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  • Amazon's Retail Store Brings Online Ways to Bricks and Mortar
  • Amazon, an online retailing powerhouse, opened a bricks and mortar bookstore in Seattle earlier this month.

    Not all that long ago, bricks and mortar stores were thought to be dying. Only a few exceptions like IKEA were planning to open additional stores and keeping bricks and mortar as a major component of their growth strategy. Showrooming, which entails shoppers visiting physical stores to look at merchandise then buying online at lower prices, was popular. Showrooming was thought to be a death knell for bricks and mortar stores.

    Then, the situation reversed. Instead of showrooming, shoppers were webrooming. This means they'd research the product online, then buy it--or at least pick it up--at the physical store. As shoppers increasingly chose to get merchandise at physical locations, the advantages of bricks and mortar locations more clearly emerged. It became apparent that retailers benefit from having both an online presence and physical stores. Even Amazon was seeking physical locations where customers could pick up their online purchases. And now, Amazon has opened a bricks and mortar retail bookstore in Seattle, though the store is much smaller than major chain bookstores like Barnes and Noble.

    While said to be an experiment, Amazon's physical store sends signals that there are still advantages in bricks and mortar retailing. But, the Amazon store is oriented toward shoppers' smartphones. Thus, the bricks and mortar move by Amazon may signal a possible intent to change physical retailing in ways that adopt more of the attributes of e-commerce.

    Amazon even displays books on the shelves of its physical store in a way that more closely resembles how books are sold online. All books in the Amazon store face outward, so shoppers see the book's cover, not just the book's spine. This is not typically done in bricks and mortar bookstores because it requires too much shelf space. But, with books facing outward, Amazon's physical selling environment seems to look like what happens online. Displaying the books this way in the store may enhance Amazon's ability to apply the online sales data it has amassed, since this data is based on customers who see the book's cover, not just its spine. The display of books in Amazon's physical store also includes reviews that were posted online. This, too, makes Amazon's bricks and mortar environment more like what's online.

    No prices are listed on the merchandise in Amazon's physical store. To get prices, shoppers must use their smartphone. This enables Amazon to know who the customer is, as well as the customer's buying profile. Handling prices this way makes the in store environment more like online by enabling the use of data about the customer, though the store does differ a bit from online in that prices aren't seen right away.

    As Amazon experiments with its physical store format and as new blends emerge combining online with bricks and mortar shopping, retail companies must still determine what best fits their business and their markets. Questions arise, such as: how should the two environments be blended, and how might the design vary depending upon the target market or the type of retail business? Shoppers accustomed to frequent online buying may be highly amenable to smartphone dominated physical stores. For customers who enjoy shopping in bricks and mortar locations, however, any required smartphone access needs to be convenient enough to keep them shopping, rather than creating an overly annoying interruption. That's why the right fit for the business is so important.

    Just as I discuss in my recent blog post that covers not overreacting to disruptive innovation, companies should continue to pay attention to their core markets when considering the adoption of new retail technology. Companies generally should not abandon markets where they are strong merely for the sake of adopting new technology that might make physical stores more like online in ways that support the business are important ingredients for success.

    Along these lines, I'll conclude by pointing out what was said on November 12 in "This Is New York, a blog about New York neighborhoods", which quoted Chris Doeblin, an independent bookstore operator who owns three Book Culture Stores on the Upper West Side. The gist of the quote by Doeblin is "...people are still reading".gy in ways that support the business are important ingredients for success.

    As I see it, meeting the needs of those readers is an important element of a bookstore's business strategy, and how to do so can vary depending upon which groups of readers the bookstore serves. Some of these readers enjoy e-books, some prefer printed books, and some like both. So, the appropriate degree of technology and, thus, how to best blend online and physical retailing, may vary, depending on the market. Building upon what's already there and integrating technology in ways that support the business are important ingredients for success.

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