6 Lessons on Retail from Amazon


Retailers are realizing that the customer journey is constantly evolving as the road to purchase continues to bounce between physical and digital worlds. As consumers cross between physical stores, laptops and mobile devices, retailers are tirelessly crafting new seamless experiences that utilize all these channels and best serve this omnichannel behavior.

Amazon has just opened 7 new retail bookstores called Amazon Books and plans to open a dozen more. The first store is at Columbus Circle in New York City. The store is 4,000 square feet, which is about the size of a typical Apple Store located in a suburban mall. The store carries about 3,000 book titles that are customer-rated 4+ stars (out of 5) on their website. Electronics are displayed in a small corner, but the overwhelming focus of the stores is on the books.

Add these locations to its 435 Whole Food stores, it's Amazon Prime Now delivery service in 32 cities, and its launch of Amazon Go, the checkout-free grocery store, and suddenly, Amazon will go from having zero stores to having over 500 locations across the U.S. by next year. And Amazon is not the only online retailer invading the turf of physical retailers.

Physical retailers are warily looking at Amazon’s aggressive move with trepidation. While physical retailers are absolutely justified in their reactions, here are some key lessons they can gain from Amazon’s and other online retailers expansions.

1. Use customer data


Amazon Books chooses store inventory by using data collected from both customer purchases and customer ratings. While most retailers use sales history on their inventory choices, few organizations use customer ratings in their stocking choices. Look for Whole Foods to follow suit.

2. Make it convenient for the customer


The first thing you notice when you walk into Amazon Books is that all the books are displayed with their covers facing the customer, as opposed to the traditional spine-out presentation on the bookshelves of most bookstores. This means that while stores display less inventory, it makes for a better customer experience overall and a lot less head tiling to read the titles.

3. Maximize the customer relationship


Amazon cares about deepening its relationship with their customers. The prices of the books are lower for Amazon Prime members than non-members, which drives new Amazon Prime memberships and reaffirms the value of the membership for its existing members.

4. Leverage the physical advantages


Amazon understands that online shopping can be limiting. While you can see the products, you usually can’t touch, hear or smell them. Amazon Books is set up like an intimate showroom, inviting you to interact with the products. Too many physical store retailers have all their products in boxes, which tends to limit sales and increase returns.

5. Don’t overwhelm the audience


The typical Amazon Books location carries about 5 times less inventory than the typical bookstore. This means that while they might not have the book you want, it is easy enough to order it online. But having every title in stock is not the goal for Amazon Books; the goal is to delight the visitor.

6. Introduce hybrid services


Many stores like Best Buy, Sears, Macy’s and Wal-Mart offer “buy online, pickup in store” or its acronym: BOPUS merging the convenience of online and offline shopping with scheduled product pickups. Meanwhile, online retailers like Warby Parker and Bonobos now have a large network of physical stores. However, while shoppers can try products on at the store, they do not maintain an inventory, so all orders are shipped out from a central location.

Amazon Books is a good example of maximizing the customer experience. They could have opened a massive bookstore, but they instead chose to open a small, intimate shop that caters to the needs of the customer rather than the needs of the retailer. While these online retailers will continue to grow, physical retailers should remember that most customers like to walk in, pick out the product and walk out as proven by the fact that nearly 90% of all retail sales in the U.S. are represented by brick-and-mortar locations, accounting for $3 trillion out of the $3.4 trillion retail sales total.

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