Changing Face of Retail

Tuesday, November 3rd 2015, a store opened in a sub-urban shopping mall. An everyday occurrence in cities around the country that would normally not have garnered much attention – except this was no ordinary store. opened its first brick-and-mortar store in open-air shopping mall at University Village outside Seattle, WA.

The fact that this was a bookstore had a lot of people scratching their heads. The company that single-handedly led to the demise of a number of independent bookstores (and some chains like Borders), the company whose founder had famously said that the bookstore was redundant, was actually opening a physical bookstore. Media reaction was mixed, while some thought Amazon was going the way of Apple and Microsoft, others were convinced it wanted to add insult to injury by muscling out the remaining few independent bookstores.

I think there is more to this move by Amazon.

Amazon built a business for itself by eliminating the inherent inefficiencies in the supply chain in some business, while using a new (at that time) medium for engaging with its customers. That model worked well and once Amazon had established its self as the leading player in the industries that (until then) were really inefficient, it moved on to others and continued to repeat the model. That was over two decades ago.

The face of retail has changed.

Amazon’s success has pushed most retailers to add an online presence to their physical stores. These two avatars of the business however were and still are largely run independent of each other with the customer’s experience significantly differing in each channel.

The inefficiencies that existed in the supply chain two decades ago may be a thing of the past, but the ones that exist in the way customers are engaged across the multiple channels that a retailer uses to interact with its customers are glaring.

Amazon has set its sights on this inefficiency. Omni-channel strategies for marketing, customer engagement and operating a business in general are in their infancy and have a long way to go. Vendors are offering tools to build omni-channel marketing programs, but building a winning strategy and executing on it is not easy.

Amazon’s brick-and-mortar store is its first step to showcase its learning and thought leadership in this area. The fact that Amazon calls its store a ‘physical extension of’ should be evidence enough.

Books are just a start. Be prepared to have this strategy expand to other areas as Amazon learns and continues to innovate from this initial experience.

Here is a company that changed the retail, supply chain & logistics and the technology landscape (AWS). I believe that we are looking at the next wave of innovation to come from this company.

If it gets this one right, Amazon may just not be the World’s Largest Online Retailer. It may as well drop the Online from that tag line.