Amazon Go is both a data mine and a tech testing laboratory

Amazon recently opened a brick-and-mortar grocery store, Amazon Go, that “has no checkouts and instead works by tracking what users buy with AI-powered cameras.” Why would they make this move to brick-and-mortar? I can see four reasons.

  1. As of September 5, 2017, Amazon “controls 460 Whole Foods locations across the U.S.” which means that Amazon Go would make sense simply as a retail experiment to increase efficiency. E-commerce is growing rapidly, but a huge percentage of retail sales (around 90% in the US) still happen in the “real world.”
  2. Also, as Juan suggested in our February 19 PUB 802 class, it could be that Amazon is trying to change our idea of what shopping is. After getting used to shopping in a store without queues, maybe we’ll find it even more unbearable to wait in line for our groceries. Amazon could be trying to tip our preferences toward shopping online even more than we already do. Along that line of thinking, Amazon Go is a way for them to collect data on the physical shopping experience; data they would otherwise have to pry from their competitors’ cold, dead hands.
  3. In fact, collecting data is a good enough reason in itself for the move to brick-and-mortar. Data has been called “the oil of the digital era.” Why would an online marketplace care about data from physical marketplaces? Companies need accurate, up-to-date data from all areas of consumer behaviour in order to predict trends and preferences. If you’re selling shoes, you need to know more about the consumer than their current shoe preferences; you need to know who they are, what they will like in six months, and why. I can’t begin to tell you exactly what data they are collecting, but I think Amazon Go is a great example of what Evgeny Morozov calls “data extractivism.” Morozov quotes Andrew Ng saying that “at large [tech] companies, we often launch products not for the revenue but for the data … and we monetise the data through a different product.” Whatever the data is, I think Amazon Go is less of a store than a product; and it’s of a new class of product designed not to collect revenue, but data.
  4. Perhaps most importantly, though, all that data about consumer behaviour and preferences needs to be monetized, often using AI. That AI needs to be tested on a large scale, in a realistic setting, and Amazon Go is the company’s live tech laboratory. Take Amazon’s Echo Look as an example. While most people still prefer to buy clothes in person, Echo Look will, as Juan predicted, teach them to buy online. It takes a picture of you, analyzes it, and makes recommendations; and “it’s always learning.” Amazon Go will always be learning, as well; it’s the perfect lab for Amazon to test new technologies in “computer vision and machine learning.” Vice President Gianna Puerini says, “This technology didn’t exist [before Amazon Go]. It was really advancing the state of the art of computer vision and machine learning.” Amazon Go allows Amazon to test and develop their computer vision and AI technology at a much larger and faster scale. (Especially considering that consumers will take time to adapt to letting a cloud-enabled camera watch us change—although less time than we would have taken in the past). 

Conclusion: An example of evolution

I think Amazon’s main reasons for opening a brick-and-mortar grocery store are to collect and monetize data, and to test new technologies. The move into brick-and-mortar is an evolution of their strategy, not a devolution. It’s a strategy that creates for Amazon an opportunity to access up-to-date real-world data, and to test new AI technology with real consumers. These are exactly the things that a big tech firm that runs on data should be thinking about.

The future is not online or brick and mortar. It’s pop-up.

Brick and mortar stores are the tangible manifestation of what human beings want, need and aspire to. Dramatic? A little bit. But this is the very reason why they have survived despite the expansion of online retail. They offer interactivity and experiences which online stores in a virtual space can only replicate to a limited extent. The simple “Welcome, how’s it going?” of a smiling sales rep in store still trumps the automated message on a screen. To use the example of clothing retail; brick and mortar stores offer the possibility to try the product before purchase, ask any questions before and after sale with a quick in-person response to counter it. There is also the certainty that the quality of whatever you see and try in front of you is the reality of the product. Online retail can be a bargain as what appears on the screen is not a guaranteed replica of what will be delivered to your doorstep. This added level of certainty is one of the reasons why brick and mortar stores are here to stay.  Furthermore, the Millennials and Generation Z who have been experiencing a wave of digital fatigue prize brick and mortar stores over the online retail channels they have grown up with. A form of nostalgic comfort in a way. (This blog is in no way an ode to brick and mortar stores because I recognise that they are  the birther and driver of capitalism as we know it but in their different iterations, they have for the most part prized in-person customer service- something which has worked really well. They falter however in their stagnation. They can be formulaic and for lack of a better word, boring.)

