I came across a very interesting article by Stephane Kuelian a retail marketing guru. Below is a summary of why it makes sense for Amazon to establish a brick and mortar presence.
"From a strategic
standpoint, physical stores are a powerful tool to increase Amazon global
revenues. Here are 9
reasons why Amazon gets physical.
1 – Physical
bookstores will help Amazon attract bigger-name authors. What other
publishers can offer
that Amazon cannot is coveted placement in physical bookstores.
Those tables you see
in a bookstore when you first enter are hot properties in the world of
book marketing. And
Amazon can’t compete with that, until it gets its own bookstores.
2 – One of Amazon’s
secrets to customer service is that it accepts returns, no questions
asked. Physical
stores would make it easy for people to return products.
3 – Amazon physical
stores will be massive gateway drug products dealers. The Amazon
devices are super
compelling to anyone who tries one. The trouble is, there’s no way to try
them unless you buy
them. Retail stores will help. Each Amazon retail store will be much
more than just a
gateway drug to Amazon’s products. It will be a gateway drug where
people will buy
gateway drug products like the Echo.
4 – Retail locations
will help Amazon win on delivery. Retail stores could double as product
pickup locations,
distribution warehouses and, eventually, drone airports from which
products are flown
to nearby homes and businesses.
5 – It is an
opportunity to set-up “outlet corners“. Stores could serve as “outlet” stores
to
sell returned
merchandise, saving Amazon millions
6 – It is an
opportunity to attract new customers. The majority of all retail sales still
happen
in physical stores.
Those real-world sales are Amazon’s growth opportunity.
7 – It is an
opportunity to enrich customers database. One way to get new customers is to
get their credit
card information and other personal details. Amazon can do that by
offering killer
deals in physical stores. Once Amazon has someone’s credit card, it will be
able to remind that
person later that buying more stuff is just a one-click deal now.
8 – Physical Amazon
stores can encourage and facilitate showrooming. Another way
Amazon eviscerates
traditional retailers is via the practice of showrooming. That’s where
you go to a
brick-and-mortar store and find the product you want but then buy it on
Amazon – sometimes
standing right there in the store, using Amazon’s mobile app. Once
friendly salespeople
from Amazon help you find,install and use the app, you will be able to showroom
not only in an Amazon retail store but you can also continue showrooming in
other stores.
9 – A retail
location acts as a sneaky reminder that Amazon can solve every shopping
issue. An Amazon
store in the mall reminds everyone that Amazon.com is the place where
people can find
anything and have it wrapped and delivered. Even if shoppers don’t enter
the store, just
seeing the store is a reminder that Amazon could be the solution to
any shopping
problems.
Let’s wrap it up.
Amazon brick and mortar stores can be considered as the gateway to the
“everything store”.
They make it easier for the brand to attract new customers and
make them loyal to
the brand’s compelling products and services. What every store will make
a day as a turnover
does not really matter."
