If there is one new product that is currently red hot, it would be food delivery. There are a bunch of brand new companies that seem to have shown up overnight who are now all vying to deliver food to our houses. Not wanting to get left behind in this booming market, Amazon has decided to roll out their own food delivery service. Amazon does so many different things so well that you would assume that this new service would be an instant hit. However, that is turning out to not be the case. What are the Amazon product managers doing wrong?
Whole Foods Home Delivery Service
Amazon purchased the Whole Foods grocery store chain back in 2017. After the purchase, Amazon expanded their Prime Now delivery service which is available to people who pay Amazon US$119 per year. The service was expanded from local grocery stores to now include a collection of Whole Foods stores. Whole Foods has 477 stores and delivery services are currently being offered in more than 60 markets. You would think that because Amazon does things so smoothly that this delivery service would be running smoothly also. It’s not and that may be because Amazon and Whole Foods are still two very separate companies.
Customers of the Amazon food delivery service have been experiencing things that have made them unhappy. Products that they order are not available and so substitutions are being made. Some of the substitutions are downright bizarre and they result in the customers being left feeling frustrated. What seems to be happening is that Amazon contractors are coming to the Whole Foods stores looking to fill orders. When they can’t find what they are looking for, they’ll ask Whole Foods employees for help. This ends up distracting the Whole Foods employees. Another problem is that the technology used by Whole Foods to track their inventory is old and out of date.
As more and more grocery stores are starting to offer delivery services, the challenge is starting to happen in the execution of the orders. One of the biggest problems that grocery stores are facing is that they don’t have the technology that is needed in order to be able to track their inventory in real time. The result of this is that although a store may list online that they have a particular product, when someone goes to fill an online order they may discover that the product is missing. When this happens, the person who is filling the order may make their best guess about what to substitute for the product that they were looking for. Alternatively they may turn to a computer program that makes a bad recommendation.
Fixing The Food Delivery Problems
Stores are taking steps to try to solve their delivery problems. One solution is to implement an updated inventory-management system. These new systems can allow a store to speed up its replenishment of goods that they are out of. The companies that provide the delivery services such as InstaCart are reporting that incomplete orders are their customers’ second biggest complaint. Companies are trying to solve this problem by investing in both training and technology in order to reduce the number of bad substitutions.
Customers are now being permitted to reject shopper’s substitutions or to prohibit substitutions all together. Currently, 15% of consumer products that are being listed on U.S. online ordering services are out of stock and this is nearly double the rate in stores. There are a number of reasons why many online grocery services struggle to offer the substitutions that customers want. Shoppers typically depend on suggestions from online tools, and algorithms can make mistakes or suggest inappropriate alternatives.
Services that rely on gig-economy workers who pick items off store shelves can exacerbate the selection problem, since many aren’t food experts and juggle many orders a day, grocery consultants say. Mishandling substitutions is expensive for retailers, as it often leads to refunds or a replacement item that is pricier than the original. Refunding incorrect items decreases an online order’s profitability by 1% to 2% on average. The problem can be particularly bad with promotions, angering suppliers when their products are swapped out for a rival’s.
What All Of This Means For You
Let’s just say that Amazon currently has its hands full with its food home delivery service. Amazon has done such great job with so many other services that they offer that you would think that this service would be easy for them to roll out. It is turning out to be a bigger hassle than anyone would have initially believed. The Amazon product managers are going to have to find a way to fix their food delivery service.
Amazon got into the food delivery business when they purchased Whole Foods. Customers of the Whole Foods delivery service are becoming upset because when products are not available, bad substitutions are being made. One of the reasons that the desired product is not available is because the inventory control programs at the grocery stores are unable to maintain a real-time inventory of what is currently in the store. Grocery stores are starting to implement new inventory control systems to try to prevent customers from becoming upset when their orders cannot be fulfilled. When bad substitutions are made it makes the customer upset and it can turn out to be expensive for the grocery store.
The Amazon product managers are going to have to spend some time and figure out what’s going wrong with their food delivery service. They need to find ways to keep better track of what food products are available and make sure that food is replaced when there is an outage. If they can start to provide an accurate inventory to the people who are trying to fill online orders, then fewer substitutions will have to be made and the end customer should become more satisfied with the groceries that are being delivered to their home.
Question For You: Do you think that Amazon should invest in technology that can make better suggests for substitutes when a product is not available?
Click here to get automatic updates when The Accidental Product Manager Blog is updated.
P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!
What We’ll Be Talking About Next Time
The world that we live in is changing and what this means for product managers is that we need to find ways to change with it. One area that is undergoing dramatic changes is how we go about fixing dinner. It used to be that you and I would either eat out or we’d go to the grocery store, pick up some ingredients, and then come home and make a meal. However, that has all changed now. The arrival of companies that make meal kits have created a system where we now get the ingredients that we need to make dinner delivered to our house and then we just have to spend a few minutes whipping up a delicious meal. The challenge for the product managers at these meal kit companies is how to stay in business.