Retailers, technology firms join hands to ward off 'Amazon Effect'

Bricks-and-mortar retailers are becoming future-ready with help from IT companies

In battleground India, caught in the middle of two giants Amazon and Walmart Inc worth more than a trillion dollars combined, are the large number of traditional bricks-and-mortar retailers fighting hard to stay relevant. Aiding them in this fight for survival are a few tech companies, who after being at the receiving end of Jeff Bezos’ ambitious plans globally are hoping to finally counter what is now known as the ‘Amazon Effect’.

According to various industry analysts, the Amazon Effect is the impact that online e-commerce has had on physical retail. 

With expectations of customers changing and demand for seamless, uninterrupted shopping increasing, tech companies are now using this fear of becoming of irrelevant as a sales pitch to sell their products to traditional retailers.

From backend inventory management and technology for improved reverse logistics to incorporating artificial intelligence and machine learning in stores, tech companies are providing solutions to help the brick and mortar stores become future ready. Basically, preparing them for the retail war with Amazon and Walmart.  

Tech companies are also forming alliances and working with other firms, bundling products together to sell as a package as well as reduce costs so that their retail solutions can find more takers. As for the traditional retailers, they are happy to tango.

Many of the US-based tech companies are now making a beeline for India as they have seen the e-commerce onslaught on physical retail in America. In the US, several large format retail businesses have shut down, some have been sold to e-commerce companies as it happened in the Amazon-Whole Foods take over, and others such as Target are redefining their retail mantra altogether in order to survive.  

Companies such as E3 Retail, which cater to US-based major retailers such as Best Buy and department store biggie Dillard’s Inc, have now entered India to bring in smaller retailers into the tech fold. 

“We have been traditionally working with tier-I large format retailers. The main reason we are approaching the SMB market is what we call the Amazon Effect.  We believe that with this technology, smaller retailers and even larger ones can become future ready,” said Barry Henderson, Founder & Chief Operating Officer, E3 Retail.

According to industry experts, while retailers are making an attempt to streamline their processes and increase productivity with the use of technology, retailers should pay an equal focus on investing in providing the new age shoppers with a personalised experience on mobile apps and e-commerce shopping platforms. 

Cloud, mobility and big data analytics are the core of digital transformation technologies that organisations are investing in 2018.

“Microsoft through Azure, Dynamics 365 and AI solutions is enabling e-commerce retailers to deliver personal, seamless and differentiated customer experiences by empowering people, enabling digital transformation and capturing data-based insights to drive growth,’’ said Samik Roy, Director and Country Head, Dynamics, Microsoft India. 

While many retailers are approaching agencies such as Competition Commission of India, Enforcement Directorate and the courts to complain about e-commerce companies flouting norms including the recent $16- billion Walmart deal to buy a controlling stake in Flipkart, they have realised the need to incorporate technology in retail.

“While on one hand we are exploring all legal proceedings to get Walmart deal rejected, we are also educating traders to upgrade and modernise their existing retail business format given the global scenario,’’ said Praveen Khandelwal, secretary general, Confederation of All India Traders (CAIT).

RETAIL’S TECHNOLOGY THERAPY

• Amazon Effect is the impact that online e-commerce has had on physical retail
• The solutions from tech firms could be in areas, including backend inventory management and improved reverse logistics.
• Artificial intelligence and machine learning in stores are also likely to get a boost
• Tech firms are working with other firms and bundling products together to sell as a package and reduce costs
• Firms, which cater to US-based major retailers, have now entered India to bring in smaller retailers into the tech fold 
• Many of the US-based tech companies are making a beeline for India