Amazon’s Jump Into Brick And Mortar Is A Sign Of What’s Ahead

by Gregg Aamoth . CEO . POPcodes December 31, 2014

Since its launch nearly 20 years ago, Amazon has been viewed as the harbinger of death for brick-and-mortar stores. In fact, in a 1999 Wire Magazine interview, Amazon founder Jeff Bezos boldly said, “Strip malls are history.”

There’s no doubt that Amazon, like many other online retailers, has seen rapid growth over the years. And today the delivery of products purchased online is a convenient necessity for consumers who no longer desire to shop in store.

While famous for his vision of an online marketplace, Bezos is also famously customer-focused. It is his attention to the voice—and wallets—of customers that has enabled the people of California and New York to line up this holiday season to step through the doors of Amazon’s new brick-and-mortar stores.

So what prompted Amazon to finally make the jump into brick and mortar? Amazon is clearly responding to consumer demand for an omnichannel shopping experience.

According to A.T. Kearney, 85 percent of purchases begin online, but nearly all of them–95 percent–end in a store. Amazon’s pop-up stores are surely a sign of things to come as e-retailers diversify and gain more of the marketplace in an increasingly omnichannel retail environment.

Amazon’s willingness to step outside of the virtual marketplace and open a shop clearly illustrates that the in-store experience is something that cannot be replicated online. The battle for consumers’ wallets between offline and online shopping channels is often viewed as a winner-take-all affair. Savvy retailers, however, understand that the ideal relationship between online and offline is not competition, but rather collaboration–and Amazon is learning some valuable truths:

The Physical Store Will Never Die
Consumers still, and always will, want a shopping experience where they directly interact with people they trust. They also want to touch and test products before they purchase–particularly when it comes to fashion, high-tech, or big ticket items.

Although online shopping has changed consumers’ expectations of what it means to shop, research continues to show that consumers still love the confidence, convenience, and customer service that comes with buying items in person. For retailers, giving customers the in-store pickup option drives foot traffic to stores and gives them an opportunity to build better relationships with consumers and encourage incremental purchases.

Instant Gratification Is A Priority
Recently, Amazon has been experimenting with several new same-day delivery models. I, for one, am anxiously awaiting the day when an Amazon drone drops a package at my doorstep. So what does Amazon’s brick-and-mortar store tell us about the future of fulfillment?

Brick-and-mortar stores are essentially becoming omnichannel fulfillment centers. More than ever before, retailers and consumers alike are embracing options like buy online, pick up in store. Opening physical stores will allow e-retailers to service same day delivery at a low cost, as well as offer click-and-collect options that make in-store pickup an easier process.

Customer Loyalty Is Best Garnered In Store
Retailers that are most successful in building loyalty create strong emotional connections with consumers through brand messages and experiences. Engagement is key when it comes to building brand loyalty. Intimacy, inclusivity, and trust all beget customer loyalty and are achieved when customers can connect with a real person. A delivery driver is a poor substitute for a well-trained sales associate.  

Amazon’s expansion into brick and mortar is a sign that even in an increasingly mobile world, the virtues of physical retail will not be forgotten. The integration of online and offline channels is the only way for retailers to provide a truly fulfilling customer experience–and ensure long-term profitability. The advent of Amazon’s physical stores may indeed be a telling sign of what’s to come for retail.

Gregg Aamoth is the co-founder and CEO of POPcodes, a cloud-based retail redemption solution that bridges the gap between the virtual and physical shopping experience. Prior to launching POPcodes, he spent more than 20 years in retail and financial systems leadership, including 10 years as vice president of customer marketing systems and privacy officer for Macy’s.