Amazon Blurs Lines Between Ecommerce & Brick and Mortar

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From Click to Brick: Did you do a double-take when it was announced yesterday that Amazon opened its first brick-and-mortar store at Purdue University? Amazon@Purdue, the company’s first pickup and drop-off location, offers free one-day shipping for textbooks and other products.

Last October, there were also rumors swirling that Amazon planned on opening a pop-up store to showcase new products in the heart of downtown San Francisco in time for the holidays.

Bobos, Birchbox and Warby Parker are other online retail giants who have recently opened physical stores. Clearly, there is a trend among online retailers to add physical presence, as shown by these companies.

Boosting Brand Loyalty:
Despite the popularity of online shopping, 90% of shoppers surveyed would prefer to buy in a brick-and-mortar store and have a tangible experience (A.T. Kearney Omnichannel Shopping Preferences Study). Also 94% of total retail sales are still generated at brick-and-mortar stores (eMarketer).

Today’s consumers are multi-dimensional, embrace the online and offline worlds and typically require multiple interactions to develop brand loyalty. Priding itself on competitive pricing and fast shipping, Amazon’s brick and mortar experiment could make for an effective in-store experience. One could argue that breaking into brick and mortar could generate more buzz for Amazon, feed into a well integrated marketing strategy, and create more points of contact with their customers.

Amazon could also benefit from showrooming (examining merchandise in a traditional brick and mortar retail store and then buying it online). Its new brick and mortar location may be the answer for consumers looking to try out the product or return the product to the store.

Generating More Reviews:
Research cites a Pew study showing 24% of shoppers look up online reviews of products while actually in stores conducted in 2011; since then, smartphone usage has only increased (Pew).

According to a Stanford University data study on ‘Understanding Rating Dimensions with Review Text’, Amazon had 35 million reviews as of March 2013. With a wealth of customer reviews, Amazon can leverage this valuable user generated content to engage with consumers in a more intimate fashion and collect even more valuable feedback.

Matt Moog, CEO of PowerReviews, says “Amazon has ample opportunities to show shoppers what other customers are saying about each product in real-time. There’s beacon technology, there’s near-field communication ‘tapping’ like you see with Google Wallet. There are QR codes, digital signage, iPhones. Amazon has this incredible flow of user-generated content.”

Whether Amazon becomes a brick and mortar expert before traditional retailers nail their digital strategies, reviews are the glue in binding an authentic, customer centric company to increase traffic and drive sales.

The New Retail Experience:
While moving into the brick and mortar world is not a sure bet for Amazon, the impact of this move is being felt throughout the e-commerce world. Online and offline retailers will feel the pressure to reinvent themselves through multiple strategies ranging from differentiated products to alternative distribution methods. With raised stakes for retailers everywhere, let the games begin!