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Four years in grocers' parking lots
Years of showing up
Nilam Ganenthiran had been calling on the same grocery retailers every month for years, and many had simply decided not to adopt e-commerce. Some of their headquarters sat in the middle of nowhere across middle America, and he would pull up once a quarter, wait outside, and phone to ask whether they wanted to meet that day. Over time they got to know him.
The Amazon moment
Then Amazon bought Whole Foods. These were family-owned, family-run businesses, often third or fourth generation and sometimes fifth, and they had watched Amazon do to every other segment of retail what it did. They knew they were ill-equipped to handle this challenge by themselves.
The guy who had been in their parking lot for the last four years showed up. Because of the trust accrued over those four years, they listened to him and to Instacart, and they felt Instacart was on their team.
He took that seriously. Nearly all of those retailers are still friends he trades texts with.
Why does showing up repeatedly build trust?
Political scientist Robert Axelrod ran computer tournaments in the early 1980s in which programs played the repeated prisoner's dilemma. The winner was tit for tat, a simple strategy that cooperates first and then mirrors the other side. Cooperation lasted because the players expected to meet again. Axelrod published the results in his 1984 book The Evolution of Cooperation.
Why did grocers hesitate on online ordering?
Online grocery orders include fresh, chilled, and frozen goods, each needing a different temperature zone from shelf to doorstep. Store staff pick the items by hand from shelves built for shoppers, which adds labor to a business with small margins. A missing item needs a substitute that the customer will accept. Produce also varies from one piece to the next, so picking it well takes judgment.
How did Amazon reach into grocery?
Amazon began in 1994 as an online bookseller and later expanded into electronics, apparel, and many other categories. It launched AmazonFresh, a grocery delivery service, in Seattle in 2007. In 2017 it agreed to buy Whole Foods for about $13.7 billion. The deal closed in August 2017, when Whole Foods operated more than 400 stores.
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