Global Retailers are making big bets behind eCommerce

From acquisitions such as Walmart’s buying Cornershop to strategic alliances like Google and Carrefour or Amazon with Oxxo in Mexico show the increasing interest of big retailers to win the sales that, with a growth 5 times as big as traditional channels, eCommerce channel is currently showing.

Though it is still a small portion of the business it is definitely the channel with the highest growth and projection of the last few years. Both the retailers and the industry understand that those who are able to anticipate the construction of the necessary capabilities to win in this channel will generate a significative competitive advantage in an ever-growing portion of their business.  This is why huge players such as Walmart, Carrefour, Cencosud, Amazon, Mercado Libre and Casino have declared that they expect online FMCG sales to become a fundamental vertical growth for their businesses.

Alliances and acquisitions that show a trend

A Little more tan a year ago, Amazon, the giant of the eCommerce industry, announced the acquisition of the texan Whole Foods chain for more than 13 billion USD. The objective behind this transaction was to fully engage in the groceries and fresh food businesses. So shortly after the announcement, they launched Amazon Fresh which offers fresh food products and groceries that can be delivered during the same day. Amazon Fresh is only present in 5 US states, so it is still in a test phase. However, it shows a clear step towards a broader groceries and fresh food proposal from Amazon.

Constantly threatened by Amazon’s sustained growth, Walmart decided to buy, a native San Francisco web site through which Walmart pretends to benefit from innovative technological solutions and fresh and new ideas. In the meantime, Carrefour signed a strategic alliance with Google looking for innovation in their distribution models and shopping experiences. Specifically, the agreement between the two global companies aims to include Carrefour’s products in a new Google selling website, create an innovation lab between the two companies and digitalize the supply chain. In response to the growth of the Last Milers apps and understanding the challenge and importance that the final delivery poses, Cencosud developed Jumbo Ahora, an app through which their promise is to deliver in less than 90 minutes. It is still under test in 17 Chilean boroughs but their plan is to strongly expand coverage in 2019.

Innovating for growth in LatAm

Aware of the challenges that the infrastructure poses against further growth for eCommerce in LatAm, these giants of the retail industry are also making their own experiments and investments. Last mile delivery, due both for its cost and time, is a crucial factor for consumers. Equally important are payment methods since les than half of the population in the region operates through a bank.

The emergence of the Last Milers, apps developed with the objective of serving customers in the logistic of the last mile in several categories including FMCG, appears as a potential solution for the delivery barriers in the region. So much so that Walmart has recently announced their acquisition of Corner Shop (a Chilean born Last Miler) for USD 225 million. In addition, the giant retailer in Mexico is pushing hard their “click and collect” option which not only reduces their logistic cost but also improves overall shopping experience for customers and gives them a wider range of payment options (basically all that are available instore).

Market Places role

Talking about innovation, Amazon just communicated their strategic Alliance with Oxxo, The Mexican minimarket chain with over 16 thousand stores along the country. Through this alliance, customers that shop at can collect and pay for their products in virtually any Oxxo store un Mexico. In the case of Colombia, Éxito, the number 1 retailer in the country and part of the Casino group, signed an Alliance with Bancolombia, the leading bank in Colombia. The objective is to create a new payment currency. It’s a card that accumulates points that can be exchanged in any store, amplifying even more the payment options for shoppers.

Mercado Libre, absolute leader among the Market Places in the region, is also threatened by Amazon’s expansion promises in Latin America. The Argentinian company declared FMCG as a main source of growth for the upcoming years and thus is investing heavily in the region and developing experienced working teams to achieve this objective.  Though they still have a long way to go until their value proposal becomes competitive vs the already established players, they have a huge base of unique users already incorporated in their ecosystems. Mercado Libre only has more than double the unique users of all the Brick & Clicks combined in the region!

So, the challenge, both for the retailers and the industry, will still be to be able to find the way to innovate in delivery methods, payment options and shopping experiences with the objective of generating competitive advantages as first movers in an ever-growing portion of the market. And all of these while maintaining the rest of their business going…. That’s what omnichannel is all about!