How Amazon is Helping Reshape Physical Retail

As published in ADWeek

Decades ago Amazon disrupted commerce with its leadership in launching one of the first online marketplaces for books. It created efficiencies and economies of scale by being digital only and continues to push the envelope with what’s possible with technology. However, if you visit their online site today, you will find a growing list of physical locations where you can touch, feel and interact with the brand in real life.

In line with the company’s ethos, Amazon is not opening stores with a traditional approach. They are using their tech savvy to create environments that are data driven, leveraging both online intelligence and in-store experiences.

Amazon owned stores: The 4 Star Merchandising Effect

Harnessing the power of data, Amazon leans not on beautiful and Instagrammable store design, but rather a highly intelligent and curated merchandising plan with its newest store concept – Amazon 4-Star. With years of analytics around customer ratings, the store only showcases items rated four stars or above by the company’s online reviewers in a local radius, along with trending items from the site and top sellers. The floor layout is merchandised into various categories with a “seal of approval” such as Trending Around NYC, Frequently Bought Together, and Amazon Exclusives. Also staying true to an omni-channel retail strategy, prime members will pay the same price as they would if shopping online, while non-members will pay the list price, unless they decide to sign up in-store for a free 30-day trial.

Going Cashless with AmazonGo

After it’s first test in Seattle, Amazon is quickly expanding their cash and cashier less stores and its driving a growing list of similar initiatives via camera vision and artificial intelligence with companies like Standard Cognition, Trigo Vision and Zippin also opening locations on the west coast. Shoppers (with Amazon accounts) scan their phones at a turnstile upon entering and can then grab what they want from a range of salads, sandwiches, drinks and snacks — and walk out without stopping at a cash register as sensors and computer-vision technology detect what shoppers take and bills them automatically. Some of its comps are going as far as saying their AI will be able to predict in-store theft based on body movements and dwell times. If they continue to prove their data capture can drive value and efficiency to people’s lives, consumers are likely to grow a lot more comfortable with being tracked even when offline.

Powering Shoppable Showrooms with One-Click

For three month’s Good Housekeeping has opened a shoppable experiential pop-up store inside of Minneapolis’ Mall of America in partnership with Amazon. Deemed GH Labs, the store will enable shoppers to test and purchase products curated by the coveted publisher, including items from Dyson, Microsoft, Nespresso and Samsung.

Each product in the store is labeled with an Amazon QR code, aka SmileCodes. Using the Amazon app, shoppers use their smartphone’s camera to scan the code, and the product detail page for that item on Good Housekeeping’s Amazon seller page appears on the screen. The shopper can then add it to her cart, check out within the Amazon app and have the product shipped directly home in a seamless transaction.

Collaboration is the New Competition with Shop-in-Shops (& pick-up lockers)

If you visit a select Whole Foods or Kohl’s you can shop Amazon’s devices and get assistance from consultants’ knowledge about Alexa, Prime Video, and more. They set up in-store demonstrations, aka “The Echo Show” to help customers answer the questions that can’t easily be answered when just shopping online, such as how to turn on a thermostat while lying in bed or dim the lights while watching your favorite movie. With strategic partners, they bridge the experience gap for their more technical products. At Whole Foods, Amazon’s physical presence also includes pick-up lockers driving more quick trips to the grocer’s location, whereby a customer may also spontaneously pick up a few additional grab-and-go items. It’s a win-win collaboration.

Amazon is constantly pushing the envelope to test the bounds of what’s possible with smart algorithms, innovative thinking and cutting-edge experiments that move the industry forward. What makes them successful is they stay true to their core value proposition in what they deliver to consumers as they innovate- competitive pricing, efficiency and access to selection. Their continuous move into physical retail shows us that brick-and-mortar isn’t dead but rather illustrates the shift in how powerfully it can be utilized.