Their online counterparts

Online retail sites such as Amazon and eBay have been widely successful in being one-stop shops for buyers on the go. They have offered variety in price especially through their promotion of used goods.  They have, in the case of Amazon at least, still sought out brick and mortar expansion. (Amazon is considering expanding its Amazon Go stores to at least six by the end of 2018). The reason being that brick and mortar stores garner foot traffic and an in-person visibility which can introduce a company to a diversity of customers. Therefore, I believe that the move into brick and mortar is an evolution for them- offering them the chance to be tangible, to increase their brand personality and show more of their corporate culture which for the most part has been veiled behind screens.

The George Orwell 1984-like design of the Amazon Go store with all the surveillance cameras however, needs to be improved by creating a more personable environment  through the addition of human customer reps for example. Making their physical store a direct replica of the online space is faulty- I said it before and I will say it again human interactivity is key. Which leads me to the question of the future. I shall sound like a utopian and say that the best option going forward is to have a balanced combination of the two (online and brick-mortar) and I see this balance through pop up stores. People want the fast, innovative, directness of online retail with the in-person, nostalgic comfort of brick and mortar stores. Pop up stores provide both at a lower cost to the companies setting them up. Pop up stores have an expiry date meaning that if the venture does not work out the company can close shop without taking a blindingly altering financial hit. Their short time span also means that they are hubs for innovation and each new pop up store can be an iteration and improvement of the one that preceded it. They are a hub for experimentation and allow for people to get an in-person taste without becoming too used to the offerings in a way that makes them static. Large companies such as Kylie Cosmetics (yes I said it) have used pop up stores to interact with customers beyond the screen but I believe that the model is also suitable for startups looking for visibility and foot traffic in a semi noncommittal way.

Pop up stores might just be the business model of the future.

Outfitting the Fittest: The On- and Offline Consuming Experience is Still Evolving

In the world of retail, things can only be thought of in terms of evolution: survival of the fittest. We cannot think of brick and mortar stores as “behind” or “inferior” (thus, a “devolution”) to e-commerce retail. It’s hard to see how Amazon’s move into the physical retail space can be seen as a step backward: 2017 US Census data showed that 90% of consumer spending still happens in physical retail. Surprisingly (or maybe not, as they never seem to do what’s expected anyway) Millennials in particular have reported preferring brick and mortar retail by 70%.
That said, just because Amazon is doing a thing doesn’t mean surviving as a brick and mortar is for everyone. Despite consumer stats mentioned above, there are a few important factors contributing to the survival or demise of a retailer that has less to do about whether the retailer started on or offline, and much more to do with how they are responding to the changing landscape of corporate structures and consumer habits.

First, a look at the businesses themselves. It’s true that having an online presence became a real and pressing need for legacy retailers (those brands or department stores that originated in brick and mortar) in the last few years to compete with the surge of e-native retailers. However, contrary to the stats above, being a native brick and mortar and simply adding a webstore to the business model is not a ticket to success. Suddenly, a legacy retailer has not just added an online storefront, they also must factor in shipping and distribution on a completely different scale. Many mid-level retailers who attempted to add e-commerce to their existing model folded in the face of competitive e-tailer prices and dealing with losses through shipping and returns. In Canada there have been many significant legacy casualties in recent years, particularly for mid-level brands or specialty department stores: American Apparel, Toys “R” Us, Payless, Radio Shack and Sears Canada to name a few.
On the other hand, brick and mortar locations have a higher customer conversion rate and higher profit margin in regards to returns for customers who enter stores compared to customers who click on items in a webstore; but small-to-mid level e-commerce retailers who decide to enter the real world are having to deal with the same ever-climbing real estate and marketing considerations as everyone else. 
It’s those legacy chains who absorbed digital natives (Wal Mart, Bed Bath & Beyond, and Hudson’s Bay Co. for example) thereby absorbing an e-commerce platform into their corporation, that seem to still be on steady footing.  

