Monoprix looks to conquer the upper end of the market with Amazon partnership
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Monoprix looks to conquer the upper end of the market with Amazon partnership

Stylish French retailer Monoprix has announced that it’s entering into partnership – as of last Wednesday – with the king of ecommerce, Amazon. The upmarket brand, which is known for the fancy packaging on its own-brand food and clothing, has started fulfilling orders for Parisian Amazon Prime members who are looking for groceries in a two-hour-delivery window.

That’s a coup for Amazon, which has found a high-quality provider in France to rival its own Whole Foods business in the U.S. – and it is great news for Monoprix, which has found a way to cash in on the ecommerce trend despite being a brick-and-mortar operation.

Amazon’s share price has appreciated by an impressive 68% so far this year

graph 1709 monoprix

SOURCE: Yahoo Finance

The benefits to Amazon include a brand that is both well-known and prestigious in its home country, and the established supply chain and organisation to support its operations. But some of Monoprix’s fans have their doubts as to whether the company will benefit from a partnership that will see it compete directly on Amazon’s platform will lower-price alternatives. Regis Schultz, the company’s CEO, is unsurprisingly not one of them.

Talking down the risks associated with the move, Schultz said in an interview: “There’s very little risk of cannibalization. This is a growing market, and when you add services, you make it grow more.” Explaining the logic behind the move in a more intuitive way, he added: “If you’re looking for the Whole Foods of France, it would have to be Monoprix.”

Monoprix will supply the produce, and Amazon will offer it on its online platform and deal with delivery – in exchange, of course, for a slice of the profit. That ‘slice of profit’ is what makes the move sensible from Monoprix’s perspective. Budget alternatives like Lidl, which are increasingly colonising French cities, operate a business model with far tighter margins. That means, unlike Monoprix, they couldn’t get into bed with Amazon and still make a profit.

In any case, Schultz doesn’t fear cheaper competitors: “People in France are starting to wake up. They realize that after a certain point, lower prices mean bad quality.”

Disclosure

Dominion holds Amazon in its Global Trends Ecommerce Fund.


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