The quasi-metaphor, “Nero fiddles while Rome burns,” refers to Amazon fiddling around with test stores while two of their fiercest competitors, Walmart and Target, continue to gain both on the ground and in the digital air, so to speak. And while Amazon has declared the necessity to expand into physical retailing (understanding the omnichannel advantage), and specifically in grocery and apparel, they are moving too slowly in this flywheel-tech era. This is astounding to me given Jeff Bezos’s mantra from day-one that Amazon must “get big fast.” The “build or buy” decision to get big fast seems to have been resolved in favor of building, with the exception of Whole Foods Market which continues to slog along. Getting big fast has certainly not led to the a dominant position in grocery as Bezos also stated Amazon must achieve along with apparel.
Technology is nothing more than a tool. It is the science part of retailing and iterates in incredible ways. However, the iterations are only supportive of the art of retailing, which is driven by the human mind.
With Amazon’s recent decision to close its Books, 4-Star and pop-up stores (68 in all), it’s apparent to me that they just do not understand physical retailing and the most imperative element for its success: engagement with customers during the search part of the journey leading to an uber-compelling reason to take the time to go to the store — and finally the in-store experience including the human interaction with brand ambassadors (the sales staff).
Interestingly, I have given credit to Amazon in past articles with their superior use of analytics and their advantage in curating and assorting stores with products that are preferred by consumers in the local area. However, Amazon’s lack of understanding of the necessity of human engagement throughout the shopping journey — and specifically in store — simply points out that having the right product in the right place, is not enough to win the purchase.
Amazon is left with Amazon Fresh, Whole Foods Market, Amazon Go, Amazon Style stores and the debut later this year of Amazon Fashion in Glendale, CA at the Americana at Brand lifestyle shopping complex, a 30,000 square-foot store featuring men’s and women’s apparel, shoes and accessories.
Build It and They Will Come
It would appear that Amazon is on its strategic path to build dominance in both grocery and apparel categories as Bezos originally envisioned. And full loop, I’m back on the “build or buy” decision. I’m confounded about why better minds in that behemoth, valued at over a trillion dollars, do not realize their lack of physical retailing skills. Acquiring (literally) those skills (which I advised in several articles) https://www.therobinreport.com/is-amazon-a-kohls-suitor/ would be a no-brainer. They would immediately gain professional physical retail skills, and importantly thousands of physical stores that function as both shopping and distribution locations. This is a smart shortcut as opposed to spending billions of dollars and years of building thousands of locations.
Michael Pachter, an analyst at Wedbush Securities, said “Retail is hard, and Amazon is discovering that,” and he indicated that Amazon’s strengths lie elsewhere. No kidding. I would say that is a huge understatement. And again, I ask why Amazon didn’t recognize this early in the testing of all those stores. As would be expected, I believe most of their testing had to do with tech solutions like cashierless stores (just walk out) and digital dressing rooms in the Amazon Style stores, along with other in-store, tech-driven connections with shoppers. So, yeah! Amazon equals technology, their core strength. However, many of these solutions replace the human touch and social interaction as a major part of the experience consumers want.
Jeff Bezos’ Big Miss
Don’t get me wrong. Jeff Bezos is a genius (of eccentric sorts), imagining and creating the historical equivalent of the iPhone, both disrupting and transforming entire industries.
And the book Amazon Unbound, by Brad Stone, made it clear that Bezos has been obsessed with exceeding consumers’ expectations. Stone indicated that Bezos’s personal obsession was the primary reason for Amazon’s enormous success. However, the big miss was his lack of understanding that what delights consumers online is different than what compels and delights them in the pre-shopping journey and finally in store.
The DNA of Amazon is convenience, value and speed. Brilliant! And no competitor has yet to come close to Amazon’s execution of those three operating pillars, which truly delight consumers. Enough so that Amazon’s growth is unparalleled in the ecommerce space.
However, the same loyal Amazon online customer also shops in the physical world. And to spend the time traveling to the store, there must be a compelling reason and a product alone is not enough. There has to be the promise of a socially interactive, delightful and browsing experience. Perhaps a “compelling in-store experience” should be the fourth pillar for their Amazon’s offline DNA.
Technology is nothing more than a tool. Yes, an awesome one. It is the science part of retailing and iterates in incredible ways. However, the iterations are only supportive of the art of retailing, which is driven by the human mind.