Amazon opened its first brick and mortar location yesterday, an unimpressive shop in an outdoor mall in Seattle. As with most of what Amazon does these day, this move has nothing to do with selling books and everything to do with data.
Under the radar. Amazon’s bookstore launched with little fanfare. In fact, it would have been a complete surprise if the book site Shelf Awareness hadn’t sussed out what was going in to the vacant corner lot in Seattle’s University Village, a shopping center across the street from the University of Washington campus.
Though there were reports of hefty crowds earlier in the day, by the time I got there in the early afternoon, there were about ten people waiting outside and it took less than a minute to get in. Despite the line outside and the cozy footprint of the store, it felt busy but not crowded on opening day.
So far, the store has attracted a lot of media commentary and attention, most of it of the headscratching "why bother" variety.
Not the experience you were looking for. If Amazon is making a brand statement with its store design, it is a very modest one. Unlike the grandiose retail book palaces that Barnes and
The store sells mostly books, with some magazines and a central aisle of electronics, including its Kindle, Kindle Fire and FireTV products as well as a few accessories like headphones, and the selection is disappointing considering Amazon’s reputation as the “everything store.” One associate I spoke with explained the inventory was “highly curated,” consisting exclusively of titles that earned 4 or more stars from the website’s rating and review system.
A local independent bookseller said she believed, based on photos of the inventory, that most of what was on the shelves on opening day was excess stock, and characterized the assortment as “very strange.” Clearly, for Seattle-area bibliophiles, there seems to be no reason to make a special trip, or even to prefer Amazon’s modest mall front to the massive University Bookstore just up the road.
So what’s going on? Why bother opening a retail location at all if you are going to do such a lackluster job of it?
It’s all about the data. Under the hood, the Amazon store has a few unusual features. Every book has a shelf tag that includes a capsule review from the website, a star rating, and a barcode. There are no prices listed.
To get the price, you scan the code with the camera of your smartphone and the Amazon app. If you don’t have a smartphone or the app installed, an associate can do it for you. This brings up the product page for the item you’re looking at, with full reviews, specs and pricing. Pretty slick, eh?
Shelf tags contain product reviews and ratings from Amazon.com, but to get the price, you need to... [+]
But here’s where it gets interesting. If you are signed into the app with your account – as is likely – Amazon is immediately able to associate its online customer records with you, the customer browsing the shelves in its physical location. It knows your preferences, your buying history, your status as an Amazon
Personalization at the point of purchase. That may eventually include offering you a personalized price that represents the company’s best guess at what you’d be willing to pay, based on what it knows about you and the context in which you are shopping (for example, is it holiday time, or close to a loved-one’s birthday?). For the record, an associate assured me that they don’t currently do this: every customer gets the same price, which is the price currently featured on the website. The associate noted, however, that those prices tend to fluctuate.
It seems clear that the shelf pricing model in the Amazon store isn’t a feature – it’s the product. By pushing pricing to the app, Amazon enables every offer, every recommendation and potentially every price to be personalized to each customer and timed to optimize every transaction.
You know who’d like to be able to do that? Every retailer everywhere.
Amazon’s head is in the cloud. These days Amazon doesn’t make money selling books, even online. That’s barely a viable business. According to their 2015 financials, the profits are in cloud services, the massive data centers that run industrial-strength infrastructure for businesses and provide the processing power to connect mobile apps with back-end customer data.
So what if this humble retail outlet isn’t actually bookstore? Suppose it’s a laboratory and a showroom where Amazon can demonstrate its solution for blending physical and digital commerce: a solution that undoubtedly lives in Amazon’s cloud. Perhaps a proof of concept for a technology that Amazon may or may not use itself later on, but would certainly be of interest to the giant companies who rent cloud services by the petabyte?
If that actually is Amazon’s agenda, then it’s possible that a Minority Report-like future of retail that we’ll all have to deal with, for better or worse, began yesterday at a mall bookstore in Seattle.
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