Amazon Takes the Streets: The Online Retailer’s Step Back to Move Forward

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What’s your plan of attack for this year’s Black Friday – will you browse the shelves in-store then buy the cheapest online?  Will you strictly purchase online?  Whatever your shopping style, the online retailer Amazon Books has recently opened it’s first brick and mortar bookstore last week to ensure it wins you over regardless.  In today’s digital age, the boundaries have blurred.  At first there was a clear divide between lived reality and the online experience.  Now, the virtual-physical interconnection has transformed the consumer lifestyle, and with it, the retail industry.

Amazon Books now offers the ability to thumb through thousands of titles selected by a mixture of big data algorithms and human curators in-store and online. The ecommerce giant is blending online shopping techniques with the traditional in-store experience to capitalize on the newest online-to-offline retail trend.

Newsflash to retailers: without both an online and offline presence, your chances of survival are slim.

Consumers have turned to buying online and picking up in-store, buying in-store with home delivery, or a combination of the sort.  Regardless, the blend of online and offline is crucial for retail success.

In many sectors, the online-to-offline strategy is already in place.  Supermarket technology platforms use sensors and predictive analytics to feed in-store managers real-time data on consumer trends.  Cashier lines and foot traffic data is fed into algorithms to predict shopper counts.  This strategy has seen positive results, albeit limited.

Nevertheless, reports say more than half of consumers have stopped an in-store purchase after doing a quick search on their phones.  50% of those found a better price in another store. 50% found a better price online.online-vs-offline

Yet 92% of retailers say they’re still struggling with online-to-offline integration.  Unfortunately for those guys, the necessity for this integration extends far beyond the final sale.

With today’s online shopping craze, winning over today’s demanding consumer is tougher than ever.  Due to unlimited access to information online, the gap between consumer selectivity and traditional retail strategy is widening; while our access to products continues to grow, retailers remain one step behind.

Consumers are more clued in than ever – a case most likely due to the open Internet.   Immediate online access coupled with full disclosure of information leaves stores with nothing to hide and pulling teeth for every sale. On the web, on billboards, or on the radio, brands must work harder than ever for your loyalty.  It’s a highly-competitive, negative feedback loop: as consumers become more selective, retailers stretch further for every dollar.

So, what can retailers do to keep up with our consumer habits?

Sorry retailers, it’s time to trim the fat.  The retail industry is plagued with inefficiency in stock count, employee numbers, misdirected marketing and more. Stores need more advanced technology to predict trends and ‘read the minds’ of their consumers.

Sure, elements of the online store such as pricing need to match the physical store.  But brands are taking it a step further.  They are attempting to integrate elements of their online presence into their physical stores — through software that allows virtual trying on of clothes, or live links to events in other stores or even other countries.

In fact, while logic would suggest that a recent downgrade in the importance of physical stores would lead to less interactive branding, on the contrary retailers’ ability to communicate and build brands online has led to more focused and impactful physical store identities as well.

Whichever the retail strategy, decoding the consumer mind will take a deeper understanding of human consumption. 

bilde1_pia_midtlie-2The latest attempt is Omni-channel retailing.  Stores track consumer habits in-store, online, on devices and across all media to piece together a buyer’s preferences even before they start looking.  Talk about customizing the shopper experience.  The tailored approach of Omni-channel retailing converges the online and offline shopping experience.

Amazon’s move to the brick and mortar setup has made an example of old business models – those exclusively online stereotypes of the Internet that occasioned the birth of the Internet.   For book sales, a brick and mortar seems counterintuitive to restoring retail success, especially given the recent shut down of other big brand bookstores. But clearly, for reasons mentioned above, a virtual and physical blend could bring much-needed economic viability to the sector.  By how much is yet to be seen.

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3 thoughts on “Amazon Takes the Streets: The Online Retailer’s Step Back to Move Forward

  1. Awesome article! Amazon has huge control over the online shopping experience and the fact that they’re building stores now is pretty incredible. It’s a brilliant way to build their already thriving business, given the immense data they’ve collected from years of online customer browsing and buying. This immediately reminded me of a discussion I had in one of my classes about Warby Parker—similarly, the once exclusively online sunglasses store recently began opening real stores in Southern California. Both WP and Amazon’s business models sound similar in that they optimize each customer’s online and offline shopping experience by gathering big data to best cater to their needs and in return, profit and expand their businesses. It’ll be interesting to see which businesses will soon follow these models.

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  2. I didn’t even think about all the data Amazon has on their customers, so it’ll be very interesting to see how the company uses this data to support their brick-and-mortar locations’ sales. I thought about how a lot of malls are shutting down, because shoppers find it more convenient to find their purchases online. For older stores, it’s a much more difficult transition and the learning curve is much sharper. I’m curious to see how the Amazon situation works out, and I’m even curious to see if this leads to any security issues (like if Amazon reverse tracks their customers).

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  3. Last winter, I went into a store called Bonobos, where my friend was working. The store was filled with clothing, but it was only to look at. Once you discovered a item you wished to purchase, the clerks would measure you, tell you the best size, and order it for you through your online Bonobos account, which they encourage you to sign up for. You cannot actually buy and wear anything in the store. It all needs to be delivered to an address, which is an interesting solution to the problem of running out of stock, but not very practical for out of town tourists who will not be back home for a while. Unfortunately, online shopping will most likely hurt small business owners the most. Electronic stores like Radio Shack and Best Buy are on their way out thanks to online shopping, and small electronic stores are long gone at this point. Fashion industries are fortunate enough to have “trying on clothing,” but other industries need to build a strong online model to augment sales.

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