Germany: Is Amazon forcing plant retailers into a price war?
By Heike Hoppe
Specialist plant retailers should form strategic alliances in order to counter the ‘All-pervading Power’ of Amazon.
Online shop for plants curbed by Amazon
“Our shop Olerum was noticeably curbed when we refused to become an Amazon Prime supplier”, reports the Chairperson of the VDG (association of German garden centres) Martina Mensing-Meckelburg in her welcome address to the winter meeting of the BdB association of German plant nurseries in Goslar.
“We already have to pay 17 percent of our turnover to Amazon. As a Prime supplier we would also have to deliver free of charge. That would have made our work unprofitable and that is why we decided against it.“ Suddenly the cooperation between Olerum and Amazon cooled off noticeably. Transfer payments that were due were not carried out and that represented turnover for two months. “It seemed as though Amazon wanted to hang us out to starve. We had to use a lawyer.”
Amazon buys organic supermarket chain: “This is just the beginning!”
In the meantime Amazon has paid but the VDG would like to be independent from this kind of partner. In her welcome address Mensing-Meckelburg spoke to the BdB members about revenue development in German garden centres, now referring to a second important topic: digitalisation and e-commerce.
In order to introduce the subject she projected a poster image onto the screen: two hands smeared with mud holding ripe, tasty, obviously freshly harvested tomatoes into the sun. The headline was ‘We‘re Growing Something Good’ with the tagline ‘this is just the beginning’.
Mensing-Meckelburg explained: “I brought this image along, with a photo that was taken last autumn. Amazon purchased Whole Foods, the first organic supermarket chain in the USA. Shares in food industry competitors fell approximately ten percent that day. A new super-big player had established itself in the market and is also trying to do the same here in Europe. I am particularly interested in the advertising slogan ‘this is just the beginning’. I am sure the poster could just as well show a plant. I think we should all be vigilant.”
Everything from A to Z, including P for plant
Vigilance – Mensing-Meckelburg is referring to this US giant conquering new business sectors – including some in Europe and including stationary retail. “Amazon is making its intentions quite clear: it wants everything, from A to Z. And that also includes P for plant.”
But what does the VDG chairwoman mean when she talks about ‘System Amazon’ as an additional online platform for garden centres and nurseries? She warned that it is not optimal for plant retail because the instrument of automatic price adjustment ensures that the downwards price spiral constantly accelerates. “Suppliers and retailers are pulled into the slipstream and this is difficult to control. Price drivers are dangerous for specialist retailers.”
Strategic alliance for online shops: better together
However, garden centres cannot do without online retail completely, Mensing-Meckelburg continued. An increasing number of garden centres and suppliers are looking for strategic alliances. As examples she listed the brands Compo and Oase, who are working together on the association online shop Olerum.
The VDG chairperson also reported that “Scheurich has also decided, following comprehensive analysis, to affiliate its shop to us”. She emphasised that this kind of alliance is exactly the right way to fight for the attention of the online customer on the plant market. The Olerum shop makes garden retailers very visible online and thus automatically well supported offline, ”…because Olerum recommends a nearby garden centre as a buying source with every order”.
She sees a solution for specialist retailers in a sensible combination of online and offline, after all we can no longer do without the Internet completely. “Our customers are also used to shopping independently of shop opening hours. In the past, you had to be in the phone book in order to be found, today it is the Internet.”
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