Analysing Amazon’s latest physical retail move
If you think bricks and mortar retail is dead, you’d better think again in the face of Amazon accelerating its physical ambitions in the UK.
Yesterday, Amazon opened the doors to the first Amazon 4-star store outside of the US.
Situated in Bluewater, this offers a range of products that are rated four stars and above, are top sellers, or are trending on Amazon’s UK site, including consumer electronics, toys, games, books, kitchen, and home.
It will also have the full range of Amazon devices available to demo, including Kindle e-Readers, Fire Tablets, and Echo Dots.
Customers can purchase online and collect orders at the store as soon as the next day. It also offers parcel free, label free returns for items purchased both in store and online.
Digital price tags are located alongside each product with the item price, average star rating, and the number of customer reviews.
Amazon account holders will pay the price as they would on the UK site. Prime members will receive exclusive perks and deals throughout the store.
It is possible to pay with cash, credit card or through the Amazon app using the 4-star QR code at checkout.
The e-commerce giant’s Just Walk Out technology, pioneered at the Amazon Go offering in the States. won’t, however, be making an appearance.
What’s the gameplan?
It’s all about baiting shoppers into the company’s ecosystem, argues Natalie Berg, retail analyst, author and founder of NBK Retail.
“The 4-star concept may seem weird (it is), but here’s Amazon’s thinking. They revolutionised online shopping through: fast/free delivery; 1-click checkout; user-generated reviews/ratings,” she tweeted yesterday.
“Now they’re looking to replicate this in a physical setting. Remember when it comes to bricks & mortar, Amazon is all about experimentation.”
“My guess is they run a handful of stores in the UK, iterate on the concept and eventually fold 4-Star into something much bigger.”
Amazon Fresh hits London
Also on the bricks and mortar retail front, Amazon is busy opening Amazon Fresh locations in London, the latest one being located in Dalston.
The others are in Camden, Ealing, Wembley Park, White City and Canary Wharf. Opening hours are from 7:00 am to 11:00 pm, seven days a week.
Customers use the Amazon app to enter and put their phone away and shop for what they need. At the end of their visit, they can head for the exit, with no need to stand in a queue or check out.
Amazon is planning further openings in the greater London area, with reports suggesting Bankside could be next, although it has not revealed exact numbers or locations.
All of which means that the idea of Amazon as an omnichannel service – rather than pure e-commerce – is gathering pace, says Hugh Fletcher, Global Head of Consultancy and Innovation at Wunderman Thompson Commerce.
“The Amazon 4-star shops offer a unique winning combination that most other physical high street stores cannot compete with,” he comments.
“A solid reputation that delivered (literally and figuratively) during the pandemic when others could not, a highly rated range of products and a loyal Prime membership customer base wanting more of the same. It’s the stuff of dreams for most physical retailers.”
Fletcher adds: “What’s clear is that Amazon is not messing around when it comes to bricks and mortar. Lauded as a potential stunt and an opportunity to drive uptake in Prime, it’s more likely that Amazon is doing what it does best and tends to win out on; challenging the status quo.”
“And these stores in particular are deliberately inclusive to all, where Prime membership and even an Amazon account are not pre-requisites to shop there. Amazon is tapping into a consumer mindset that is increasingly loyal to service, rather than brand.”
“So as long as the Amazon 4-stars offer the same level of price, service and efficiency as it does online, it’s hard to look past these stores as another feather in an already crowded cap.”
In conclusion
Amazon is often accused of killing the UK high street by undercutting traditional retailers and paying less tax.
Now it’s muscling in on their physical action as well.
The jury, however, is out as to whether it can run hundreds of stores and become a force to be reckoned with.
Or maybe that’s not Amazon’s end game. Maybe, as Natalie Berg believes, the 4-star concept is more experimental than practical.
And maybe this is all building up to small(ish) number of stores across the UK, with the ultimate aim of getting people into Amazon’s ecosystem. Don’t bet against that happening. But then again, don’t rule out a serious challenge to the high street status quo.
Love them or hate them, you have to hand it to Amazon. They always keep you guessing.
