Amazon rejuvenates Brick and Mortar

Amazon made headlines at the end of 2015. They opened a long-rumored brick and mortar bookstore in Seattle, the same town 15 year before where they were launched as an online bookseller. 

Could this prove to be a new model of how brick and mortar is done? The move was greeted online with some friendly skepticism and ironic comments in that the same firm credited with forming a corporation responsible for the demise of hundreds of independent bookstores around the country would go this route. 

But more and more with the rise of click and brick, where consumers buy online and pick-up in store, we are seeing a new kind of physical extension and technological brick and mortar.  More on this later in this article. 

The idea for Amazon, is here is a space where consumers are free to try their mobile devices such as: Kindle, Echo, Fire Tablet and Fire TV and others. Even the books are shown differently though, with covers face-out, with review cards of customer ratings and reviews. These are signs of the changing times of the increasing feedback loops between digital and brick-and-mortar. 

Customers trust other customers, so it makes perfect sense for Amazon to display their product in this manner. The prices are the same as online, but it remains unclear if brick and click or click and brick will predominate in the coming years. The rationale to try it in shop and order it later is obvious, it's a light-weight solution for busy consumers. 

Either way, the predominance of brick and mortar means consumers still love the tactile and social experience of shopping in store. As augmented reality evolves, it will be a third layer between Ecommerce and brick and mortar that consumers and retailers will have to consider. Holographic displays and advertisements in-store are also not so far off.  Those of us who follow retail technology, will be writing about it every step of the way. 

The New Kind of Brick-and-Mortar

What Amazon is doing here, is setting a precedent. That a good store is data-centric and ties into customer-product analytics. This premise is obvious, algorithms are getting better at predictive analytics and that's the bridge between the digital and physical worlds. More sophisticated machine intelligence that can do marketing automation that's personalized at scale, is just the natural evolution of things. 

Matching products with people is the golden ratio of businesses like Amazon. High-value interactions with customers are now occurring with digital touchpoints that begin with such things as online cookies, customer reviews, ratings and cross-selling histories of like-individuals. The Big Data is being churned and the results are more digital spaces and more physical online simulations. 

It's Data with Heart - Jennifer Cast, VP of Amazon Books

Data knows best, data knows what the customer wants. So Retail pioneers like Amazon are following the cheese. It's the creation of a new kind of retail space that is optimized with data augmentation. Everything comes full circle, the new kind of brick-and-mortar, might be called brick-and-algo (algorithm) to celebrate how machine-intelligence is now involved in such stores. 

Brick-And-Algo

We all know Amazon's production selections are heavily influenced and rely on Big Data treasure troves, the the secret is customer analytics that's matched with product analytics. 

A brick and algo store has smart analytics tracking every transaction where customers can opt-in for greater benefits. This is not unlike what a cloud POS integrated store can experience with the right software. 

It's ironic then that the leaders in data-augmented retail (DAR), would also be the most humane, since anyone how has bought a book online with Amazon, knows how well the cross promotion works and how tempting the related books are to a lover of knowledge. Cross selling is one of the sweet spots, for data centric retail. Humane in the sense that, the better the algorithms knows me, the more it can cater to my preferences with accuracy that's emotional salient to me. 

There's some evidence that says human-AI hybrid intelligence is the future, where big data is a supplement to human insight, not necessarily a substitute for it. Forgive me, if I am skeptical of this. If Amazon disrupted those resale book stores that we all loved, can they replicate and give back something to the future of brick and mortar to compensate for the digital disruption?

Retail with a Corporate Social Ethical Responsibility 

Amazon must restore the economic viability of a vertical that has died, not just for its own profit, but for the future of literary in America and beyond. If a CSER isn't enough incentive to get this right, an Amazon store is a physical experiment of how disruptive cycles can transform retail itself. The digitization of the world yes, but also embedding analytics into the physical universe. 

Amazon's squeeze on publishers is putting a profits-only way in which authors must adapt to continue to live and function as an author. If I love to write, I would have to become a serial crime mystery novelist, for example. 

You will notice a lot of the best sellers are not great contributions to the history of literature. However, the upside of Amazon providing a on demand economy (ODE) solution relating to information acquisition/leisure reading has a huge upside as well that the rest of Retail can learn from: 

• Analytics and algorithms produce better product selection matching! 
• AI-Human hybrid intelligence (e.g. The store owner with SaaS integrated with Cloud POS, for example) as a revolutionary new form of entrepreneurship. 
• Optimized inventory management via predictive analytics, reducing lost margins in unsold stock. 
• Data augmented retail (DAR), in the next phase in the evolution of brick-and-mortar. 
• Brick-and-algo (circa 2016-2024) will begin to disrupt brick-and-motar.

The Future of Physical Retail as Related to Technological Evolution 

With the rise of IoT that we will see in the next decade, and the various interaction of AI with IoT, making an "AIoT", new bridges will be formed between the virtual world and the physical world, between the unaided human intelligence and of Big data optimized analytics insights in real-time. 

This marrying of AI and analytics becoming embedded in all human activities and in our environments is what I call "convergence". As an amateur futurist, I believe it's one of the pre-singuarlity phases of technological evolution and how the brick-and-mortar store (a symbol of our historical past) is adapting is a microcosm of this. Amazon's involvement in the story is pivotal, I think. 

Amazon is founding brick-and-algo, and it's just the beginning.