The digital business environment has for some time now been seen as the future of retail. It saves retailers the costs of renting or purchasing shops on what were becoming more and more expensive on the high streets. More and more companies began racing to build their digital offering and high street stores have been closing.
Online marketplaces like Amazon and eBay have provided the public with a digital tool to sell their wares without having to fight for an expensive physical space in a prime location. The increase in digital literacy has also seen more people/retailers creating strong digital propositions with their own websites.
This, however, seems to bring its own challenges. Speaking to the guardian in 2016 Sucharita Mulpuru noted that there are some 800,000 online stores trying to compete for customers via the google gateway. It’s critical for websites to appear on Page 1 of Google, especially in one of the top three organic positions, as these spots receive 58.4% of all clicks from users, according to a new study from Optify.
This creates the type of intensive battle online for visibility that was previously occurring on the high street.
Online real estate has become crowded and costs are becoming ever more expensive. To get on to the first page of Google stores are having to bid against the likes of Amazon, eBay and other digital powerhouses. This can prove too expensive for alot of businesses.
Macy’s and Nordstrom, for example, spent an estimated $6.4m and $4m, respectively, in paid search listings for the top 1,000 apparel-related keywords in the first quarter of 2015, according to a study this month from L2 Inc, a research firm that tracks digital brands. (Guardian.com, 2016)
So how can organizations maximize their exposure?
Amazon, the most successful online business and market place has changed its strategy. Not only is it now looking at having a strong digital presence, it is actively growing its physical presence too.
The advantages of a combined physical and virtual channel strategy can be derived from early predictions about the death of distance caused by electronic commerce (Cairncross, 1997).
This “Clicks and Mortar” strategy began in 2016 Amazon opened its first physical book store. Ironic as the company was originally blamed for effectively decimating the market for independent bookstores globally.
So why would Amazon who created such a colossal digital empire look to create a physical footprint?
After a slow start in Web-based retailing, many traditional brick and mortar retailers now have an electronic commerce channel in place. E-commerce researchers, using terms like clicks and mortar, and cyber-enhanced retailing have considered the combination of physical and web
channels to be a distinct business model (Stienfield et al. 2001)
By opening physical stores Amazon are creating flagships which can:
- Increase awareness of the companies value proposition and brand
- For the first time bring in a human element to the shopping experience.
- Move away from gatekeepers like google who have such control over location in digital searches.
Research suggests that there are indeed tangible benefits to click and mortar approaches to e-commerce, particularly when firms more tightly integrate the two channels and exploit the sources of synergy between them. The four categories of synergy:
- Market extension
Represent one workable framework to help organize these opportunities.
But Amazon is going further, Amazon is using digital technologies in its flagship stores to further enhance its shopping experience. How are they doing this? By introducing their new technology with the name Amazon go. Which changes the way people do the physical store shopping and calling their new technology as Just walk out technology.
This Just walk out technology developed using the similar kind of technologies used in the self-driving car. These are computer vision, Sensor fusion algorithms, and deep learning.
The concept of walking into the shop and waking out with exactly what you need and not having to queue for a check out is revolutionary. However, how big an impact will the removal of the human element have?
With turnstiles instead of registers, we have removed one of the few points of contact between customers and the store, irrespective of the size of the shop. Removing the person working behind the till will provide huge savings for employers, as but also potentially hundreds of thousands of job losses world wide. Although in this instance we are describing a single amazon go store which has just opened in seattle, but what will be the impact globally by 2030?
The Amazon Go project in Seattle is the first major example of the extent to which technology is a threat to some professions which are destined to disappear. Other roles in the store still require human staff, storerooms, shelf stackers etc, but what is to say their jobs will be safe in the future sooner rather than later it is concievable that robots could do these jobs too or even start mingling with humans.
The use of technology like this will also revolutionise Amazons ability to collect customer data. Not only will they see what you are buying as they currently do, they will also be able to use the instore camera’s to study your behavior and gain insights into these data intelligence touch points. Information collected across digital platformes can now be cross-referenced with information on individual behaviors in stores. So where will advertising go now? Potentially everywhere: this does depend on the individual customer, in line with the habits of individual accounts
ad hoc deals could appear on specific items. And freedom? Privacy? Gone.
Walsh, M. (2016, January 30). The future of e-commerce: Bricks and mortar. The Guardian. Retrieved from http://www.theguardian.com/business/2016/jan/30/future-of-e-commerce-bricks-and-mortar
Caffo, A. (2018, May 7). Amazon Go: the pros and cons of the high-tech store of the future. Retrieved from https://blog.avira.com/amazon-go-opens-seattle/
Chaffey, D. (2018, August 14). Amazon.com case study – 2018 update. Retrieved from https://www.smartinsights.com/digital-marketing-strategy/online-business-revenue-models/amazon-case-study/
Goodwin, D. (2011, April 21). Top Google Result Gets 36.4% of Clicks [Study]. Retrieved from https://searchenginewatch.com/sew/news/2049695/top-google-result-gets-364-clicks-study
Frink, L. (2017, April 12). Here come the new office cyborgs: One of them could be you. Retrieved from https://searchenginewatch.com/sew/news/2049695/top-google-result-gets-364-clicks-study
Stienfield, C. et al (2001). Combining physical and virtual channels: Opportunities, imperatives and challenges. Retrieved from https://www.researchgate.net/publication/228592877
Combining physical and virtual channels: Opportunities, imperatives and
. Retrieved from https://www.researchgate.net/publication/228592877