The other major factor is consumer buying habits. Increasingly, consumers are putting their disposable income towards experiences, not traditional retail goods like clothes. 50% of Millennial shoppers prefer to spend their money on dining or live events, for example. The flipside is that consumers increasingly demand transparency and fairness in retail pricing. It may have seemed, in the early days of e-commerce, that the best deals could be found online, but this did not necessarily correlate with satisfaction in the product. In this way, tech-based retailers like Amazon have the upper hand: they can apply algorithm pricing to goods sold in-store, which consumers perceive to be more fair.  Amazon is doing this for Whole Foods, who was becoming endangered by bargain chains like Wal Mart offering similar organic products at a lower cost.  

The take away for me is that e-commerce or brick-and-mortar stores do not have an inherent or conclusive advantage over the other. They are two separate experiences that each have their unique pros and cons. Online stores, for example, will always be first for research and comparison shopping as it is fast and easy to compare many similar products from various retailers at once. However, statistics continue to show that consumers value the social interaction, instant gratification (“then and there” purchasing), and tactile product testing the get from real-life stores. The future for retailers who want to compete, then, are business models that use on- and offline experiences that complement each other in the wake of changing consumer demands.

Brick and Marketing Stores

When considering the implications of online retailers moving into traditional market places it is important to make the distinction between small scale businesses like Bonobos and Blue Nile that are discussed in Mark Walsh’s article “The future of e-commerce: bricks and mortar“, and corporate giants like Amazon. The scale between these two groups is not at all comparable so what is motivating them to open brick and mortar locations is logically not the same. For the purposes of this assignment I will be considering why a small online business would move into a traditional marketplace as a form of marketing and brand awareness.

One of the major concerns for any business is how to attract new customers and generally make the public aware of the company. Magazine companies are faced with this issue and an industry strategy is to use the presence of the magazine on the news stand to increase their visibility. Single issue sales typically account for a minimal amount of overall magazine sales so most of these companies are not making a profit off of having their issues available on the news stand. An average return or pulp rate for magazines is about 70% of the print run. Given these rates the profitability of employing a magazine distributor to put the magazine on news stands in major retailers is minimal however the visibility gained is an invaluable form of marketing. A similar business model is likely being applied with small online retailers. By having have physical brick and mortar location the online store is able to gain visibility and attract new customers. Seeing the company’s name when passing the location allows for potential customers to gain awareness of the name and become curious as to what the company is. Rather than getting lost amidst the crowded online retail space these stores are able to be found by customers in a given geographical location.

Etsy is a popular website that allows people to sell handmade goods in a small store within the website. While many stores can find moderate success just through search algorithms most are buried under the thousand of comparable stores. Etsy stores are also moving into physical spaces to gain visibility however these physical spaces are temporary. Craft sales are an event where many handmade good retailers come together to sell products and have existed for decades (not unlike brick and mortar stores), however there has been an increase in etsy stores attending craft sales. These etsy stores are able to sell products at these events however they are temporary markets. The hope of these etsy sellers is that by handing out business cards at these craft sales they will also increase traffic to their online stores.

Overall I don’t believe that online retailers moving into brick and mortar stores is a devolution because they are simply practicing a similar strategy that magazine companies have used for years. The intention behind these physical stores is not to replace their online store but to attract new customers and drive traffic to the website.

Devolving Our Way Into the Future

The only thing I see as “devolving” is the physicality of Amazon’s new grocery store, which I understand is kind of the whole argument, but I think there’s a lot more to a store than simply its tangibility. The model is very different and more advanced than a traditional brick and mortar store. With Amazon’s store, Amazon Go, you are not required to interact with anyone, nor are you required to wait in line: kind of like what we love about Internet shopping. Amazon’s goal is to provide the ideal shopping experience: a goal toward which they are constantly working, so this means that what Amazon has determined (through whatever data mining they’re doing over there) to be the next level of the ideal shopping convenience is a cashierless grocery store. I don’t think it’s far-fetched at all to say that Amazon Go is simply an Internet store in a brick and mortar manifestation. Rather than a devolution, perhaps we can think of it as a “best of both worlds” situation, and at the very least, we as consumers now have even more choice in how we decide to carry out our shopping habits.

