Is the World Ready for the Convergence of Brick-and-Mortar and E-Commerce?
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Why would an online retail giant such as Amazon open brick-and-mortar retail stores? Maybe just to conquer the world. Maybe because Amazon’s offline stores could be beneficial to their online experience. In the opinion of Sucharita Mulpuru, retail analyst at Forrester: “It seems counterintuitive they are investing in any physical stores when they are blamed for the demise of so many of them, but no cow is sacred.”
Amazon is looking to learn
Even though Amazon’s killing it these days, they are steadfast believers in research and optimization to position themselves better for the future. So, is their retail store experiment merely a study for them to make their online store even finer? Here’s a hint: According to Brian T. Olsavsky, Amazon’s Chief Financial Officer, Amazon stores represent “…another way to reach the customer and test what resonates with them.” So, what could they learn?
Method to this madness
In dozens of their bookstores – on campuses, and all around the country – books are arranged on shelves with front covers facing forward. So, shoppers see the cover first, just like the online experience. These stores don’t display many books because they know most purchases will be made online – but they still offer customers the tangible experience of holding the book and browsing through it. They display gadgets, enticing people to try them out before buying. Tutorials are also offered on weekends to help students learn how to best use these gadgets. Guess what gadget is also there? If you guessed the Kindle E-reader, you are correct. A bookstore is a place for non-Kindle owners, so everyone is a prospect! What better place to entice Kindle converts? Robert Hetu, a retail analyst at Gartner, says online customers tend to go to a website already knowing what they want to buy. By contrast, customers visiting a physical store often make impulse purchases, even if they go in with something specific in mind. Amazon could then learn more about that serendipity from its stores – and perhaps find better ways to increase impulse buying online, Hetu believes.
Making a go of Amazon Go
The Amazon Go convenience store uses proprietary technology to gain knowledge. This store uses sensors to track items as shoppers put them into baskets or return them to the shelves. The shopper’s Amazon account gets automatically charged, so cashiers are not needed and there are no lines to wait on. Amazon might even license its technology to other retailers, similar to the way it rents out its data centers to businesses and groups to power their websites and for other digital needs. That business, known as “cloud computing,” is a big revenue generator for Amazon.
Google gets into the game
Not to be outdone, Google is also breaking into the retail brick-and-mortar game. In fact, they have already opened pop-up stores and counters within large retailers. Chris Petersen, PhD, President, Integrated Marketing Solutions offers: “Like everyone else, Google realizes that the future is ‘phygital,’ a blend of physical and digital. Google certainly needs to showcase and create an experience for its hardware before it loses more ground to Apple.”
We believe Google should not focus exclusively on hardware, but instead offer lifestyle solutions for home and office. Can their store be positioned as more of a “home or life powered by Google”? Like Amazon, Google may use their physical store as a way to demonstrate its products and the ecosystem they exist in. Hands-on experience is the one thing an online experience simply cannot offer. They can also showcase products from their Google Marketplace. Whatever they do, Google usually gets it right.
One thing is certain: Amazon and Google are on the cusp of changing brick-and-mortar retailing. Automation, data-mining technologies, and moxie – are the main ingredients and all borrowed from e-commerce. Going back to the future?
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