Amazon: The Offline Giant

By: Brian L.

Having embraced the online market for a long time, Amazon is showing signs of interest in the brick-and-mortar world as well. Amazon Go, a twist to a traditional grocery store, and Amazon Bookstores, a new approach from the company that started as an online seller of books, has already begun launching. Will this mean that Amazon is preparing to step in the offline market as well?

Amazon Go

Traditional grocery stores are threatened once again as Amazon, after launching an online food delivery service, Amazon Fresh, in multiple cities just a few years ago, now decided it has to go physical to appeal to the consumers in the traditional grocery market as well. With in-store technology designed to track customers’ every step and through the utilization of the Amazon Go app, the Amazon Go promises consumers ‘No Lines’ and ‘No Checkout.’

The first Amazon Go concept store is roughly the size of a convenience store, though according to the Wall Street Journal the company is also testing a drive-thru concept as well as a traditional 30,000-to-40,000 square foot grocery store that would combine in-store shopping and curbside pickup.

It features artificial intelligence-powered technology that eliminates checkouts, cash registers and lines. Instead, customers just walk in, grab what they want, and scan their phone on a kiosk on their way out.  Amazon automatically determines what items customers take from the shelves. After leaving the store, they get charged to their Amazon account for the items and get sent a receipt.

Amazon Bookstores

Amazon sells books online. Period. The profits from several offline bookstores are hardly worth anything to the Seattle behemoth. So why, when for the last 22 years, it’s had a laser focus on online commerce, is it launching bookstores in already 4 states, and with promises of more to come?

“I don’t think Amazon even realizes what they have at this point. This is just a test,” says R.J. Hottovy, an Amazon analyst with the investment company Morningstar, in an interview with USA Today.

Many see them as experimental platforms by a company that has never been reluctant to experiment with new thoughts and similarly as vitally to savagely prune away the ones that don’t work. It is a strategy made possible because of the fact that Amazon shareholders appear to be fine with allowing it to keep its mind on the end goal, to learn what is to come.

The stores are using books to bring in an educated, relatively affluent stream of customers who are then exposed to Amazon’s electronics, such as the Echo, Kindle, Fire tablet, and Fire TV. They are displayed prominently, and there is a space for customers to try the device, instantly recognizable to anyone who has ever been in an Apple store.

“These stores effectively are a showroom,” Morningstar’s Hottovy said in an interview with USA Today.

But the real focus of this bookstore should be on how they are experimenting with the customer data that they have amassed over the last 22 years, by utilizing it directly in the bookstore. Every bookstore has a best-selling section, but this is Amazon, and this is where they start to experiment with the data. They have a section for books that have received a high rating online, and by only selecting books with a customer rating of 4.8 or higher on a scale of maximum 5, Amazon appeals to the customers’ sense of quality, urging them to buy. Another feature is the Wish List section, in which the books that are in many people’s Wish Lists are showcased. This shows the customers’ potential interests in buying the book, which makes the section very appealing to customers. But the best feature yet may be the “If you like… you’ll love” or “If you like… you should try” section. This is the pinnacle of the utilization of the big data technology. They recommend books, and then recommend books based on the data that they had gathered about what those customers also bought. And some of the books even have actual customer reviews included with them as well. These are all the features found in the online version of Amazon, but is now also recreated in its offline stores.

There are many speculations of why Amazon is creating these offline stores, but at the moment, there is no clear explanation. All the same, it is puzzling for the public and its investors to see Amazon step into the offline market instead of taking advantage of the niche market created by the fact that offline bookstores cannot utilize long tail as much as an online company, which Amazon initially took advantage of to grow as a company.

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