While we know that the Amazon Go stores will come fully-equipped with cameras to document our every shopping move, it is not clear what Amazon plans to do with the data they collect. Like I touched on in a previous blog post, people are growing more and more comfortable (or maybe the right word is “submissive”?) to Internet giants gathering and using their data. For this reason I think a Big-Brother-type Amazon store plastered with cameras will not scare the public as much as we think it’s going to. It comes down to a cost–benefit analysis, and I think that the convenience the store promises may just outweigh inconvenience of sharing one’s personal information. By sharing our data we are allowing Amazon to make our shopping process even more personalized and streamlined: something that does not go unvalued by the consumer.

Just because Amazon has opened a grocery store, and just because I predict that it will be successful, doesn’t mean that this model will work in all instances. Groceries are an excellent example of something that is difficult to buy online. No one wants their bananas bumping around in a delivery truck; fresh produce, meat, and baked goods do very well sold in a brick and mortar store, despite the inconvenience of leaving one’s home. Another superiority of brick and mortars is the case of trying on clothes before buying. Currently, we do not have a perfect system in place that allows us to do this with Internet shopping alone (although try-before-you-buy retailing methods are gaining traction these days). In the cases of fresh food and trying things on before committing to a purchase, a brick and mortar store is superior, but it may not be in all cases. A cost–benefit analysis usually winds up with people doing a lot of their shopping from home in the comfort of their pyjamas. This is why Internet shopping became popular in the first place, and I don’t know if people are going to swarm to a brick and mortar store for the streamlined shopping experience alone.

Although we think of an Internet shopping model as being “the future,” that doesn’t mean we have to think that it comes at the expense of brick and mortar stores. They both have their place in the market. We shop online because we like the peace of mind that comes with not leaving the house. We shop in stores because we like our food fresh, and we like to try on clothes before committing. Amazon is doing its part to bridge these two shopping models, but for now they remain separate, and each valuable in their own ways.

From Physical Store to Online to Physical Store

People enjoy shopping online because of the convenience. You can shop from home in your pyjamas with a mug of hot tea in front of you while you have cookies baking in the oven.

People enjoy shopping in person at physical stores because of the convenience. You can flip through a book you want to buy, read a snippet of it, and feel the quality of the paper. You can try on the dress that looked so good on the rack and realize it belongs on the rack, and try on a top you’re not sure about and realize it looks amazing on you.

People are driven by convenience, whatever that means to them. Companies, however, are driven by profit margins and reaching their consumer where their consumer wants to shop. Companies like Amazon realize that their consumers shop online and in physical stores, so they want to reach their consumers in both places.

In November 2015, Amazon opened their first physical bookstore in Seattle and have since opened many more. Amazon has also bought a grocery store chain and opened stores with no checkouts. Every decision Amazon is making seems to be targeted directly at the convenience of their consumer.

The business model of catering to the convenience of the consumer is not just for big businesses, however. I work for a travelling bookstore, which would definitely be considered a small business. The owner of the bookstore (author Pat Flewwelling) opened the bookstore because she had trouble getting her books into traditional bookstores and selling them on the west coast (she lives in Ontario). The idea of the travelling bookstore is that she has no physical storefront in one location, but travels across Canada and sells books at conventions, fairs, festivals, and other events. She carries books from Canadian small publishers and independent authors and offers them the chance to have their books sold all over the country. This is convenient to the suppliers and to the consumers because books from small publishers are now available all over the country instead of just in the province and area where the publisher is located.

