Loblaw has started selling a range of new, non-grocery products—everything from Lego sets, to furniture and maternity wear—in an expanded online marketplace through its PC Express platform.
The new product categories are baby, toy, home, kitchen and pet, and are available for delivery or in-store pick up. The products are all from third-party vendors, meaning Loblaw won’t have to deal with logistical issues like inventory management and storage. This is Loblaw as an e-commerce platform—one that draws obvious comparisons to Amazon.
Loblaw said the “curated” marketplace offers products that are complementary to those in its existing PC Express offering, with the additional customer benefit of earning PC Optimum points.
“As parents shop for diapers and/or formula, they might find it convenient to be able to order blankets, wash cloths or even a crib through the platform,” said Hesham Fahmy, vice-president, Loblaw digital.
But can Loblaw become a destination for Lego shoppers when there is already so much competition among companies selling the same product?
“It is important to recognize the intent for looking for a Lego set,” said Fahmy. “If someone was looking to host a birthday party for their kids, or prepare for the holidays, then they will likely be looking for a one-stop shop, which would include gift ideas.”
But David Zietsma, senior vice-president of strategy and performance at retail agency and consultancy Jackman Reinvents, doesn’t believe that’s enough to get Loblaw shoppers to add to their digital cart beyond groceries.
“I’m not sure I see the customer need that it’s solving,” he said. People are very savvy these days, and increasingly distrustful of retailers—they feel like they are in charge when it comes to shopping, and can easily check to see the value of the offer from any retailer, including Amazon.
“Unless that product is better, or better priced, or there is something else compelling about it, convenience isn’t enough.”
People who are shopping online know they have a lot of choices. They know they can easily check on Amazon, see other product options, read reviews and feel like they are making more informed purchasing decisions.
“Amazon is way too big now,” said Zietsma. “The gap is just too huge.”
Sylvain Charlebois, a business professor specializing in the food industry and retail at Dalhousie University, also sees this a response to Amazon. Loblaw similarly expanded its in-store offerings in response to Walmart’s arrival—and subsequent rapid growth—in Canada.
“You can see this obsession coming out of Loblaw wanting to be like Amazon,” he said. “I’m not sure it’s the best idea because Loblaw has done a very good job becoming Loblaw. They have strength—the private labelling strategy is incredible—but unfortunately, they often get sucked into trying to offset their opponents’ strengths by becoming like them.”
The Loblaw marketplace is different from the company’s earlier attempts to offer more categories, such as cribs, in-store, said Fahmy.
“Carrying inventory in stores is challenging, and difficult to scale the distribution nationwide,” he said. “[S]elling through a marketplace offering—leveraging vendors’ own economies of scale and central distribution—makes this work better and allows us to offer a much deeper assortment of cribs than we could before.”
The move also further demonstrates how Loblaw’s digital infrastructure enables it to expand its business in new ways and across new channels. Loblaw announced Thursday that it acquired Las Vegas tech company PFTech to improve the integration of the online marketplace within the PC Express platform. And in April, it started using its massive PC Optimum consumer database to start selling highly targeted advertising to its customers.
However, Fahmy said the PC Optimum data will not be shared with vendors in the new marketplace. “The only data we will share is the personal delivery address associated with an order so that the seller may drop ship the ordered items to the customer,” he said.
“Loblaw may choose to promote certain vendor products to customers, based on customer behaviour and data, but this is done at Loblaw’s sole discretion and not driven by any information shared with vendors.”
The expanded market may seem like a bit of a stretch for Loblaw, but the risk isn’t huge, said Charlebois. “It is e-commerce, and the beauty of e-commerce is that you don’t have to really invest a great deal. When exploring new fields, you can always just test the waters and see how it goes.”
It’s not wrong for Loblaw to want to enhance its digital offering and become more omnichannel, said Zietsma. “But you still have to figure out why.
“Loblaw is a deeply entrenched provider for a lot of Canadians, including myself, for an aspect of my life,” he said. “My relationship with Loblaw is not a convenience one, it is a food and health one. That doesn’t port over into my household needs in the same way I think they are thinking of it.”