Amazon’s ‘400’ Brick-And-Mortar Bookstores — Or Could It Be Four? — Reflects All Retailers’ Omnichannel Ambitions
Though its massive physical rollout is pretty much debunked by now, the e-tailer's move from clicks-to-bricks is assured.
Note: In light of further news reports, we’ve updated this post from its original version.
Speculation abounded about the veracity of the claims of the mall CEO who let slip that Amazon planned to open up to 400 physical bookstores during a Tuesday quarterly analysts earnings call, but Amazon’s year-old brick-and-mortar moves suggests that this is a natural progression.
On Wednesday, mall operator General Growth Properties issued a terse press release stating that CEO Sandeep Mathrani, who was reported by the WSJ as having said that Amazon was planning to rollout 300-to-400 physical bookstores during his company’s Tuesday afternoon earnings call with analysts, had recanted that revelation.
No matter, ReCode’s Jason Del Rey has outlined Amazon’s plans as more deliberative and cautious — but no less revelatory — than Mathrani had led people to believe. It’s still not clear what number of buildings will be branded as “Amazon Books,” the company’s plan is the clearest vision for what a synthesis of online/offline retail can be.
Amazon’s New Model Store
“One of the experiences discussed in the application would allow customers to pick an item from a shelf and automatically be charged for it upon exiting the store without stopping to pay at a checkout counter or kiosk,” Del Rey writes, citing a March 2015 ReCode report about Amazon’s patent application for its new model store.
At a time when e-tail stars like Warby Parker, Bonobos, Birchbox, on up to Google are tapping into the tactile value of the in-store experience driven by the data from their respective e-commerce core businesses, it would appear that the likes of Amazon will reshape the traditional retail blueprint.
‘In Amazon We Trust’
Aside from current trends of online-only retailers going from clicks-to- bricks in order to capture the more than 90 percent of shopping that goes on in physical stores, studies have shown that consumers have far greater trust in Amazon’s ability to cater to them personally and to understand their needs than they do in traditional retailers, says Hilmi Ozguc, CEO of beacon platform Swirl Networks.
“Our research shows that Amazon is the clear leader in understanding shoppers’ preferences and delivering highly-personalized experiences – 56 percent of consumers say that Amazon demonstrates an understanding of their individual preferences and needs on a regular basis, while only 25 percent say that traditional retailers understand their preferences and needs,” Ozguc told GeoMarketing.
After years of Amazon’s dominance of e-commerce, it seeks to build on its burgeoning retail strength, as Investors Business Daily reported the company captured more than 51 percent of all retail sales gains during Q4. As such, it looks like Amazon could influence the direction of omnichannel marketing, which has largely been driven by legacy brick-and-mortar businesses like Macy’s and Target. After all, as traditional retailers seek to integrate their online and offline businesses and provide a personalized in-store experience, something Amazon has surely influenced.
Rumors, But Not Plans
After years of being held responsible by many for almost single-handedly leading to the decline of the physical bookstore, Amazon opened its first physical bookstore in Seattle last November. Amazon Books, as the store was plainly dubbed, was heralded by CEO and founder Jeff Bezos as an integration of “the benefits of online and offline shopping.”
The store carries a variety of products, mainly books, that are also available on Amazon.com, all priced exactly the same, and a heavy integration between site and store. Customers can try stuff out in-store and order online, or browse online and pick up in-store. The goal is a seamless unification of Amazon’s online presence and the physical world.
At the time, Amazon didn’t lay out any clear plans for the future of Amazon Books, aside from a cryptic statement that “[this] is literally Day One for Amazon Books.” Now it seems that that was just a test run for a much larger initiative — if the initial reports turn out to be correct.
The origin of the rumor, which is spread like wildfire, much to Amazon’s dismay, began with General Growth Properties CEO Sandeep Mathrani casually mentioning the ecommerce giant’s plans to open more stores in an earnings call, which was immediately picked up by the Wall Street Journal, New York Times, and countless others.
“You’ve got Amazon opening brick-and-mortar bookstores and their goal is to open, as I understand, 300 to 400,” Mathrani said.
Matt Novak of Gizmodo writes that some anonymous Amazon sources have gotten quite flustered about the whole thing, but have repeatedly refused to publicly deny the claims. (They became even more flustered after he reported their refusal to deny.)
A New Era Of Bookstore
More than 1,000 bookstores have closed between 2000 and 2007, and sales have continued to dwindle, albeit slowly, over the past few years. Amazon already controls a huge portion of the book market, over 60 percent of all new online book sales and captured 51 percent of all U.S. retail growth last quarter. For perspective, if Amazon does open between 300 and 400 physical stores, that would put them among the largest physical bookstores in the country, with more locations than Books-a-Million (255) and only a few hundred shy of the largest, Barnes & Noble (640).
“Traditional retailers have failed to bridge the physical and digital worlds – and that’s impacting both loyalty and sales,” Ozguc told GeoMarketing. “Today’s consumers live in an “always-connected” world and expect no boundaries between the online, in-store and mobile shopping experience. With Amazon now betting they can deliver personalization at the brick and mortar level, traditional retailers must master omnichannel marketing in 2016 or risk losing even more ground.”