How Retailers Can Leverage Food Quality and Traceability to Beat Amazon

By Sue Welch On Mar 24, 2020

More than 2.5 million food businesses use Amazon.com for product distribution, yet the retail empire, worth an estimated $900 billion, struggles to police a major problem: food product quality standards and regulatory adherence. In a recent report on Amazon’s spoiled food challenges, CNBC found that a disturbing number of Amazon’s top food sellers had at least five customer complaints regarding expired goods. While Amazon insists it’s a transaction-only platform intended to connect buyers and sellers around the world, this stance is problematic. The fact is, it sidesteps regulation and introduces enormous risk to consumers, as counterfeit and/or expired food products continue to circulate on their marketplace without penalty.

Because of the public health risk, both media outlets and politicians have targeted the e-commerce giant, asking it to take accountability for third-party food companies on the platform. For example, in August 2019, The Wall Street Journal uncovered more than four thousand items were found for sale on Amazon’s marketplace that had either been deemed unsafe by federal agencies or are banned by federal regulators. But even during such controversy, Amazon still prevails as an example of disruption for profit, leaning heavily on the delivery experience and wide product assortment to drive revenue.

Here are three cues competing retailers can take from Amazon’s regulatory indifference to better emphasize quality, safety, and traceability in their food product assortment:

Prioritize Supplier Quality Over Supplier Volume

All retailers leverage third parties in the development of private label goods and the sourcing of national brand food products. However, the difference between Amazon and a traditional food retailer is that the latter takes full accountability for the products they sell.

Amazon, meanwhile, is notorious for recruiting overseas suppliers and encouraging the sale of goods from many vendors without properly vetting the quality, safety, and legitimacy of their products. Retailers should view their supplier and product vetting process as a strategic differentiator against Amazon who has prioritized revenue over their customers’ health and safety.

Invest in Software Platforms that Support Product Traceability

Amazon’s ascendance over the last decade speaks to the power that digital marketplaces can drive in the retail community. However, the e-commerce retailer has not successfully utilized its technology tools, skill sets, and strategic acumen to solve challenges around food spoilage and traceability.

As consumer expectations and government regulations evolve, it’s vital that food purveyors can speak to the origin of their food products and product sub-ingredients. To differentiate from Amazon, invest in product development, supply chain, and traceability software capabilities that support product quality, food claims compliance, and recall risk reduction.

Understand the Consequences of Weak Vendor Management

As the public discourse on Amazon’s product quality issue continues to accelerate, it’s inevitable the e-commerce platform will come under regulatory pressure to resolve these issues. For example, a food crisis, where several Amazon shoppers fall ill due to a non-compliant or spoiled food good, could push lawmakers over the edge, leading to legislation that forces digital marketplaces to take responsibility for the transactions they facilitate.

Given the prevalence of these reports on food product spoilage, there’s a significant chance this could occur in the near future. Amazon competitors should leverage strong training, process support, and technology tools to foster thorough vendor collaboration and management. As government regulators catch up with technology behemoths like Amazon, retailers can use strategic supplier relationships to differentiate their brand with high quality products that are aligned with consumer trends and expectations.

Whether it’s food, fashion, or furniture, the public should always feel comfortable purchasing products from a retailer without putting their health and safety at risk. Likewise, retailers should always respect consumers by prioritizing product quality over the bottom line. In an era where consumers have ample choice and voice, it’s vital that retailers have the proper people, processes and technology in place to ensure product quality and safety.