Will Amazon be the first to truly nail omnichannel retailing?

Discussion
May 19, 2016
George Anderson
George Anderson

It’s clicks meet bricks in the brave new world of Amazon.com. Reports have it that Jeff Bezos and company plan to open more of their Amazon Books locations as well as more drive-up grocery stores.

According to a Wall Street Journal report, Mr. Bezos told a small group at the company’s annual shareholders meeting this week that plans are in the works to open an unspecified number of additional Amazon Books locations.

“We’re definitely going to open additional stores, how many we don’t know yet,” Mr. Bezos was quoted as saying by the Journal. “In these early days it’s all about learning, rather than trying to earn a lot of revenue.”

Amazon Books, which opened its first location in Seattle last November and is preparing to open a second in the San Diego area, has proven popular with consumers. According to research done by secret shoppers for Field Agent, shoppers at the Seattle location prefer getting their books at Amazon Books over Amazon’s own website and Barnes & Noble.

According to Silicon Valley Business Journal reporter Nathan Donato-Weinstein, who first reported last July on plans by Amazon to open an 11,600-square-foot drive-up grocery store in Sunnyvale, CA, the company is working on a second identical concept store in San Carlos on the Monterey Peninsula.

Whether a test or part of a plan for a larger rollout, it appears based on initial details that Amazon wants part of the BOPIS (buy online, pickup in-store) market, which fits with its strategy of offering delivery options that meet the varied needs of its customers.

Photo: Amazon

DISCUSSION QUESTIONS: Do you think Amazon.com is in the best position among major retailers to truly pull off a seamless omnichannel shopping experience and all that entails from an operational standpoint? What categories – books, consumer electronics, groceries, etc. – do you think Amazon is most likely to concentrate on as it develops its brick and mortar presence in markets across the U.S.?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"If anyone can pull this off it is Amazon. Why? They have data … TONS of it!"
"Barnes & Noble should be very concerned, but grocers should be less worried."
"It is much easier to site warehouses, trucks and even drones than it is to acquire conveniently located, ideal retail real estate."

Join the Discussion!

23 Comments on "Will Amazon be the first to truly nail omnichannel retailing?"


Sort by:   newest | oldest | most voted
Chris Petersen, PhD.
BrainTrust

To date, “seamless” omnichannel has been almost as rare as a unicorn. Traditional brick-and-mortar retailers struggle with the systems and infrastructure required to make shopping seamless across channels, devices and time. Amazon appears to have the technology and is not burdened by the historical baggage of “what stores are.” But at the end of the day, results count! Amazon has little real experience in creating a compelling consumer experience in stores. IF they can master that, they have the infrastructure and components to dominate omnichannel in categories like media, fashion and even food.

Shep Hyken
BrainTrust

If anyone can pull this off it is Amazon. Why? They have data … TONS of it! They know what customers want, need and ultimately buy. They are constantly testing. And while profitable, their focus is on pushing to find better ways of connecting and selling to their customers.

The categories that Amazon focus on will all come from their data analytics. Data, not emotion, will decide what products they focus on in their brick-and-mortar stores.

Bob Amster
BrainTrust

Why should Amazon do better at omnichannel retailing than any good brick-and-mortar retailer did expanding to e-commence and m-commerce? Just because a company is good at one thing (read: its business model) does not imply that it will be good at another business model. Pure-play store chains have had to learn the commerce business (and are still learning it in many cases). As Jeff Bezos said himself, Amazon is in the process of learning the brick-and-mortar business. It is possible that Amazon will execute very well on the store model, and it is also possible that they won’t. As we all know, signing leases, hiring and training associates, designing store interiors and stocking stores with merchandise is very different from taking orders on the Web and pick-pack-and-ship.

George Anderson
Staff

I’m making an assumption here, but my guess is Amazon probably has real insight into all of its inventory – stores and fulfillment centers – at the same time. The fact – assuming it is a fact – Amazon has one unified of view of all its inventory is a step up from most brick & mortar chains that are in various stages of trying to integrate their disparate channels. Would you agree?

