and in the U.K.—allows online shoppers who cannot find a near-term delivery slot to reserve one further out.
“If you go and you shop either Amazon Fresh or Whole Foods [today] … it’s very statistically likely you should be able to find a same-day slot. If you can't find a same-day slot, you’re going to be able to find the next day or the day after. But if we have a massive peak from where we are today, what we don’t want is for customers to just arrive at a screen where they don’t know when their next slot is, or they go through the entire shopping experience and they can't complete it. And so what would happen if we had one of those big demand increases is that we’ll give customers a time slot, say, ‘Hey, we don’t have it now, but on X date, you can come back and shop. You're going to have two hours to complete your order.’ … That will create a lot more equity in distributing the available capacity that we have—and it will give us time operationally to work on increasing that capacity.”
Despite these challenges, the pandemic is likely to live on as a kind of punishing inflection point for e-grocery adoption that could favor Amazon’s presence and influence in the U.S. grocery world, particularly as it grows virtual and physical channels simultaneously and consumers adjust to abrupt changes in their routines.
“We’re all interested to see how things pan out. But what I can say is, online delivery as a portion of grocery in the U.S. was very small in previous years. It was a growing and important business, but still statistically, very small—some estimates put it at lower than 2% or 3% [of the industry]. And what we know now is the pandemic has catapulted interest and engagement with online delivery,” she said, citing Amazon’s recently reported quarterly sales figures illustrating 300% year-over-year growth.
“I believe that consumers are not going to be an online shopper or a store shopper. That is not the way grocery and food works. I think that people are going to use in different occasions online options. And in other occasions, they’re going to use physical store options. And so, what we really want to do is create a great experience regardless of whether or not you’re in the store or online.
“Everyone’s so particular about food, and their routines around food,” she added. “It can be hard to change. And what the pandemic did was caused a lot of people to change their routines. And I think a lot of people are going to appreciate the value and convenience of online grocery. And I have to imagine there will be some permanent changes because of that, just by getting people interested in trying.”
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