Hugh Fletcher (pictured), global head of consultancy and innovation at e-commerce specialist Salmon, looks at how the launch of Amazon Go in Seattle on January 22 could shake up the retail industry and how it might make bricks-and-mortar retailers rethink their approach
Technology continues to change the face of retail and Amazon is a driving force for this change.
What Amazon does so well is harness what customers want (and don’t want) and harness technology to address these friction points. Its dedication to service has revolutionised the digitally driven services landscape in retail.
The launch of Amazon Go, the futuristic convenience store, caters to shoppers’ craving for a friction-free, convenient and seamless experience, and officially takes the once online-only platform further into the high street.
It’s an interesting concept and many have argued that Amazon is looking to partially reverse the increasing consumer trend to shop online.
However, the real aim is to use its customer-centric learnings from its online platform to improve physical shopping.
Online shopping was first to disrupt the retail model, as customers were given the option to purchase goods from the ease of their home. And Amazon Go may well be the next step in this experience.
As to whether it’s good for retail, it might shake up the already declining influence of bricks-and-mortar stores and prompt them into rethinking ways to innovate their store to suit the convenience of the customer.
Amazon’s Go shop, and the most recently popular digital assistants such as Google Home and Amazon Echo, are designed with one thing in mind – to purposely navigate shoppers through certain platforms, cornering the market away from competitors. For example, Amazon’s Echo device directly connects shoppers at home to their vast online marketplace.
These new channels will become less intrusive and present an enormous opportunity for retailers to build a long-standing relationship with the customer. There is clearly an appetite to embrace these sorts of technologies, and only time will tell if Amazon has developed another market-changing concept.
Amazon is the best out there when it comes to re-thinking customer experiences. Unlike most organisations that sit on their data and ignore their friction points, Amazon’s customer, service and margin focus drives it towards streamlining customer experiences – one-click checkout, Prime, Prime Now and voice ordering, to name just a few examples.
The Amazon Go concept is the physical manifestation of this streamlining, which has been its modus operandi for years. Amazon has rightly identified that customers still want to have a physical experience – but they want it to be quick, easy and convenient – just like they want their online experiences to be. Getting rid of the checkout is getting rid of one of the major friction points in physical grocery shopping.
Another example of this is its bookstores; which bring Amazon’s learnings from online – reviews, comments and recommendations – into a physical environment to help shape stock and influence purchase, and it is indeed possible that this will occur in the world of electricals too.
All of these learnings and this approach is not sector specific. We have seen Amazon grow from selling books, to electricals, to almost everything, and have seen it turn itself from a retailer, into a manufacturer and service provider (Amazon Web Services). When it comes to the question therefore of whether Amazon will expand its learnings from its Amazon Go concept into other retail industries, the answer, based on past form, is a resounding yes.
This expansion into new verticals has been called ‘aggressive horizontal expansion’, but could just as easily be called ‘giving the customer what they want, when they want, how they want’, and no one is better at this than Amazon.
So what does the future hold? Amazon has expertly and strategically built a business model across channel and industries, which provides the infrastructure – online shop, delivery capability, hosting etc, that many organisations rely on to operate their ecommerce operations.
So it’s not too big a stretch to imagine that its ultimate aim will be to white label its Amazon Go concept and sell this to retailers.
This will force retailers to use the Amazon infrastructure to survive and to give customers the experience they want, and further cement Amazon as an indispensable element of the retail world.
Alternatively, could we see the big hitters (Tesco, Walmart et al) fight back with a solution of their own? It seems unlikely when so many are only just integrating ‘innovations’ such as self-scan.
Once again, Amazon’s ability to strategically plan for the future, to address friction points, and define consumer expectations will undoubtedly revolutionise grocery, electrical, and the wider retail environment.