Amazon’s Future is Offline. Is Yours?

Mar 11, 2016 in CPG, Retail

The digital transformation of the retail industry and the rise of e-commerce stores has led some people to declare, “brick-and-mortar retail is dead.” The reality of the situation couldn’t be further from the truth. E-commerce stores are transitioning back to brick and mortar based on the performance of physical locations.

Online shopping provides many benefits to consumers, but an in-store experience cannot be replicated. Direct customer service with a human is impossible to automate and bring to online channels, especially if customers frequent one location. Staff and repeat customers build relationships through these interactions, which creates a personalized and memorable experience for shoppers.

E-commerce Giants Branching Out

Amazon is king of the online retailer kingdom – with a $272 billion value, according to Internet Retailer. As such, Amazon is a trendsetter that many e-commerce retailers track and follow. Amazon’s most recent move takes it into brick-and-mortar storefront territory, a massive departure from its standard operating focus. Steve Kessel, who also had a hand in creating the Kindle, is the leader of Amazon’s physical storefront plans, reports Re/code.

The storefront plans center around Amazon’s book inventory. Amazon Books in Seattle features a curated selection of books chosen based on customer reviews. The most well-regarded books online make their way to the store. Amazon also features its line of e-readers and accessories in these stores. Amazon Books isn’t Amazon’s first foray into the brick-and-mortar world; A Purdue University-affiliated storefront functions as the official textbook store for students. In addition to getting textbooks through Amazon Student accounts, Purdue University students can also receive other Amazon packages at the store.

At first glance, moving into a brick-and-mortar storefront may seem like an odd move for a company that made its name in the online world. However, moving into physical storefronts provides Amazon with several advantages. Brick and mortar gives Amazon the physical channel it needs to round out its omnichannel approach to retail. With the introduction of a storefront, Amazon customers aren’t limited to online and mobile shopping channels, allowing shoppers to choose the option most convenient for their needs.

Amazon Books also caters to shoppers that shy away from online shopping. This demographic either lacks the tech-savviness to effectively use online shopping channels or simply doesn’t prefer to make purchases online. Amazon also benefits by cutting down on delivery fees and return costs. Furthermore, the online retail giant can capitalize on in-person impulse shopping experiences by bringing customers into Amazon Books. While the Amazon.com recommendation feature provides a somewhat similar experience, online shoppers can easily scroll past these listings. In contrast, customers going through the aisles at the store or waiting in the checkout line are a captive audience.

Amazon’s online store has excellent product selection and pricing, but it lacks the human element. Amazon Books brings its online shopping experience to a physical location and incorporates a personal shopping experience into the mix. Shoppers don’t have to wait on the phone or in a live chat session to get assistance with their purchases – they have floor staff immediately available to answer quick questions or make recommendations.

Amazon’s Expansion Plans

Amazon is planning additional Amazon Books locations, but the exact number is up in the air. The New York Times reported a rumor that 300 to 400 Amazon Books stores are planned, but Amazon has not confirmed any numbers. The success of delivering a different experience to shoppers through Amazon Books, its Purdue partnership, and various pop-up stores paint a pretty picture for a thriving brick-and-mortar strategy. Instead of e-commerce causing the death of brick-and mortar-retail, the two provide a powerful combination for retailers capable of branching out into physical storefronts.

Will Other E-Commerce Stores Follow Suit?

Amazon is a trendsetter within the e-commerce industry, so it’s likely other e-tailers will branch out into offline shopping. The offline shopping experience is fundamentally different in many ways, from the retail execution required to the high customer experience expectations from shoppers. Your offline retail channel helps capture sales from shoppers who prefer showrooming when making purchase decisions, those who want a human element added to the customer experience, and consumers who avoid online channels entirely.

Your existing data from e-commerce channels help with inventory selection and stocking. Amazon leans on its data when choosing books for its physical storefront, and you can take the same tactic during an offline transition. Online and offline purchasing patterns don’t always match up, but your existing data provides an excellent start for optimizing inventory.

E-commerce sellers seeing success with online and mobile channels should pay close attention to Amazon’s moves in the industry. As Amazon Books and other specialty storefronts open, you can discover how the in-store shopping experience is still thriving today, even for primarily online sellers. You can’t emulate the human touch online, no matter how user-friendly your online store is.

Want to know more about the ways brick and mortar storefronts complement e-commerce operations? Learn more about the offline potential of the e-commerce industry in the guide “The Future of E-Commerce is Offline.”