“The recent launch of Amazon’s in-store credit card reader and checkout software was one of Jeff Bezos’s most deliberate acts to date to grab a slice of the 85 percent to 90 percent of total purchases that still happen in the physical world,” writes Re/code columnist Jason Del Rey in a recent post. “But the people who know Amazon the best said it has far more ambitious plans in the offline world.”
In his Re/code post, Del Rey spoke with a number of anonymous former Amazon employees, as well as some of the smartest people he knows in the retail payments industry, to analyze what Amazon’s next moves will be.
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Here are the highlights of the Re/code post, “Here’s How Amazon Might Take Over Brick-and-Mortar Retail”:
Broadly speaking, Del Rey’s contacts say that the world’s largest online retailer aims to make it easy for a wider array of brick-and-mortar shops to sell on Amazon while giving Amazon shoppers another way to receive orders on the same day they are purchased. “The move would extend Amazon’s reach far beyond the virtual checkout aisle to the real ones in your neighborhood,” writes Del Rey.
Included among Amazon’s services and tools are new payments hardware and point-of-sale checkout software. The company hopes to see a wave of new small business sellers flood amazon.com with new offerings, now that they have the resources to ship orders.
Del Rey believes the strategy could also advance Amazon’s goal of getting a greater percentage of orders into the hands of customers on the very day they are ordered and fulfill one holy grail of retail — instant gratification at scale.
The plan will likely have several stages. First, Amazon will need to deepen relationships with stores beyond its payment readers and sales tracking point-of-sale software. Amazon will also have to develop software tools to help brick-and-mortar retailers keep track of their in-store inventory. Amazon would then rely on these stores as both customer pickup locations and hubs to support same-day delivery, too.
“If Amazon is going to use their locations to fulfill pickup and same-day delivery orders, the online retailer will have to persuade those that sell products — think hardware stores or independent convenience shops — to place their products for sale on Amazon.com,” Del Rey writes.
Although some of these businesses might send some inventory to Amazon and let the giant online retailer handle shipping, others may not have enough inventory to afford to do that — or may not want to. In that scenario, Del Rey’s sources believe that Amazon will give online shoppers who want to purchase products from these businesses on Amazon.com several options to receive these goods quickly if they live in the general vicinity of the business.
An Amazon shopper may pay for or reserve the product on Amazon.com and then pick it up from the physical store that sells it, or s/he may be given the option to have the goods delivered directly from the store on the same day an order is placed. Del Rey’s sources believe the company would likely rely on a crowd-sourced network of delivery people to help make this a reality.
“Jeff [Bezos] thinks about all of the core assets as platforms and wants to drive maximum utilization through the platforms to get more efficient, achieve greater scale, build competitive advantage, etc.,” one former Amazon employee told Del Rey in an email. “To drive scale and utilization, you need to put as much through the system as possible. So if they can execute on building out local delivery, their appetite [for what to put through the system] will be endless.”
Del Rey notes that in order to coordinate same-day pickup or delivery with a network of stores, Amazon will need access to real-time inventory information from its partners, or risk shoppers ordering items for pickup only to find the store is out of stock of the ordered item. “That means Amazon will have to expand the features of the current point-of-sale system to include inventory management or tracking tools,” he writes.
Del Rey notes that, clearly, none of this happens overnight. “Tens or hundreds of thousands of businesses will need to adopt Amazon’s credit card reader and checkout software. That is a lot to ask of products that just launched.”
Read the full Re/code post here.
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