Amazon Enters the Bricks and Mortar World

Although amazon.com is virtually synonymous with online retailing, it has gradually been entering the world of bricks and mortar. Like the online business, its physical retail stores started with books, with an Amazon bookstore opening in Seattle in 2015. A push into wider retail has followed, with the opening of a grocery convenience store, also in Seattle, in early 2017.

More Sales, More Data 

Why would a business so successful in the digital world make a concerted business strategy effort to open bricks and mortar stores?

There are several possible answers. The most obvious one is first. The more stores a company has, still, the more it can theoretically sell. Technology news has done little to change that fact. Amazon.com is after sales expansion.

The current MIT Technology Review points out that e-commerce amounts for just under 10% of all commerce, so despite the fact that it has been growing and is widely viewed as the way of the digital future, stores still command a lot of sales.

The sturdiness of stores can be seen tellingly in the book trade. Amazon.com is responsible for one-third of all physical book sales in the U.S. and two-thirds of all e-books. E-books, however, experienced an 11% drop in 2015 revenue. Physical bookstore sales, on the other hand, saw revenues rise more than 6% in the first half of last year.

The second possibility is that amazon.com wants to increase the data it collects on customers and is using the stores as something of an experiment. This possibility is most clear in the recently opened food stores. They promise no cash, no clerks, and no waiting in line. Customers simply pick up what they want and walk out. Their purchase, of course, has to be enabled by an app for the store that will have a customer’s amazon.com account, which will be billed for the cost of the items purchased. (The store, 1,800 square foot in size, will sell convenience foods such as bread and milk along with prepared meals.)

The rest of the retail work — scanning the purchases accurately as well as identifying what customers are looking at and perhaps pricing them based on interest or other factors — will be done with existing retail technology.

As Wired points out, a great deal rides on the accuracy of the technology. If it scans items incorrectly, it may be shorting amazon.com or stiffing a customer. Also, responses if a customer picks something out then returns items are not clear at this point.

Omnichannel as the Wave of the Future?

But a third possibility is what that all retail purchases, with amazon.com in the forefront, is moving toward a kind of omnichannel, where differences between bricks and mortar shopping, online shopping, mobile phone shopping, and even telephone shopping are less and less distinct. All the channels will use data gathering, digital checkout, and real-time customer service methods, so the experience is much more a kind of omnichannel than distinct sales channels.

The MIT Technology Review observes that amazon.com is in the forefront of making its physical bookstore physically resemble its Web site. Books all face cover out, for example, in marked contrast to the spine out of most bookstores. It’s part of prepping the consumer — or reifying the consumer — in the omnichannel.

Amazon’s opening of retail stores is likely an experiment, the results of which will unfold over the next few years.