Inside Amazon's 30-Minute Grocery Strategy | Amazon VP Mariangela Marseglia

[00:00:00] Amazon's grocery strategy is probably one of the most watched spaces in the industry. I remember when we started offering two days, that felt magic to a lot of customers. And now if you tell customers, I'm going to deliver this in two days, they say, okay, you know, not really exciting. It's no longer enough to just cut friction. I feel like the next battleground in retail is about really reducing the shopper's cognitive load. We all live a very busy life. Maybe we just want the luxury of deciding what to eat for dinner.

[00:00:28] Half an hour before or one hour before. Speed is obviously very important, but also you announced a couple of things today around giving customers more control over the delivery experience. You're listening to Retail Disrupted, a podcast that explores the latest industry developments and the trends that will shape how we shop in the future. I'm your host, Natalie Berg.

[00:01:03] Mariangela, we are here at the Dartford Fulfillment Center at Amazon's Delivering the Future event. You've just been on stage talking about the customer experience and convenience. And everybody wants convenience, right? So everybody wants convenience. Nobody wants less convenience. But what I found really interesting about your talk was that you talked about something deeper than that, which is the luxury of time. So can you tell us a little bit more about this?

[00:01:29] What do you mean by the luxury of time and how important is it to give customers some time back? Yeah. So thanks for the question. Well, I will start by saying that really everything that we do at Amazon starts from customers and work backwards. And when we started thinking about what customers need the most in these times, it is definitely time. Time to do what they like. Time to spend with their family, friends, etc.

[00:01:57] And one way we can help them in that search for more time is to make sure that whatever is a chore for them, making the errands, go shopping, etc., can be done in less time. And this is why today we announced that we are making our deliveries even faster. You know, in some cases, even below 30 minutes, which, of course, gives back a lot of time to people. Yeah.

[00:02:25] So I'd like to I want to come back to Amazon now because I think that's such a big topic. And I know I've had so many questions about it as an analyst. I'd love to get your take on that. But first, I'd like to talk about a new term that I heard today, which is sub same day delivery. Can you tell us a little bit more about what this means and how delivery is getting even faster at Amazon? Sure. So we already deliver very fast at Amazon. We are very famous for offering great prices, amazing speed and vast selection.

[00:02:53] And today we already deliver very fast in hundreds of cities in the UK and across Europe. But and this is what we call same day. So it's basically delivery that happen in a day or less. The sub buzzword means that we can now do delivery not in a day, but in hours. Or even you were talking about Amazon now, even less than an hour.

[00:03:20] So this is the new frontier of what speed means for us. Yeah. And how are you fulfilling these orders? Because I imagine if you are going to deliver to customers same day, you know, 30 minutes, two hours, you need to be close to those customers. So how are you fulfilling and how important is proximity? No, proximity is fundamental. Of course, you cannot deliver so fast if you don't. Your products are not located very close to customers.

[00:03:45] So we are opening a number of micro fulfillment centers, the way we call them, that are very close to where demand is. So where customers are living so that we can ship to them ultra fast. And on top of that, on top of location, what we are also doing is to automate and improve and make more efficient all the process within these buildings so that it becomes very easy to pick items within them.

[00:04:15] And so, you know, get to customer ultra fast. Yeah. Yeah, absolutely. And so it's probably a good time to talk about Amazon now. I remember when it launched earlier this year, you know, it got a lot of headlines. It's a big piece of news that you're delivering, you know, this is ultra fast delivery. It's 30 minutes or less. I've personally used it and had my groceries delivered in 17 minutes. How was it? I mean, I was blown away. The experience is magic, right? It is. It's amazing. Yeah. It is incredible.

[00:04:42] And I know it's kind of designed for those crisis shopping missions, but I do personally use it as sort of a top up shop because it is convenient and you've got the value as well. So can you tell us a little bit more about it? How's it going? And, you know, how do you see it evolving in the future? Well, customers really love it. Customers like you, customers that, you know, like me, I've also tried and the experience is very magic. And it's exactly what you're saying. We are seeing customer shopping habits evolving with it.

[00:05:11] So we are seeing customers shopping more frequently because, you know, we all live very busy life. And sometimes we don't really have the time, you know, back to the initial question of time to go and make this big weekly shopping. Maybe we just want the luxury of deciding what to eat for dinner, you know, half an hour before or one hour before. And this is what Amazon now really does. Allows people to be very flexible around what they need and what they want to do.

[00:05:38] And what we are seeing is that customers are really using it mostly for shopping groceries. So it's not just that emergency need that we thought was the need that we were fulfilling. They are really shopping with us for the dinner. Yeah. But also you can do those emergency talks. I think you talked about a protein bar in India. We can. Was that in four minutes? Yeah, exactly.

[00:06:07] You know, between four and seven. So, yes, we are doing this crazy thing of delivering ultra fast. So, of course, customers use the service for whatever they need for. But what I'm saying is we are seeing more and more customers using now also for, you know, groceries, which is good. Yeah, and I think that is, you know, looking more widely at the industry. That is the way that shopping is moving. We're not doing that big weekly shop anymore. Exactly. We're doing more top-up shopping.

