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In recent years, smart warehousing has been brought into the mainstream by ecommerce businesses like Amazon and Ocado. These facilities are a world away from the warehouses I am familiar with: think large buildings filled with lots of racking and forklift trucks. Not very inspiring!

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After the opening of the first Amazon Go store in Seattle earlier this year, a second location has opened in the city.

Smaller footprint with fewer features

The Seattle Times reports that the second store has opened close to the Seattle Central Library and unlike the first store, does not form part of Amazon’s campus in the city. At 1,450 sq ft, the store is also 20% smaller than the original location and does not feature a liquor aisle, key grocery staples or an in-house kitchen. The store is reported to be supplied by an Amazon facility in the city. A higher proportion of office workers are expected at this location.

Source: IGD Research

Increasing pace of development

This opening comes as the retailer plans to expand the concept to Chicago and San Francisco. However, it remains very much in pilot mode and we expect to see further enhancements to the original concept as additional stores open. Nevertheless, it remains an excellent marketing tool for the Amazon brand, showcasing the company’s technical capabilities.

Similar concepts

The launch of the concept has seen an increased level of interest in unstaffed grocery stores. Similar concepts from Zippin and Inokoyo have recently launched in San Francisco while Alibaba, JD.com, 7-Eleven and Tencent have launched their own unstaffed stores in Asia. This is a growing area of focus for retailers as they look to drive cost efficiencies, improve speed of service and raise the bar on innovation within their businesses.

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Amazon has opened its second fulfillment centre in Australia, in the south western Sydney suburb of Moorebank.

Second fulfillment centre in Australia

The new centre is the first for the retailer in Sydney and second in Australia, after opening its first in Melbourne in late 2017. The new facility, which at 43,000 sq m is almost double the size of the one in Melbourne, will dramatically improve distribution and logistics capabilities. As well as the capacity to allow more suppliers to sell products via its Fulfilled by Amazon (FBA) service.

Targeting improvements to capacity and service

Suppliers using FBA in Australia currently have their products available to Amazon Prime customers, offering free two-business-day delivery. Like in other countries that Prime exists, as Amazon improves its logistics network in Australia, we are certain it will aim to improve this service level to next day delivery.

Robert Bruce, Amazon director of operations, commented, “The new Sydney centre builds on the capabilities of our first fulfilment centre in Dandenong South in Victoria, and expands our ability to service the growing customer demand.”

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A new report published by the Grocery Manufacturers Association shows that levels of product availability online are well below those seen in physical stores. The headline finding is that online availability is 80% across the markets and categories reviewed. In the USA, the 15% out-of-stock rate online is nearly double the out-of-stock rate of 8.3% for physical stores.

The report looks at six different countries (USA, China, France, Germany, Japan, United Kingdom) and six personal care categories (baby care, fabric care, hair care, oral care, skin care, shave care). Although the report only covers personal care categories, the researchers pointed out that “Ongoing unpublished research on OLA with food manufacturers confirms that they experience similar levels of OLA, that the causes of NOLA are comparable and that the reactions of food shoppers converge with those of non-food shoppers.”

 
Source: GMA Online Availability report, 2018

The report also looked at shopper behaviour when encountering an out-of-stock product. It showed that:

  • Shoppers in the USA are much less likely to switch to a different retailer (most likely due to the dominance of Amazon and the Prime loyalty programme);
  • shoppers in China are much more likely to switch to a different online retailer (indicating high levels of switching between online retailers and high brand loyalty); 
  • shoppers in the three European countries are more likely to switch to a different brand (possibly due to the strength and availability of private label alternatives).


Source: GMA Online Availability report, 2018

“The findings should encourage retailers and brands to collaborate and enhance online availability in the fast-growing area of online retail”, said Keith Olscamp, a GMA director of industry affairs and collaboration. “Greater on-shelf availability of products is already a top priority for our industry, and this report shows the critical importance of reducing out-of-stocks for online sales as well.”

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