Macro Trends on the Shelf and on the Web: One Seamless Experience

Amazon Reported to Open Retail Store
As traditional brick and mortars move resources and capital into the profitable world of online commerce, Amazon, the world’s largest online retailer, is reportedly launching a physical store front in its hometown of Seattle, Washington. This isn’t exactly a paradigm shift in how Amazon operates its 61 billion dollar a year business, but rather an extension of Amazon’s founder and CEO Jeff Bezos’s philosophy to err on the side of action. The idea of action without regret has lead Amazon into industries including tablets, streaming media and book publishing and also to some notable failures such as Amazon Auction, which couldn’t compete against its market rival eBay.

With its aggressive price check app, low cost of operation and penchant for finding new ways to “charge less,” Amazon uses its business model as leverage against the big box stores. This strategy has been so effective at rupturing in-store sales that competitors are now offering price matches on identical merchandise and refusing to stock the Amazon Kindle. Some retail analysts speculate that Amazon’s move to open its first physical store is premised on the belief that having a brick and mortar presence drives online sales and offers a venue to showroom inventory. Cowen & Co. Analyst Jim Friedland states, “The primary goal of the test is to determine if a physical retail presence can accelerate sales of Kindle devices and follow-on consumption of digital content at an attractive return on invested capital.” The irony literally stings. While the big box retailers are clamoring for their share of the online sales, Amazon is toying with the idea of expanding into traditional retail. This is one of many reversals in which traditional retail and online commerce are virtually intertwined.

Checkout Lines Going Mobile
Mobile checkouts are yet another push to add elements of eCommerce to brick and mortar stores. The not-so-farfetched idea that traditional checkouts will be usurped by mobile apps is already happening as companies like JC Penney replace checkout lines with merchandise tracking systems. JC Penney will offer mobile checkout in all 1,100 of its stores by the end of 2013 and is adding roaming salesmen equipped with iPod Touches and self-checkouts. JC Penney’s CEO Ron Johnson, who at one time was Vice President of Retail Operations at Apple, envisions a cash-register free store that will cut half a billion in annual spending. Many brick and mortars such as Nordstrom and Sam’s Club already use mobile checkouts for exactly that reason and believe their point-of-sale systems will be primarily mobile in the upcoming years.


Source: NPD Display Search Quarterly Mobile PC Shipment and Forecast Report

The move to mobile is made possible by the sheer number of mobile device owners and the numbers are hard to ignore. For the firsttime ever, tablet shipments are projected to beat notebook shipments by 37 million units. In 2011, smartphone sales increased 62.7%, outselling traditional PCs by 73 million units. With many users making the switch to mobile devices, retailers are looking for ways to make their point-of-sale systems mobile.

Mobile technology gives users access to the zero moment of truth at any given moment in time, whether at home, in a car or out shopping. Today’s smartphone users are more apt to drive local and service industries since smartphones are often used for product research, consumer reviews and coupons. Companies like Groupon are structured around the idea that smartphones have a geographical relevance that encourages local spending. Over 88% of American adults own mobile phones, which means your average consumer has the power of price comparison, mobile checkout and couponing in their jean pocket. The in-store experience is now an event where shoppers ping back and forth between in-store and online media to get the best deals, read consumer reviews and even purchase goods. As mobile technology leaves its digital footprint on the big boxes, it’s hard to ignore the collusion between online and in-store sales.

Walmart’s Lockers and Crowd-Sourcing
Following in Amazon’s footsteps, Walmart is adding lockers to a dozen stores for a no-fee pick-up option. Customers who choose this option, can visit one of the select stores and retrieve their online purchase with a combination code. Neil Ashe, Chief Executive of Walmart Global eCommerce says, “We’ve dramatically accelerated customer acquisition online.” Walmart is also considering the possibility of fulfilling orders with “crowd-sourcing” also known as “shared-economy.” This type of fulfillment is premised on the idea that Walmart will pay a customer to deliver online orders based on their geographic location. By adding elements of eCommerce in its traditional retail stores, Walmart is poised to gain ground in the world of eCommerce and compete with Amazon for online sales.

What all this Means?
We’re looking at a new way of doing business where eCommerce and traditional retail are so interwoven they’ve become one seamless experience. The zero moment of truth is entirely ubiquitous as mobile devices take ground on traditional PCs and while brick and mortars find new ways to deliver an online experience in-store, huge online startups like Amazon are thinking about physical stores. The lines once drawn between traditional retail and eCommerce are rapidly vanishing. Now more than ever, you need to think about your online channel and how it influences every aspect of your business, on the shelf or on the web.

As always, we welcome your input and look forward to the conversation; click here to leave a comment. For an overview on the purpose of this blog, take a look at the initial post here.

This article was written by:
Kyle Roble, Senior Content Writer


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