[00:06:34] And it kind of brings me to a point and something I wanted to get your take on. Something that I keep saying is that I don't feel that it's no longer enough to just cut friction from the shopping experience. I feel like the next battleground in retail is about really reducing the shopper's cognitive load. And it feels like everything that you've announced today kind of plays into that trend. Is that something you'd agree with? Is that what you're seeing? I do agree 100%.

[00:06:59] And I would probably also add an extra step that reducing friction is definitely not enough. Reducing cognitive load is a step further. But delighting customers is probably the next frontier. Providing customers this experience that look magic, look like, you know. And this is really what really excites us in everything that we do every day. Yeah. And something else I heard on stage today, which is I love it. And it's so true.

[00:07:28] It's just to illustrate the pace of change, which is that today's innovations become tomorrow's norms. Exactly. And customers just want more convenience, better value. So I think as retailers, you've got to keep moving. You've got to keep innovating. It's definitely a virtuous cycle, the way I say it, because, you know, what really looks magic today is definitely not looking magic tomorrow. And we have seen this throughout our speed journey.

[00:07:55] So I remember when we started offering two days to customers a few years ago, that felt magic to a lot of customers. And now if you tell customers, I'm going to deliver this in two days, they say, oh, okay, you know, not really exciting. And now 30 minutes looks much more exciting. So, yeah. Yeah. It is interesting how quickly it becomes. It's evolving. Yeah. Definitely. So speed is obviously very important. And that's what drives loyalty, especially for your shoppers.

[00:08:23] But also you announced a couple of things today around giving customers more control over the delivery experience. So could you talk us through a couple of those announcements and what they mean for customers? Yes. So speed, of course, is important, but the overall experience matters, right?

[00:08:38] So a couple of things that we announced today is, for example, the possibility that we give to customers to add an extra item or two extra items to their delivery that is already in process of being shipped.

[00:08:54] And this is quite new because it happens to all of us that, you know, we have made our shopping list and then we forget something and giving them the ability to say, okay, I know that I do have a delivery that is coming to my doorstep. I can add this other item without redoing the entire process from scratch again.

[00:09:14] I think that is exactly doing what you were describing before, reducing the cognitive load, just, you know, took the phone out of my pocket, you know, click a couple of bottoms and then the order comes complete to my doorstep. And this is one.

[00:09:29] The other one that we announced is also the possibility that we give customers to actually decide when they want their order to be shipped to make sure that, for example, you know, there are moments where speed is not that important, but it is important to receive the shopping when you are at home. In that case, we allow customers to decide the exact window, you know, time window when they want the order to be delivered to them.

[00:09:58] That's interesting. And that's in grocery or is that, or non-food as well? It is non-food as well. Non-food as well. Okay. Interesting. And I guess the other thing that I thought was interesting was something that I know when I was in Seattle last year, it was, you know, something you guys have been doing in the U.S., which is consolidating grocery and non-food orders. And, you know, I think there are probably still some shoppers out there that don't realize you can add some milk and bread to your, you know, I think what was the example you used? A hairbrush and some hummus. Exactly. Hummus. Yeah, yeah, yeah.

[00:10:26] No, absolutely. We are, you know, we are, we are famous for electronics and books and things like that. But this is what is, I think, great about what we announced today, that customers don't need to do, to build two separate baskets. Maybe, you know, shop their, whatever, airbrush or electronics with us and then go shopping for bananas, eggs and milk somewhere else.

[00:10:52] They can just have one delivery, one single basket and everything that they need delivered, you know, at home very, very conveniently. Yeah. So Amazon's grocery strategy is probably one of the most watched spaces in the industry, right? There's been a lot of experimentation, a lot of innovation. And naturally, not everything is going to stick when you are constantly experimenting. You have retreated from physical retail and you seem to really now be doubling down on e-commerce. What does this tell us about the future of grocery retail?

[00:11:22] Well, it tells a lot about how we do operate. So we like to experiment a lot. We like to try different things and then we concentrate on what we think is the best solution for customers. And this is exactly what we're doing right now.

[00:11:40] We think that the best for customers is to enjoy the convenience of home delivery of their groceries instead of going to a physical place and do the shopping themselves. It is good for them because it's very convenient. I would say it's also good for other aspects like the environment, for example.

[00:12:02] We don't have so many vehicles, you know, in the street, but we just consolidate orders maybe in a neighborhood and then we deliver in one single trip. So, yeah, it's just a matter of us experimenting with different ways and picking the one that we think works best from our viewpoint. Does this mean that the entire grocery industry is moving to online? Hard to say, right?

[00:12:29] I think, let's say, physical stores and online shopping will continue to coexist as today. Fantastic. Maria Angela, thank you so much for coming on the podcast. My pleasure. Thank you. Thank you for listening to Retail Disrupted. If you enjoyed this episode and would like to support the podcast, please leave a rating or review or share it with others. It really makes a difference.