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Amazon declares mobile war on brick-and-mortar retailers

Bryan Wargo - Wednesday, December 07, 2011

Amazon announced that December 10th is the day that their physical store competitors officially become show rooms for Amazon.  Amazon is offering up to $5 off products if a shopper is willing to go into a brick-and-mortar store, look at a product, then buy it on Amazon.  Amazon has long represented a threat to the traditional retail sector, but for the most part it was only a direct threat to those retailers' online channel.  As shoppers have adopted smartphone technology, Amazon is capitalizing on the blurring of these retail channels and now can attack retailers where it hurts the most, within their stores.  

I have written a bit about how online is growing rapidly but still only represents a small percentage of any retailers overall sales volume.  The soft underbelly for most retailers has been that store environment, where the lions share of any annual sales takes place.  With smartphone technology Amazon has found a very interesting way to disrupt the physical store channel and potentially attack a market that is 10x the online business they pursue today.

So how will retailers respond?  

Our first recommendation is that they better get a handle on how big of an impact this is making today.  Most retailers understand that their store business is being cannibalized today by shoppers purchasing items on their smartphones from within their stores, but no one knows how to measure this.  Does it happen once a day or once a second?  Retailers need to figure out in a hurry how often this is happening and measure this trend over time.  Nearbuy has some specific ideas on how to accomplish this through guest WiFi networks - helping retailers understand exactly how online content is impacting the store experience (i.e. what content is of the most interest, what are shoppers searching for, etc.).  These analytics will allow retailers to truly quantify the impact of Amazon and other online content sources on the store shopping environment, and can help power them to defend such tactics.  With knowledge comes great power...

Second, retailers better figure out how to offer a mobile in-store solution that provides an even better experience than the Amazon apps.  Price transparency is the tip of the iceberg here, table stakes for a converged multichannel experience.  So retailers need to play off their strengths and leverage the fact that they have the shopper in their store.  Any mobile offering they role out needs to integrate store staff, local inventory, and the fact the shopper can get immediate gratification from buying the product from the store.

2012 is going to be a very exciting year for retail and as shoppers we will see fundamentally new and exciting ways to shop that leverage the best of the offline and online channels.  Retailers who plan on being successful are going to have to take this new mobile fight to heart.

Thomas W commented on 08-Dec-2011 11:56 AM
Also notice that you need to turn on location services to get these deals. Amazon openly talks about wanting you to give them in-store prices. They get to look into stores, and what people are barcode-scanning. Wouldn't stores like introspection into Amazon
and in-store barcode-scanning, too?

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