The biggest problem we’ve had as a travelling bookstore is the cost to ship books all over the country multiple times a year. Obviously we can’t have our entire stock list at every event (especially now that we’re selling at multiple events on the same weekends throughout the year), so we have to carefully choose which books to sell at which events. In 2018, Pat’s goal is to open an online store so when a customer asks for a book we don’t have with us, we can point to the online store and still potentially make that sale—in other words, for the convenience of our customers.

Eventually, Pat hopes to open a physical storefront. Technically, we are already an in-person shop, but our travelling method is very different from a traditional bricks and mortar store. We’re evolving from travelling to conventions, to an online store, to (hopefully) eventually a static physical storefront. Myth Hawker’s business model started from the need for convenience for small publishers, independent authors, and customers who love small publishers and independent authors, and the business model is growing and adapting to the need for convenience for our customers. While Myth Hawker isn’t growing nearly as fast as Amazon is, we’re still very much operating under the same sort of business model—sell where it is convenient for your customers to shop.

Brick and Order From Online

Brick and mortar stores evolved with the advent of the internet, and now internet business models are moving into brick and mortar stores (like Amazon). Is this an evolution or a devolution? How do you see things developing in the future?

 

Thinking about physical and digital stores as either evolutions of devolutions from each other I think relies on incorrect assumptions and treads into the trap of thinking that technology and society is a constant, linear, forward evolution. Much like how the ebook was not the next evolutionary step of the book to completely replace printing (instead both now coexist), the physical and digital retail exist in different spaces and appeal to different crowds.

Brick and mortar did not evolve with the advent of the internet. Brick and mortars still exist. The digital store evolved out of the internet to run beside the Brick and Mortar.

I think Taylor put it best that the kind of business determines the kind of store best employed unique to each business. 

With that pedantry out of the way, I would answer this question with a big ol’ unmistakably decidedly unquestionably unequivocal: it depends. It depends on the business, on its own mission and its own definitions of growth. It depends on how that business is entering the new market.

For amazon, I would say it’s new store is an evolution on two counts. For its own business model, it is expanding into a new market, it is growing the ways people can shop from amazon as well as what a Prime membership nets you. It is reaching into the physical space to secure more of the overall retail market share. Consider that Amazon’s sole goal is to be the “biggest store in the world.”

As well it is an evolution of physical store spaces in general: this is the first time a physical retail space will be so fully integrated with a digital app, allowing people to just walk in, pick stuff up, and leave, and have their app automatically charge their account.

But it might not always be an evolution to go one way or another. A brick and mortar store might think to evolve into the internet space to tap into another market, but botch it’s online interface so much that it affects the overall brand of the store, causing a possible devolution. Just a thought.

I don’t think the physical store will ever die out. I think, buried somewhere deep in the human psyche, is a persistent and ever-lasting need to experience physical life. Maybe for some that need is gone, but it will forever be somewhere, in some portion of our population, because a human mind is far too complex to have the entire species streamlined into internet shoppers. There will always remain the individual who worships the shelves of a bookstore, or delights in the social interactions of a communal shopping space. Anti-social efficiency won’t take over the population because the population is too variant, and so the physical store will always remain to serve certain psychographics’ needs, and the online store will coexist to serve others.

In reference to our in-class discussion, about how Amazon Go is a long-term investment intended to get people used to the quick, easy, efficient shopping experience to make a regular store like Safeway feel unbearably slow: that will only apply to a certain sector of the population. I will forever maintain that there will be a portion of the population who want, or need, that classic brick and mortar experience of social interaction as part of the shopping process.

Back to Brick and Mortar: An Evolution

Brick and mortar stores evolved with the advent of the internet, and now internet business models are moving into brick and mortar stores (like Amazon). Is this an evolution or a devolution? How do you see things developing in the future?

I would say that Internet business models moving into brick and mortar spaces is an evolution, as it is the next logical step in expansion, branding, creating awareness, building customer loyalty, and changing the retail experience for customers.

By definition, devolution is a “descent or degeneration into a lower or worse state.” I would disagree that one business model (the Internet business model), is better than the other (the traditional brick and mortar model)—they both have their strengths and weaknesses. Online companies are not tossing their Internet business models in favour of traditional business models because the Internet model was no longer working; rather they are finding new ways to utilize brick and mortar locations to their advantage.

