We have watched the opening of Amazon's first bricks-n-mortar specialty store with great interest. And here is our conclusion: Brace yourself!
In fact, we anticipate an onslaught of entire shopping centers of Amazon "specialty retail stores". (Zappos Shoe Store, anyone?!) All using the same data-centric efficiencies Amazon is testing at Amazon Books, its just-opened bricks-n-mortar bookstore.
- Whether apparel, electronics, sporting goods, kitchenware, jewelry, hunting gear or whatever: Amazon has incredible customer data.
- Now, imagine a center full of separate Amazon "specialty stores" of categories specifically tailored to that particular market: hunting and fishing gear in some places; hiking and backpacking gear in another market.
Breath taking, isn't it? But that is our prediction: "Earth's Biggest Store" will find you and others who shop like you, (or your customers and others who shop like them) and set up its own specialty shops.
Talk about target marketing!
A Little BackgroundIn early November, in a prominent location – complete with a brick facade – in an upscale shopping center in Seattle, Amazon opened the "real wooden doors" on Amazon Books, its bricks-n-mortar bookstore.
Hmm. Actually, Amazon Books has far more in common with Amazon.com than with bricks-n-mortar bookstores.
- First, it is VERY data-centric. The books they carry, Amazon says, "are selected based on Amazon.com customer ratings, pre-orders, sales, popularity on Goodreads, and our curators' assessments." And it's hyper-local; it represents the tastes and preferences of the readers in that local market.
- Second, they have inoculated themselves from price competition from "the web": all prices in the store are the same as on Amazon.com.
- Third, they are constantly gathering customer data. No prices are displayed at Amazon Books. Want to know the price? Just scan the barcode below each book. Be sure to do so with your Amazon app; for convenience, you know.
- And, it's true; they do not take cash! Yet another typical cost they have eliminated.
In our view, what they have opened is a new kind of category killer, but in a very small footprint.
- They are using their vast storehouse of data to offer only the best turning inventory, to a targeted, localized market.
- And, they have the pricing advantages that come from size. They are "earth's biggest bookstore", after all.
- Their pricing is dynamic; e.g., $16.25 today, $17.85 tomorrow. What will it be next week? That's the marketplace dynamics in action.
- Their pricing also could be targeted to the particular shopper as well, based on that person's history with Amazon. Remember, the only way to get price info is by scanning with your Amazon app. ("Don't have one? We can set that up for you right now!")
- And, it certainly continues Amazon's relentless pursuit to turn "the art of retailing into the science of retailing." No more need for judgment calls from the high-salary buyer; just follow the data! (The data isn't temperamental the way some buyers can be, either!)
Coming Soon to a Neighborhood Near You?The issue is this: with its vast 20+ years of customer data, Amazon is showing its ability to again reinvent retailing.
We believe they are poised to roll out collections of Amazon Specialty Shops. Each shop is targeted to that particular market, as is the mix of shops in a given center.
All, of course, would be highly data-driven, and able to exploit the same cost efficiencies that Amazon is testing at Amazon Books.