Executive Briefings

Brick-and-Mortar Retailers Take Aim at E-commerce Marketplaces

Nilam Ganenthiran, vice president of business development and strategy with Instacart, explains how traditional retailers can work with e-commerce marketplaces -- and compete against them.

Increasingly, e-commerce marketplaces are helping to bridge the divide between online and offline sales, Ganenthiran says. Adding to the complexity is the fact that many marketplaces, such as Amazon.com, are themselves retailers.

As the two entities overlap and blend, they face such challenges as the need for volume pooling and the ability to pull inventory from multiple sources. The resulting cost efficiencies can be shared with the price-conscious consumer.

Instacart partners with e-tailers in the provision of software and logistics applications. Even with the success of such arrangements, however, it’s vital that sellers of all kinds retain close ties with their prospective buyers. “What you don’t want in a partnership is a disconnection between you and your understanding of your consumer,” says Ganenthiran. “There’s a fear of disintermediation. We believe in joint ownership of the customer.”

E-commerce buyers in the coming decade are going to be demanding faster service, continued access to trusted brands and the widest assortment of products possible, Ganenthiran says. The resulting operational pressures on retailers will be “immense.” Service providers will need to adopt new forms of fulfillment, along with improved customer-facing and back-end technology to support them.

Retailers will need to undertake a fundamental rethinking of the role of the physical store. The share of e-commerce as a percentage of overall sales is expected to climb from 1 to 2 percent to around 15 percent. The implications of that growth, says Ganenthiran, will be “profound.” Retailers will need to figure out how to allocate space for both store and online fulfillment, operating under a mixed model of inventory deployment. “Increasingly, the store is being used as a fulfillment hub as well as for [traditional] retail sales,” he says.

To view the video in its entirety, click here

Increasingly, e-commerce marketplaces are helping to bridge the divide between online and offline sales, Ganenthiran says. Adding to the complexity is the fact that many marketplaces, such as Amazon.com, are themselves retailers.

As the two entities overlap and blend, they face such challenges as the need for volume pooling and the ability to pull inventory from multiple sources. The resulting cost efficiencies can be shared with the price-conscious consumer.

Instacart partners with e-tailers in the provision of software and logistics applications. Even with the success of such arrangements, however, it’s vital that sellers of all kinds retain close ties with their prospective buyers. “What you don’t want in a partnership is a disconnection between you and your understanding of your consumer,” says Ganenthiran. “There’s a fear of disintermediation. We believe in joint ownership of the customer.”

E-commerce buyers in the coming decade are going to be demanding faster service, continued access to trusted brands and the widest assortment of products possible, Ganenthiran says. The resulting operational pressures on retailers will be “immense.” Service providers will need to adopt new forms of fulfillment, along with improved customer-facing and back-end technology to support them.

Retailers will need to undertake a fundamental rethinking of the role of the physical store. The share of e-commerce as a percentage of overall sales is expected to climb from 1 to 2 percent to around 15 percent. The implications of that growth, says Ganenthiran, will be “profound.” Retailers will need to figure out how to allocate space for both store and online fulfillment, operating under a mixed model of inventory deployment. “Increasingly, the store is being used as a fulfillment hub as well as for [traditional] retail sales,” he says.

To view the video in its entirety, click here