By Manika Bahuguna, Wavespot
My neighborhood Barnes & Noble closed down a few months ago. Not long after, Amazon launched its flagship bookstore in Seattle. Ironically, it opened its doors at the same location where a Barnes & Noble once reigned supreme. With the rise of e-Commerce and specifically Amazon, physical retail has been through tumultuous winds of change.
While bricks and clicks may have found harmony within the realm of ‘omnichannel’, the basic tenets of physical retail are in for an overhaul. Amazon Books isn’t just another retail outlet — it’s setting a precedent for the future of brick and mortar retail. Only time will tell the success or lack thereof of Amazon’s bookstore, but for now Amazon’s got a story to tell for the next leap of brick-and-mortar retail. And we are all ears.
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Product Curation Enters The Real World
Amazon’s new store is essentially a carefully curated collection of books — the catch being ‘curated’. Shelf optimization is less of a concern in a place where only a few chosen ones make it to the Amazon aisles. Display aesthetics and a crafted product selection overtake inventory infiltration.
By taking a cue from the success of product curation in its .com world, Amazon aims to now bring the science to the real world. We are all too familiar with Amazon.com’s “customers who bought this also bought” product recommendations and personalization. The physical store embodies the curation philosophy by selectively presenting only those products that customers are known to love and recommend on Amazon.com.
Amazon Books is probably not your center for finding obscure, hidden gems. If you walk in the store looking for, say, “Histories of Irish Traditional Music and Dance”, you will be disappointed. While Amazon critics often cite this concern, Amazon wouldn’t really care. Amazon Books’ target audience is attracted precisely to this “popular” curated content featured in the store.
Even though a curated physical store seems like an outlier today, it indicates a possible evolution of retail — an evolution where the physical store represents “less is more,” and the .com acts as the main channel for selling larger inventories.
Brick, Mortar And Data
Amazon’s store hasn’t just been built with bricks. Data science and machine learning is manifested in every Kindle and corner of the store. Products in the store are carefully chosen based on number of pre-orders as well as popularity and ratings on Amazon.com and Goodreads.
What does this mean? It means that the products already have consumer validation and are likely to be received well by in-store customers. The science of online user behaviors and preferences has been brought into the physical world, thus enabling Amazon to minimize inventory and optimize sales at the same time.
It doesn’t end here. There are no price tags on books; instead Amazon aisles hold barcode scanners. Customers can scan the barcode using the Amazon app and uncover prices and detailed book information on Amazon.com.
This is, however, not just a tale of good user experience — it is a crucial data source that links in-store customer behaviors with online data. By compelling every interested buyer to connect with the app, Amazon ensures that it captures every buyer’s preferences in the store. It’s almost like a powerful physical cookie that seamlessly connects with the digital one.
Amazon’s data dominance is no secret. Revenue from Amazon’s AWS, the cloud service that is used by the likes of NASA and Netflix, powers almost half the operating profits of Amazon. This is not just a data-driven store; it’s possibly a stepping-stone towards a kind of unprecedented data supremacy.
In any case, data isn’t just for e-Commerce any more. Data will be the essential asset optimizing physical retail in the years to come. Jennifer Cast, the mastermind behind Amazon’s bookstore, seems to agree: “We love that mixture between creativity and data, and understanding our customers and continually trying to learn how we can make a better store for them.”
Physical Stores Play Dual Roles
Amazon is expediting its shipping to the extent of hourly deliveries. It wouldn’t be a surprise if Amazon Books stores (yes, there will be more) will act as local mini-fulfillment centers for online orders. As retail continues to blur the lines between the online and offline worlds (think “click and collect”), more and more physical stores will hold this dual responsibility for fulfilling the offline and even some of the online demand. Moreover, Amazon Books also stands to benefit by enabling “buy online, return in store” policies that are widely successful in retail.
One Product, One Price
By promising to keep prices consistent between the online and offline store, Amazon has killed two birds with one stone. The obvious bird — Amazon has created a seamless, online-offline customer experience. In-store customers don’t have to make the effort to compare prices online anymore, and they shop with the assurance of getting the best deal.
Secondly, Amazon has simplified the path to purchase. As beneficial as ‘showrooming’ practices might be, they make it cumbersome for retailers to accurately measure and attribute the sales impact. By depriving its consumers of price uncertainty (the obstacle that often hinders in-store purchases), Amazon has created a seamless path to purchase, and one that is more and more conducive to ‘in-the-moment’ purchases.
However, it is important to note that in the case of Amazon, keeping prices seamless is perhaps a necessity. “Comparing prices on Amazon, while shopping in-store” is now a well-established customer phenomenon. What is to stop a customer from partaking in this activity when they are in the Amazon store? Needless to say, if the offline-online prices aren’t the same, the in-store books simply won’t sell.
Amazon Books isn’t just a big marketing and branding exercise. Nor is it just another experiment. The store is part one of a much larger strategy. A strategy that is designed to position Amazon for the next era of retail — an era where physical and online experiences thrive in cohesion, under the watch of big data.
Manika Bahuguna leads Marketing and Content Strategy at Wavespot, a Bay Area start up specializing in WiFi-based location marketing, a technology platform that optimizes real time, in-store engagement and analytics for retail businesses.