Liz Crawford
BrainTrust
Amazon is in a unique position — coming from pure digital to brick-and-mortar. Barnes & Noble should be very concerned, but grocers should be less worried. Why? Because in the world of physical retail stores, it will be very hard (maybe impossible) for Amazon to be all things to all people. Managing excellence in grocery is very different from managing excellence in fashion or books or furniture … Excellence in physical retailing ranges from customer experience, to merchandising, to assortment, to lighting and paint, to location siting, to knowing your shopper and more. Here are my specific brick-and-mortar predictions: Barnes & Noble will suffer. Barnes & Noble has not fared well against this behemoth so far. I don’t imagine they will prevail in this latest struggle either. Sharp grocers who know their business (e.g., Whole Foods, Trader Joe’s, Wegmans, et. al.) won’t be seriously affected. The reason is that their shoppers are loyal to these channels for a holistic experience and unique offerings. On the other hand, grocers who are less differentiated will feel the… Read more »
Liz Crawford
BrainTrust

Let me amend my predictions to say that, while brick-and-mortar grocery will be hard for Amazon to match, Amazon’s private Label grocery (available online with subscription) will be a roaring success. Amazon’s private label will inevitably spell a guaranteed revenue stream and hefty market share for them. When shoppers are filling their subscription boxes online, Amazon’s private label option is a no-brainer. Incentives and smart algorithms will only recruit buyers (at a low cost per acquisition) and cement loyalty. This online move (rather than the physical store) will negatively impact national brands and grocers alike.

Brian Numainville
BrainTrust

And just to tag on here — Amazon’s impact on grocery, especially if private label is well-executed, may be broader than one thinks. Some of those same shoppers who patronize the sharp grocers you mention may also buy online and choose to purchase private label, among other grocery items, via Amazon. Not to say that a compelling and differentiated retail experience won’t hold them in-store for the majority of their grocery purchases, but it’s the little bit of sales loss here and there that can really add up (and sneak up) on you.

Ben Ball
BrainTrust

Probably. Primarily because they already understand what we are calling “CE 360” or the Customer Experience 360 — the sequel to the linear Path to Purchase — better than anyone.

The primary barrier they will face is physical infrastructure. It is much easier to site warehouses, trucks and even drones than it is to acquire conveniently located, ideal retail real estate. But … they could always buy a retailer with the right footprint and be in business overnight.

One quibble with George though — I highly doubt that Amazon will actually do BOPIS. It’s the “pick up in-store” part that bothers me. Kroger has already demonstrated with ClickList (thank you Harris Teeter) that the key to customer satisfaction in this model is curbside pickup.

George Anderson
Staff

To Ben’s point and to clarify: The Silicon Valley Business piece only says Amazon is opening drive-up grocery stores. It doesn’t actually say anything about getting out of one’s car and going into a store.

Ben Ball
BrainTrust

Thanks George!

Ross Ely
Guest

Amazon can continue to be a strong player in retail by adding physical locations, but this move doesn’t necessarily mean the demise of other retail competitors. In fact, Amazon’s decision to build brick-and-mortar stores underscores the fact that shoppers often prefer to visit a physical store rather than purely shop on an online site.

Independent booksellers have thrived in recent years as they have developed in-store shopping experiences that Amazon cannot replicate. Likewise, independent grocers can provide a unique “foodie” experience in addition to their e-commerce and click-and-collect capabilities. It will be difficult for Amazon to be “all things to all people” even as they build up more of a physical store presence.

Lee Kent
BrainTrust

It isn’t really fair but the answer is yes. You see, Amazon didn’t start with all the disparate systems and architectures that the traditional retailer has to deal with. No, Amazon started with e-commerce and, as I understand, they are using their e-commerce in stores as well. This gives them that illusive unified platform that many retailers can only dream about.

In horse races, all the horses start at the same gate. But that’s just my 2 cents.

Peter Charness
BrainTrust
Amazon certainly has the financial wherewithal to be successful, if success is possible. In the books category though you really have to wonder. Books are undifferentiated, the stores (that used to sell them) carried big assortments, and the shopping experience was decent, complete with coffee shops and comfortable chairs. But in the end shoppers didn’t want to go to the physical stores as it was just easier to press a button and get a book in either physical or digital form for a much lower price (remember how much cheaper books used to be online before the brick-and-mortar retailers were driven out of business?). Why will that behavior change because the name over the door says Amazon? Unless shoppers are tired of online only and would rather trade off the electronic convenience and pricing and go back to in-store browsing. For other product categories, well, as always, assortment is king and Amazon certainly has “more data” but turning that into valid in-store compelling assortments is not as simple as it looks, as every fast-fashion retailer… Read more »
Tom Redd
Guest

First, what is omnichannel? Besides some old spin term born at IDC it has ZERO meaning. If you mean all-channels or just retail — as shoppers expect it — then old Jeff is late to the game. All-channel retail has been nailed by more than one retailer already — start with Macy’s and move on to Apple. Amazon needs less attention from writers. They are not that unique and they really lack strong, overall product quality. Some items re-sold by this retailer are pure trash. Apple and many other global retail operations — all-channel shops — would never carry or re-sell the trash Amazon does.

