Three Reasons Amazon Can Succeed in Brick-and-Mortar Retail

Amazon is “piloting” holiday pop-up stores this holiday season, with two confirmed locations in San Francisco and Sacramento, along with what may or may not be a permanent space in Manhattan. While theoretically Amazon is going to let the pilots run their course, analyze the results, and then possibly move forward with a rollout of more permanent brick-and-mortar stores, most observers expect the pilot is the first step in an already determined strategy to build a physical presence.



Assuming this is the case, here are three reasons why Amazon can most assuredly succeed in brick-and-mortar retail:



Amazon has technology



Amazon is one of the most innovative technology companies this side of Apple. Like Apple, Amazon straddles the lines between retailer, IT services provider, and technology developer. According to Bill Davis, director of MB&G Consulting, Amazon has all the technology it needs for a move into brick-and-mortar retailing.



“Amazon's new store in Manhattan, and the pop-ups in San Francisco and Sacramento, represent an excellent opportunity for them to showcase their recently launched mobile point of sale system, Amazon Local Register,” said Davis. “This gives them a real-world instance to showcase and test this out to spur adoption. As Amazon in many ways views itself as a software shop, my educated guess would be that all of the systems they use for their stores will be either developed by Amazon or be one of their existing systems.”



Also consider that Amazon has an existing network of fulfillment centers across the U.S., and its predictive delivery technology already gives the retailer solid insight into localized product assortment preferences.



Amazon has relevant experience



Amazon’s New York store will reportedly function more as a mini-warehouse and pick-up depot for shoppers, but also allow for showcasing of Amazon products, while the California pop-ups will reportedly be set up as kiosks where shoppers can check out and play with such Amazon products as the Fire phone, Fire TV, and Kindle e-readers.



Amazon has been offering delivery lockers in partner brick-and-mortar stores in Japan as far back as 2008 and in select U.S. cities since 2012. The New York storefront will essentially operate like an expanded version of a locker, and the fulfillment logistics of these lockers are similar to the fulfillment logistics of stores.



So Amazon is not as much of a naif in the world of brick-and-mortar retailing as some observers have suggested. Plus, considering the company’s deep pockets and easy access to investment dollars, it should not be hard for Amazon to hire high-quality veterans from the world of physical retailing if and when they choose to launch a more sustained brick-and-mortar venture.



Amazon has vision



Amazon has never had a shortage of vision, extending all the way back to its 1994 launch as the world’s first major e-commerce retailer and up to more recent developments like Amazon Web Services and the abovementioned Fire phone and TV and Kindle. The company has an enviable record of secrecy, meaning we probably won’t know anything about its longer range brick-and-mortar plans until it wants us to, but surely there is a carefully crafted master plan that includes contingencies.



Retailers who until now have not had to worry about direct competition from Amazon in the physical space need to start preparing for it. They many not know exactly how or when Amazon will offer a sustained rivalry in the brick-and-mortar real, but they would be foolish to doubt it will eventually happen.