How to Beat Amazon.com

The first online sale occurred in 1994 when a man named Dan Kohn sold a Sting CD on the World Wide Web. That same year, young Jeff Bezos entered the picture with Amazon.com selling books. Amazon popularized online shopping by taking the physical world online. The convenient home access and deliveries were revolutionary, kickstarting a trend that forever changed the way we buy.  

Now, we can order electronics, groceries, home goods and almost everything else straight from Amazon’s website and have the items delivered to our doorsteps within 24 hours. Did you forget to buy a Fitbit for someone’s birthday? Or, did you miss a few items at the store and just can’t be bothered to peel yourself off the couch and fight through the aisles with a basket? Whatever the case, Amazon has a solution and made sure of that by expanding its offerings to include more than 450 million products in the United States alone.

For more than 20 years, Amazon has been running one of the world’s most successful Internet companies with not a store in sight. Then recently, to the shock of many, the retail behemoth decided to take its online world to the physical world by venturing into the realm of brick-and-mortar stores. Opening a small space in Seattle’s University Village mall this past November, Amazon is beginning to make traditional retailers quake in their boots with speculation that hundreds of stores will follow.

The terrifying thing for traditional retailers is Amazon will operate stores much more efficiently and effectively because the company is driven by data and powered by software. Using data analytics, endless APIs and other intelligent tools, Amazon will monitor its online and physical stores closer than George Orwell’s Big Brother to perfect its online-offline strategy. It’s not an easy victory for Amazon, but the company will tirelessly optimize it to work for them and will turn in-store shopping on its head. We already know Amazon Books will not just sell books, and it also will not just be a store either. The retail location will also be a distribution hub, a Prime Now pick-up point for 24-hour deliveries, a returns drop-off point and an experience center. Amazon will take omni-channel to a whole new level.

It’s a smart move. By connecting the online and physical worlds, Amazon is bringing new value to consumers and increasing its revenue opportunities while bringing a personal, human element to its approach. According to a New York Times article, Amazon Books is “an important way to introduce the public to new, unfamiliar devices.” This includes Echo, Kindle Fire and Fire TV, among others. Amazon’s new approach reinforces the value in allowing consumers to physically interact with products and brands before making big purchasing decisions. If done sooner, perhaps the Fire Phone would have faired better.

Amazon isn’t the only company doing this. Online retailers such as Alibaba, Warby Parker and Bonobos are also setting the stage. For instance, e-commerce giant Alibaba recently purchased Suning, a chain of brick-and-mortar stores that contributed to its record Singles’ Day sales of $14.3 billion. Additionally, eyewear retailer Warby Parker recently opened brick-and-mortar stores to offer consumers the convenience of in-store custom fittings and repairs, on top of its huge online selection. Similarly, menswear retailer Bonobos opened guideshops featuring one of every item on its website for in-store fittings.

This trend points to the importance of in-store consumer experiences, which online retailers are missing out on. Apple, for instance, reportedly has more than one million daily visitors to its 400 stores worldwide. Added up, that’s 365 million visitors each year. Consumers enjoy browsing, fiddling with gadgets, feeling clothes, conversing with sales reps for added opinions (sometimes) and soaking in the overall atmosphere the brand embodies. If done right, it draws consumers in, keeps their attention and entices them to come back for more. Whether it’s playing with the latest device at Apple’s store, getting pampered at Sephora or reclining in a new Model S at Tesla, in-store experiences are critical for consumer-brand relationships.

With Amazon entering the physical fold, it is more important than ever for traditional retailers to turn their brick-and-mortar stores into an advantage. They need to find new and innovative ways to leverage their physical space and provide real-time value and customized experiences. For instance, Target is using beacon technology in its stores to send personalized recommendations and coupons directly to consumers that opted into the Target iPhone app. A new parent might receive a coupon on diapers, while a gaming enthusiast might receive a coupon on an Xbox game.

For retailers and any other consumer business, the key to success lies in bringing information out of the depths of their applications and to the forefront of the business, where the information can be leveraged to figure out who the customers are and what the customers might want based on their history. Unlocking this information flow is done with application program interfaces (APIs), which are a way of exchanging digital information between two or more parties. APIs unlock data from IT systems and new technologies, such as beacons, to drive decisions based on data to enhance and create differentiated consumer shopping experiences.

For traditional retailers to survive in the age of Amazon, they need to deliver a seamless customer experience across channels, and they need the agility to keep in step with the changing needs of consumers. This added level of complexity requires online systems and in-store software to be connected so retailers can provide an uninterrupted experience wherever customers shop. Traditional retailers shouldn't just think about how to keep up with Amazon. They should also think about how to beat Amazon by blending the online and physical worlds to offer customers a holistic, enjoyable shopping experience that keeps them coming back.

What do you think? Will Amazon turn in-store shopping on its head? Or, is Amazon’s threat overstated as Macy’s CEO thinks?