RetailTechNews’ weekly Amazon Watch brings you some of the company’s biggest moves from the past seven days, analysing how the giant is revolutionising the retail space. In this week’s edition: Instacart Fighting Amazon in the Grocery Delivery Space; Amazon Laying Off Hundreds Across Retail Division; and New AI Chip to Tighten Grip on Voice-Assistant Market.
Instacart Fighting Amazon in the Grocery Delivery Space
There’s no doubt about Amazon’s ambitions in grocery delivery, but Instacart, Amazon’s most popular competitor, isn’t giving up without a fight.
In the face of Amazon’s moves, including their testing of free two-hour delivery of Whole Foods products, Instacart has raised USD$200m (£142m). This funding values Instacart at USD$4.2bn (£3bn) (compared to Amazon’s USD$649bn/£461bn).
So, what does this mean for the future of the five-year old startup? Despite the disparity in company size, Instacart is adamant they can continue to compete by forming alliances with grocery stores that are concerned about the online shopping giant’s dominance. Given the superior scale of Amazon’s operations, and their ability to price the majority of competition out of the market, this could be a big challenge for Instacart.
Shoppers will naturally gravitate towards lower-priced products, and if grocers can lower the cost of their products by partnering with the cheaper delivery option (Amazon), then Instacart could be in trouble.
Amazon Laying Off Hundreds Across Retail Division
Amazon is cutting hundreds of employees to shift resources around the business. Most of the losses are taking place across its consumer retail operations, including areas like toys, books, and groceries. Instead, more emphasis will be put on growing areas such as Alexa and AWS.
Could this mean a potential opening for competitors across the areas Amazon is making cuts? Unlikely, as the cuts are being made in order to make the unit more profitable, rather than to cut losses, with the company seeing a massive sales rise of 38% in the last quarter.
Instead, the news is probably a sign of a shifting strategy, as Amazon looks to invest more in Alexa, with 19% of consumers making a purchase via a voice-controlled device in the 12 months from July 2016 to July 2017. If this trend continues, shoppers will be making purchases for toys, books, and groceries through voice-controlled devices, meaning these verticals will continue to be profitable for Amazon, despite the job cuts.
New AI Chip to Tighten Grip on Voice-Assistant Market
Amazon is following Apple and Google by designing custom AI chips for Alexa. These will help drive faster, more efficient responses than relying solely on the cloud.
Apple and Google, Amazon’s competitors in the smart-home market, have already developed similar technologies. With the full launch of the Apple HomePod (which already has similar technology in built) earlier this month, Amazon’s dominance of the voice-assistant market is being challenged.
It’s no wonder keeping a tight grip on this market is so important to Amazon. As shoppers continue to do their shopping through their voice-activated assistants, rather than in-store, retailers will rely on the owners of this technology to ensure they continue to have a sustainable audience base. With Google and Apple also vying for a larger share of the voice-assistant market for precisely this reason, introducing AI chips which will help Alexa outperform Google Home and Apple HomePod will help Amazon maintain market dominance.