There's little question that Amazon has dominated e-commerce for much of its existence. But as it quietly boosts its physical presence in communities, it's not really getting into the bricks-and-mortar business. All that it's doing is perfecting its online operations, ever mindful that the final stage of e-commerce is getting the product to the shopper, a stage that can run into quite a few obstacles.
It's those kinds of obstacles — age-restricted products such as alcohol, neighbors or opportunity thieves stealing packages from outside the front door, temperature-sensitive merchandise, etc. — that Amazon is focusing on. Have seen no plans at all for a true shopping cart warehouse effort from Amazon, other than a wacky friction-less warehouse scenario described in a patent from January.
Problematic deliveries are not at all uncommon. Unless there's someone at home 24/7 and in a position to grab and secure the package, leaving an expensive package unattended outside the front door is not the wisest approach. Beyond someone simply stealing it, we have weather exposure (lots of snow or rain and a cardboard package are not an ideal combo), animals (a dog could smell something yummy in the box), temperature control (beyond products that need refrigeration or being frozen, many products, such as chocolates, don't like extended summer-heat exposure) and age-restricted products.
And there are other delivery challenges. For example, how to prove that a delivered package really was delivered. Could the delivery person have kept it? Or delivered it to the wrong address? If Amazon's system reports, "We just delivered your $10,000 package" and you look out the front door and see nothing, what happens? One side needs to trust the other, and with an expensive delivery, that can be difficult.
Amazon's latest moves are to test shipping alcohol for one-hour delivery (when you absolutely, positively have to get blasted before noon), a pickup service slightly different from Amazon Locker and an automated enhancement to those lockers.
Although it has yet to roll out anything that specifically addresses temperature controls (try letting this order sit in an Amazon Locker during a three-day business trip), that's likely to happen shortly. Indeed, it could prove to be a major selling point for lockers or Amazon Flex.
Physical chain executives have always been fond of blaming Amazon for lost sales, even dreaming up the comically misleading showrooming complaint. The biggest reason that Amazon has flourished is that physical chains have dropped the ball on both customer service and providing a fun (and hassle-free) shopping experience. As malls are now learning, you have to give shoppers a reason to forgo the convenience and, often, cost savings associated with Amazon.
Amazon Prime (and its current same-day and one-hour variations from Amazon) explicitly tried to knock out the two downsides of e-commerce: the lack of immediacy and the extra cost, in the form of shipping charges. To be fair, Amazon has absolutely not removed those downsides yet, but it has whittled them down. Even the faster Amazon delivery may not be as swift as swinging by the store that you're going to pass on your way home from work anyway. And the highest Amazon Prime package still is very limited when it comes to making deliveries free for items sent by the huge number of Amazon partners, including a lot of moms-and-pops. (The day Amazon has a service that truly eliminates all shipping fees from all products purchased through the Amazon site is the day brick-and-mortar CEOs are dreading.)
Then again, it's that vast army of partners that gives Amazon an almost infinite inventory. And that ability for the Amazon site to pretty much fulfill almost any shopping need is something that no physical chain can match.
As argued many times before in this space, physical chains can't beat Amazon at its own game, so don't even try. The strategy has to be reversed. Don't try to do what Amazon does better. Focus instead on doing what Amazon can't do, which is to create that fun and effortless physical experience. Remember when going to a bookstore was a fun social outing? Or when a day at the mall was a teenager's dream come true?
Look at it this way: Which chains have the reputation for customer service? Think Nordstrom's, Trader Joe's and — to a lesser extent than it used to be — Whole Foods. They turned their associates into a huge reason to visit their stores, to be helped, pampered and given valuable advice. When was the last time you felt that way about going to Walmart, Target or Costco? Does the typical consumer see Macy's as a fun place to shop or a crowded, unpleasant way to make that necessary purchase?
Amazon can and will do everything it can to perfect the online experience. Physical retailers must do the same to in-store. Truth be told, a powerful in-store experience can't be touched. Think Trader Joe's is losing a lot of grocery sales to Amazon? How many formal gown sales has Nordstrom's lost to Amazon? If retail execs do what they are supposed to do, they have no reason to sweat about Amazon. In other words, they have much reason to sweat.
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