The Internet business models, which revolutionized business and the retail experience, are also revolutionizing the brick and mortar experience. While there are examples of stores that started online and then opened a traditional brick and mortar location, this is not common. And as Walsh wrote in The Gaurdian, these are usually specialty stores or clothing stores (like Casper and Birchbark). But the companies that we really want to pay attention to during this transitional time are the large, leading companies (like Amazon, which the question references), and others, like some of the big banks, who are approaching the brick and mortar expansion with intense innovation. They are finding new, streamlined ways of doing business: they are evolving.

In the case of Amazon, I agree with the points raised in class that a brick and mortar location is not the end goal—it is a means to an end. The cashierless, camera-filled stores will help the Amazon dive even deeper into the data of how people shop while at the same time training people to expect a streamlined shopping process. By getting to know us intimately (and then using that knowledge to cater to our needs) and building up our dependence on them, Amazon is ensuring that our relationship is strong so that we buy everything from them (eventually online, because that is even more streamlined than going to a store). Take the example of when a CNBC tech correspondent accidentally shoplifted a yogurt from the Amazon store. She tweeted about it, and Amazon responded telling her to keep the yogurt. The customer is happy, and Amazon carried on unconcerned about shoplifters because 1) their technology is so advanced the scenario occurring regularly is highly unlikely, and 2) once people are converted online shoppers, shoplifting will become even more impossible than it already is in their stores. I foresee other grocery stores and retailers trying to emulate Amazon’s model, but if they don’t move quickly Amazon will continue to eat up their market share.

Pivoting, I’d also like to touch on another model of brick and mortar stores that have come out of online models: pop-up banking branches. As people increasingly do their banking online and some banks exist only online, there is less need for brick and mortar locations. But occasionally, a physical location is important for improving customer service and increasing visibility. Pop-up branches, which DiGiovanni writes in the linked article, are cost-efficient and affordable.

“But what if you could just drop a portable branch off in high-traffic, populated areas whenever needed? Imagine locals buzzing about your branch, and offering suggestions on where it should be located next? Or if you could put your branch where it was needed most after a natural disaster?”

Her article touches on how customers want convenience, and how this is a great way to be where your customers are rather than having them come to you. Other service providers should be watching the banks carefully to see how this new model unfolds as it has the potential to work in many other sectors as well (such as retail and food, which have experimented with similar models but not to this extent).

But Amazon Makes Most of it Arbitrary Anyway

Looking at the interchange of online and brick and mortar businesses as an evolution or a devolution of the market as a whole is a vast oversimplification.

I think the first error is assuming the Amazon is the appropriate trendsetter for small businesses to be watching. The amount of power Amazon has over consumer behavior alone sets them outside the normal realm of expectations for business operations.  They’re an outlier. This Guardian article does outline some other businesses that are migrating to brick and mortar successfully, but the author based much of the ethos of his article on the notoriety of Amazon. Also of note: the article is two years old (that’s, like, eight years in business cycles).

I’m not saying there isn’t a general trend, because of course there is. People rushed to the dot com and then the dot com busted. But the bubble burst back in 2001 — this isn’t a new phenomenon. Since then,  the market has restabilized itself and allowed for re-entry to the online market. But no one is going to thrive well in the online market unless the online market is right for their business.

It all comes down to the little details. This question cannot be answered on a global scale; it must be answered on a local scale — urban versus rural, Canada versus Indonesia, English versus French, wealth versus poverty, book selling versus pastry selling  versus computer part selling. Having a brick and mortar store is going to be a lot more important for a bakery in small town Georgia than it is for BarkBox, which makes its money from delivering to vast quantities of people over a large region.

This debate also harkens back to conversations people in the magazine industry have about going online or staying in print. The phrase “go online” is now mostly redundant; most every magazine has an online component, though they may not have a print one — the opposite of how it was a few decades ago. But some magazines (like Geist) function best in print, and some (like Daily Hive) are best fit for online. Neither one is an evolution or devolution of the other; the two markets can coexist, and its unlikely that either will die out altogether.

