Amazon’s Pop-Up Store Strategy Is Going to Confuse Traditional Retailers

Amazon Pop-Up Stores

When Amazon opened the company’s first brick-and-mortar store in Seattle quite a few people thought, amusingly, that Amazon would go into traditional retail and would, eventually, start opening big(er) stores comparable to, say, Walmart. This wishful thinking, born out of the aspect that one own’s cost structure (stores) would thus be validated for a world with online shopping, is just that: wishful thinking.

At the time, I wrote that I expect Amazon to open more stores around the country (first US, than in other western markets with a strong Amazon presence). And Amazon would do this for one main reason: To get people to try out its devices. Those devices, the Echo, the Fire tablets, and so on, are important enough to do this, as they are essentially the new ‘storefronts’ for Amazon. Because of the prohibitively high costs of this, I expected more cooperation with retailers:

If Amazon itself will expand into brick and mortar retail it will be with an Apple Store like concept for its increasing range of devices, “disguised” as book stores. But these partnerships with retailers seem like a far more suitable approach for Amazon. (At least as long as Amazon and online retail as a whole have not put them out of business yet.)

And expanding on this, I wrote:

I have been thinking about this over the last few days and I am now more than ever convinced that a hybrid approach is what makes the most sense for Amazon. That means a few Amazon stores in premium locations and partnerships with third-party retailers. This way Amazon can have it both ways with the presentation of its devices. Complete control in selected locations and widespread availability.

And don’t think for a second that this is about distribution in the sense of selling the devices. It is about helping people getting to know the devices first and foremost.

I compared these potential Amazon stores to the Apple Store concept for a reason.

For reasons that elude me today, pop-up stores didn’t cross my mind at the time.

Of course, pop-up stores make more sense for this objective. They are cheaper to set up and run than actual permanent stores. They can be easier ramped up and reduced as the company sees fit (and as the device strategy demands). And with them, Amazon is not dependent on relationships with other retailers.

Once you start thinking about it, it quickly becomes a no-brainer.

So, it makes sense what Business Insider is reporting on Amazon’s pop-up store strategy:

Amazon is aggressively expanding its presence in the real-world retail market, with a plan to open dozens of new pop-up stores in US shopping malls over the next year, a source familiar with the matter told Business Insider. (…)

The miniature retail storefronts are a separate effort from the physical book store that Amazon opened in Seattle last year and are primarily designed to showcase and sell the company’s hardware devices, particularly its Echo home speakers. (…)

It also makes sense that those stores are an initiative of devices and services.​

The pop-ups also serve a strategic purpose, by providing Amazon with its own physical sales channel — something that’s become especially important after big box retailers such as Target and Walmart stopped selling Amazon devices in 2012 (Target plans to bring Amazon products back this year). (…)

One interesting part about Amazon’s pop-up stores is that they are run by the devices team, not the retail team that opened Amazon’s first bookstore last year. The initiative is led by SVP of Devices and Services Dave Limp, who oversees everything from the Kindle to the Echo.

Business Insider has a few photos of an Amazon pop-up store.

Amazon also has launched a dedicated page for its pop-up stores. This page provides a bit more information, some photos and current locations, which count 22 at the moment.

You might have guessed it by now: Some will say that Amazon’s pop-up stores are just the beginning and the ecommerce giant is finally going into brick-and-mortar and thus will, finally, validate the multi-channel approach. Amazon does this, some will say, by going into the opposite direction but towards the same destination traditional retailers got lured to by service providers and consultants. The funny (or sad) thing though is that the exact opposite is happening: Amazon is doing this to expand the company’s foot print in next-gen online shopping. It is about going beyond the webshop and building out ways to shop that may not fit with every use case but that are just better for some.

The customer lifetime value Amazon will get from people buying Fire tablets and Echo devices is far higher than with customers using a website in a browser. Once a customer starts ordering via voice or via TV or via Dash buttons they are far down the rabbit hole.

This is as far away as one can be from a lowest common denominator strategy; while multi-channel ultimately is the latter.

If you think successfully integrating a webshop, an ‘online channel’, into your multi-channel construct is hard, wait until you try to incorporate tablets and voice interface platforms and the processes that make those valuable to your customers.

​More on this topic:

​* Amazon’s SVP for Devices and Services Candidly Talks About Amazon’s Devices Strategy
​* Echo is just like a store for Amazon & third-party retailers help spreading it now
​* Om Malik on why Amazon will build more physical stores
​* Walmart Built Ecommerce Strategy for Themselves, Not Users
* ​How Zalando Will Persuade Zara and H&M to Join its Platform
* Data from Dash Buttons Will Lead to Evolution of Brands & Amazon’s Private Labels
* Post-PC Online Retail: Why and How Amazon is Building the Alexa Voice Platform

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