How Amazon is Reinventing Retail – Literally from The Ground Up!
I received an email this morning from Amazon. No big deal as I get them all the time. However, as my brain processed the novelty of the familiar online logo on a bricks-and-mortar shopfront in the headline picture (right), I did a doubletake. I wasn’t being asked to buy a book from the Amazon website – though the logo would simultaneously prompt me to do that too – I was being invited to visit an actual shop with books on shelves named after the website.
This from the company responsible for wiping out traditional bookstores around the planet! In 1995 there were 1,894 independent bookshops in the UK. By 2018 that number had fallen to a mere 868. Until 1995 bookstores in the US were opening at a significant rate, but post 1995, when Amazon opened for business, the number of independent bookstores fell by over 40%. What is intriguing however, is that the number of physical bookstores in most countries is now on the rise again (albeit rather slowly).
This includes nineteen Amazon bookstores which are unique in their model: Each title has a review. Prices are dynamic to match the on-line platform. Titles are curated and stocked in stores depending on buyer preference in the particular region. Amazon also offers add-on purchases based not just on what you bought in the bookstore but by knowing what you bought across all Amazon outlets, obviously including online.
However, it’s not just Amazon’s unique take on bookstores that is re-defining retail. Discreetly, Amazon has been opening physical stores known as Amazon 4-star, where customer-ratings, reviews and sales data are used to curate physical stores with merchandise rated 4-star and above. As the only physical retailer that can effectively do this, Amazon blurs the line between the online environment and off-line possibilities.
Let’s also not forget about Amazon Go, now 12-stores strong, which allows you as an Amazon customer to literally walk out of the store with merchandise in hand, paid for by your credit card on hand with Amazon, and with no check-out lines and no waiting.
According to Bloomberg, Amazon is considering opening 3000 of these stores by 2021. Two years away – a tremendously ambitious plan. Such numbers would place Amazon amongst the largest chains in retail in the US. They could also couple this technology with their acquisition of Wholefoods, making them a force to be reckoned with.
The decline of the retail shopping mall is even more interesting. Reports are that Amazon is snapping up shopping malls that have closed or are about to close because of competition from online vendors and replacing them with distribution centres. Think about that. Shopping malls have been built to be close to transportation and population hubs. Just the attributes required for a distribution centre.
Shopping malls have in the past several decades become part of the identity of individuals, families and communities, meeting places for many groups and the “commons” of the consumer society. Their replacement by distribution centres will certainly impact the way we spend time outside our homes and workplaces, and on our family and social lives.
The questions to ponder: What will traditional retail look like twenty years from now? What will your organization look like, twenty years from now?
Will traditional stores make a come-back, or will they be replaced by shells that are just “website fronts” i.e. the online experience replicated in an offline manner? How is your organisation integrating the off-line and on-line experience for your customers? Will the “digital transformation” your organisation is currently attempting result in simply making manual processes more efficient through IT, with no underlying transformation?
Will shopping malls as we know them exist, or will we never need to leave home to do our shopping as strategically placed distribution centres on the site of defunct shopping malls deliver anything and everything to us within the hour? And what might that mean for our social life and communities and how we spend our time? And how is your organisation re-shaping the fundamental nature of the vertical market you operate in? If you are not the one re-shaping it, you can be guaranteed that another organisation is.
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Managing Director, The Strategy Group
Dr Tobias is an accomplished innovation consultant and entrepreneurship strategist, drawing expertise from the academic, entrepreneurial and corporate worlds. Jeffrey’s commercial and business experience is particularly focussed on lean startup, design thinking and leadership. Prior to The Strategy Group, Jeffrey was Cisco’s Global Lead for Innovation in the Internet Business Solutions Group helping Fortune Global 500 companies improve customer experience and grow revenue by transforming how they do business.
Jeffrey is a professor of innovation and entrepreneurship teaching MBA students at the Australian Graduate School of Business at the University of New South Wales. An active angel investor, Jeffrey is on the board of various well known startups. Jeffrey’s corporate background includes leading global innovation strategy at Cisco, working with large corporates such as Adobe, Westpac, Telstra, Woolworths, and Perpetual.
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