To tie this all back to the publishing industry, I think that book stores are at less risk than maybe any other market of losing online marketspace — Amazon has made sure of that. Regardless of their growing fleet of brick and mortar stores, accessible only to those who live in coastal urban population hubs, Amazon has carved out an unpenetrable niche in the online book market and continues to cannibalize brick and mortar book sales. It’s not a matter of booksellers having to figure out whether online or brick and mortar is the better option — it’s whether either is sustainable at all. Amazon’s sales strategies aren’t realistically replicable for most businesses. You don’t watch what they’re doing so you can do it too; you watch what they’re doing so you know how screwed you’re going to be down the road.

Brick and mortar stores evolved with the advent of the internet, and now internet business models are moving into brick and mortar stores (like Amazon). Is this an evolution or a devolution? How do you see things developing in the future?

Internet has changed the whole game of business in every industries imaginable. What was once a store that we can walk in is now a store that we can click. Or the combination of both. E-commerce and click and mortar businesses have been popping out like an epidemic, changing the course on how customers spend their money. And where.

Opening up an e-commerce store is as easy as searching an article about Trump. It is a game changer; lower cost, diminish the boundaries of time and location, better information and communication, better reach to the targeted market, better customer service, you name it. Cost, among other advantages, is definitely the number one factor why people are running towards e-commerce and/ expand their brick and mortar business to a click and mortar one. Then Amazon Go happens.

As Wikipedia refers, Amazon Go is a grocery store operated by the online retailer Amazon, with currently one location in Seattle, Washington. It is partially-automated, with customers able to purchase products without using a cashier or checkout station. Which could only mean one thing : no line. A dream for every shopper. It is not only that the e-commerce giant is now touching base with the click and mortar idea, they make it so shopisticated it makes every retailers in the world go berserk. VP of Amazon Go, Gianna Puerini, said how easy it is to shop there. Just sign in with the Amazon Go app when you enter the store and shop as you normally would. The app keeps track of what you pick up and put back on the shelves, and charges you for your final items when you leave through sensing gates. Although some errors did happen, like a “stolen” yogurt which happened couple weeks ago.

Now coming back to the question : why? Why would Amazon open a physical store? I could only think of several obvious reasons :

1. To promote their kindle. It is the only way to showcase their gadget, live, where people could touch and feel their product. To try and learn how to use it before they buy it. And of course, to capture new customers who maybe never thought on buying one until they came to the store.

2. Prime, upgraded. Amazon Prime is their biggest revenue stream, but in their mind : what if we can capture the same market, the same revenue, but with less work? The answer is : make the customers buy the products online and pick them up  by themselves at the store.

3. To try the game of impulse buying. They will never know that their regular customer who always buys toilet paper online might want to try buying them in stores and ended up buying bunch of other stuffs too.

4. To capture loyalty of existing customer, especially Prime Students with their Amazon Books store.

5. To create brand awareness, positioning, buzz. You all know how online community reacted on their ridiculous long line at their Seattle’s store. Which is kind of ironic, because the main purpose of the store is to have no line. But hey, it gets the community excited. So it works.

As you can see, all five of them fall into one umbrella : marketing. Which of course will derive sales, but that’s not the point here. It is neither evolution or devolution. It’s just another innovation for marketing. Which I can say has happened for quite some time. The most popular one is pop-up shop. One example being Kylie Jenner’s 400-million dollars cosmetics empire which exists only on the internet. Yeah, they have opened pop-up shop just in time before their newest launch. What for? Marketing. Do you ever heard of Gymshark? The UK based athleisure company which call their brand ambassadors “athletes” did a pop-up shop in LA, selling  exclusively products that had not been released on their e-commerce store. What for? Marketing.

See? Buzzwords. Product awareness. Launch awareness. Trend.

This is not a new thing, yet it is spreading. Who knows what future may have in store for us (pun intended). Maybe Bezos finally grows out a single thin hair because he has been thinking hard of what other markets to capture and how to reach them. Or should we help him?