Nobody shops in brick-and-mortar stores anymore, if you don’t count about 90% of purchases.
Because so many of the physical businesses we connected to on an emotional level were killed by the Internet (book and video stores, record shops, newsstands, etc.), it seems online is predominant in retail. But that’s not nearly true, at least not yet. In order to keep expanding market share, Silicon Valley powers like Amazon are venturing off into the real world, a phenomenon that may increase exponentially. I doubt it will work very well with Amazon Books stores and their shallow selections, but perhaps the planned convenience store chain will make a go of it? Tough to say: Corporations great at one type of platform often flounder in others.
In a Technology Review piece, Nicholas Carr visits a new Amazon Books and explains the key role of the smartphone in this surprising turn of events. An excerpt:
Amazon Books may be just the vanguard of a much broader push into brick-and-mortar retailing by the company. In October, the Wall Street Journal revealed that Amazon is planning to open a chain of convenience stores, mainly for groceries, along with drive-in depots where consumers will be able to pick up merchandise ordered online. It has also begun rolling out small “pop-up” stores to hawk its electronic devices. It already has more than two dozen such kiosks in malls around the country, and dozens more are said to be in the works.
Even after 20 years of rapid growth, e-commerce still accounts for less than 10 percent of total retail sales. And now the rise of mobile computing places new constraints on Web stores. They can’t display or promote as many products as they could when their wares were spread across desktop or laptop monitors. That limits the stores’ cross-selling and upselling opportunities and blunts other merchandising tactics.
At the same time, the smartphone, with its apps, its messaging platforms, and its constant connectivity, gives retailers more ways to communicate with and influence customers, even when they’re shopping in stores. This is why the big trend in retailing today is toward “omnichannel” strategies, which blend physical stores, Web stores, and mobile apps in a way that makes the most of the convenience of smartphones and overcomes their limitations. Some omnichannel pioneers, like Sephora and Nordstrom, come from the brick-and-mortar world. But others, like Warby Parker and Bonobos, come from the Web world. Now, with its physical stores, Amazon is following in their tracks. “Pure-play Web retailing is not sustainable,” New York University marketing professor Scott Galloway told me. He points out that the deep discounting and high delivery costs that characterize Web sales have made it hard for Amazon to turn a profit. If Amazon were to remain an online-only merchant, he says, its future success would be in jeopardy. He believes the company will end up opening “hundreds and then thousands of stores.”•