We all know Amazon as the behemoth online retailer credited (or accused) as being behind the declining state of actual stores is opening an actual store. Well, sort of.
CNN Money reports that Amazon has opened a pickup and drop-off location on the Purdue campus, with plans to open a second location on campus as well as more at other universities.
It’s not quite a traditional brick-and-mortar store, no more so than the existing Amazon Lockers set up in actual stores and other business locations to facilitate customer self-service and convenience. You order merchandise online, which can be anything from textbooks to boxes of mac and cheese, and pick up (or return) said items to what is essentially a distribution depot.
It provides cost-effective convenience for students, with one-day free shipping they would otherwise have to either pay an annual fee or place a minimum $35 order to obtain (and even then that only guarantees two-day shipping). At the same time, Amazon further consolidates and streamlines a delivery system to be even more cost-efficient.
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Stores or Storage?
Arguably, Amazon’s success has less to do with its retailing savvy (considerable as it is) than its distribution strategies. Last year, there was a lot of conjecture that Amazon would open a retail store in Manhattan down the street from Macy’s in time for the 2014 Christmas shopping season; Quartz notes that Amazon was simply leasing corporate office space.
Currently, Bloomberg reports rumors Amazon is interested in purchasing certain RadioShack stores now in bankruptcy as a possible foray into actual physical retailing, though they could just as easily be intended as freestanding Amazon Locker locations.
Why Would Amazon Want to Open an Actual Storefront?
In some respects, Amazon is an Apple-wannabe. It has its own line of tablets and smartphones, and delivers content to those devices. But there is no Kindle store akin to an Apple store where customers can actually put their hands on the products, pose questions to actual humans, get useful answers and hands-on, technical assistance. As New York magazine observes, Apple stores are the most profitable retail operations worldwide. In the first nine months of 2014, revenue per Apple store was about $39 million.
Amazon’s problem is that its devices aren’t nearly as popular as Apple’s. Physical store outlets might help improve the “also ran status” for these devices. Then again, that strategy didn’t help Barnes and Noble and its Nook e-readers.
According to GeekWire, Nook sales declined more than 55 percent during the last Christmas shopping season. However, the Nook’s considerable problems probably have less to do with in-store retailing than with insufficient technology and overall marketing implementation.
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What Amazon’s Plans Mean for Your Business
How any of this affects SMBs depends to a large extent to what degree they actually compete with Amazon. Physical stores do certain things better than online retailers. For example, independent bookstores, the very market Amazon first took aim at, are making a comeback in part because they offer an intimate experience you just don’t get online, The Washington Post reports. Call it the humanizing factor. Forbes cites an A.T. Kearney Omnichannel Shopping Preferences study that says a whopping 90 percent of shoppers surveyed prefer to buy in a brick-and-mortar store.
The message here is that it really isn’t an either/or situation. Today, an online presence is absolutely vital. Nobody is going to beat Amazon at its own game. Similarly, Amazon would have to play a considerable game of catch-up to play a significant role as a physical store. Sure, they could manage the costs of inventory and supply better than most anyone. But could they provide the same customer experience in the real world as they do in the virtual world. Particularly in a world where they have almost no experience?
Entrepreneurs take note. The next big thing in retailing may not be the latest technology. It might just be customer hand-holding the old-fashioned way.