Let’s get off the simple media-created amazement with Amazon. They are a retailer of some form that is OK to many if they do not profit. That is strange. Media hype over business basics? Typical press impact.

George Anderson
Staff

Tom – You may be correct although your assertion that “all-channel retail” has been nailed by others doesn’t fit with what retailers and tech vendors have shared with me in recent weeks and months. Companies such as Apple, Macy’s and Nordstrom are generally held up as the exceptions to the rule with the vast majority of retailers still unable, for example, to arrive at a single view of their inventory.

Ken Morris
BrainTrust
Ken Morris
Retail industry thought leader
3 years 8 months ago

I do think Amazon in a great position to nail the omnichannel shopping experience as they are starting from ground zero, they are not saddled with legacy in-store systems and can leverage and modify their e-commerce system to support their brick-and-mortar business. However, I am not sure the success of their Seattle book store customer experience means it will translate into success in the grocery segment.

Does anyone really want to buy their food from Amazon? Hubris is the word that comes to mind. Will they be better than Wegmans, Publix, Whole Foods or Trader Joe’s? They should go bricks and mortar as they are missing 80%-90% of the market, but they should stick to the retail categories they know well and dominate — like books, electronics and other hard goods. They should leave food to the experts.

Herb Sorensen
BrainTrust

Amazon’s bricks store in Seattle is a DISASTER as a model for high volume bricks retailing. It’s more like high margin Apple stores, since it is built around selling Amazon tech products at the core, with books marginally promoted on the perimeter.

I wrote a review of the whole thing shortly after their opening, as a CONTRAST sidebar to “Selling Like Amazon… in Bricks & Mortar Stores!” which is the foundation of the 3rd chapter in my new book: “Inside the Mind of the Shopper: The Science of Retailing (2nd Edition).”

Roger Saunders
Guest

“Seamless” points to perfection from a consumer acceptance standpoint. Can’t offer that status to Amazon just yet. They are, however, masterful in making incremental improvements to their operating structure, taking costs out, expanding categories, growing market share in multiple categories, and winning over new converts on a daily basis.

They are calling the plays. Other retailers are reacting, while too few are focusing on innovating from within to build their e-commerce in conjunction with brick & mortar.

Amazon, while they experiment with/test multiple strategies, will likely find the sweet spot in the broad, middle market spaces, as they have done with consumer electronics, books, and other categories. Along the way, they are building loyalty and passionate adopters, akin to Starbucks, Wegmans, and Apple.

Elizabeth Meaney
Guest
3 years 8 months ago

Does anyone have thoughts on fashion? Personally I’ve been buying more and more clothes from Amazon. Prime and the good return policy make it so easy to order something, try it on, mail it back … and a brick-and-mortar clothing store would be even easier. Shop online, pick up several items at my local Amazon Department Store, try them on in-store and return them right then and there if I don’t like them.

Vahe Katros
Guest
Vahe Katros
3 years 8 months ago

AMZN has the best opportunity to fail first at this goal. So we need to learn; the enterprise software companies need to learn how to adapt their front office and back office capabilities at these moments of truth.

Charles Whiteman
Guest

I do think Amazon has the best shot at perfecting omni-channel — mostly because their shareholders are willing to finance long-term strategies which are costly in the short run. Amazon’s other advantage is that omni-channel is data-driven — and they certainly have a leg up here.

Amazon’s two challenges relative to their more traditional retail competitors are:

1) While the traditional retailers already do online, Amazon is starting from scratch when it comes to physical retail.

2) Amazon is going to have to morph its “everything at the lowest price” concept to create a “point-of-view” that makes sense to consumers and is profitable.

Arie Shpanya
Guest

Amazon is definitely well positioned to succeed from an operational standpoint, from an inventory management perspective, especially. There’s more to a seamless omnichannel experience than that though. I also agree with Shep that another huge competitive advantage they have is their ability to effectively take the vast amount of data they have and make informed decisions every step of the way.

Doug Fleener
Guest
3 years 7 months ago

Hey there … Great information you shared here about Customer experience.

wpDiscuz
Braintrust
"If anyone can pull this off it is Amazon. Why? They have data … TONS of it!"
"Barnes & Noble should be very concerned, but grocers should be less worried."
"It is much easier to site warehouses, trucks and even drones than it is to acquire conveniently located, ideal retail real estate."

Take Our Instant Poll

How likely is Amazon.com to be the first large retailer to truly nail omnichannel retailing?

View Results

Loading ... Loading ...