Today’s article in Bloomberg Amazon Goes North, Forcing Canada’s Retailers Out of Hibernation, talks about how established Canadian retailers, big and small, are being forced to up their game and prepare for the onslaught of Amazon. While the article comes down heavily on retailers, who are obviously in Amazon’s cross-hairs, it misses a critical fact: Amazon’s expansion affects multiple Canadian industries who broadly operate within the MRD sector (manufacturing, retail and distribution), and some others beyond. According to a recent article in The Economist, Amazon is described as a “remarkable conglomerate” – one that will disrupt many industries in Canada and across the world – not just retail.
From my vantage point, I see issues across multiple Canadian industries: logistics organisations, media, distributors, brands, banks, technology & data firms, mall operators and a host of other industries whose paths intersect Amazon’s.
Among these, retailers are working the hardest to improve their odds. The same cannot be said of several other industries.
Let’s first talk about retail. Over the past year or more, Amazon.ca has added several categories to its Canadian offering and listed millions of stock keeping units (SKUs), from luxury fashion to pet food, as being available for sale within the Amazon Prime program. It is building up its distribution centres rapidly, while expanding its fulfillment capabilities in innovative ways that capture the essence of the modern economy (see next blog). Even so, the behemoth is still to achieve its full capability in the Canadian market and is just at the very beginning of its capabilities. Many of its capabilities in Canada are currently below those offered within the US. For those vested in retail, a large employer in Canada, the “good news” is that several local retailers have pulled up their socks and are using this time to upgrade their “omni channel” capabilities at a feverish pace. This includes leadership changes, business process overhauls, back-office technology upgrades, e-commerce integrations and the streamlining of supply chains. Much like modern warfare, retail outcomes are dependent on leadership and integrated systems execution, not shiny expensive weaponry. In Canada, retail transformation is well under way. “Endless aisle,” virtual retail, marketplaces, affiliate marketing and integrated vendor drop ship networks are the hottest topics and projects underway within Canadian retail transformation.
More needs to be done and faster. A physical store network, a digital supplier base and an optimised distribution network collectively provide considerable strength to bricks-and-clicks retailers, but only if such a network is effectively leveraged, integrated and brought online quickly. Exhaustingly for retailers, such a network’s advantage is short-lived, as Amazon starts to add its own stores. This includes building convenience stores and adding small/independent retailers as part of its expanded merchandising and fulfilment network, which already includes an army of online vendors and drop-shippers.
The Bloomberg article talks about media companies and retailers teaming up, an example of a strategy to consider in taking on Amazon. I believe that the partnering has to go much further and needs to be done on a much larger scale, involving several industries that come together on a common and possibly multiple “platforms.” Amazon is many industries packed into one. Some early work is underway to build parallel “marketplace platforms” where several large players, including competitors, work cooperatively to build new “assortment & options rich” channels. Stay tuned for more updates on this front.
Canadian retail is girding up for battle. In my next blog, I will discuss other industries who are squarely in Amazon’s sights, but have not yet woken up to the fact that they are next.
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About the Author
Neel has held senior roles at various technology firms and is currently a Partner at SPICE Technology Group, Inc. Neel is a well-recognized technologist within the North American Manufacturing, Retail & Distribution sectors. Amongst the early pioneers in the “cloud” computing market, Neel has been working since the nineties with customers across the globe to achieve technology-driven, quick-time-to-market capabilities for modern commerce and complex supply chains. He brings expertise in digital commerce, supply chain, analytics and in emerging information technologies that are propelling organizations towards new business models. Some of these technologies and their modern applications include “Internet of Things (IoT),” “The API Economy,” “The Sharing Economy” and collectively: “Industry 4.0”
Neel is the Program Chair & Board Member of the Council of Supply Chain Management Professionals (CSCMP – Toronto Roundtable). He is also the Chairperson of the Program Advisory Committee for Business Process Management at Sheridan Institute of Technology and Advanced Learning.