Why Amazon is backing brick-and-mortar

category: Trends

sectors: Retail

It seems counterintuitive that Amazon is opening and investing in physical stores when it is repeatedly blamed for the staggering rate of store closures and bankruptcies in the retail industry. More than 5,000 closures have been taken place so far this year in the U.S., so what is Amazon’s end-game for their retail expansion?

Having physical stores might simply be another way for Amazon to reach customers that aren’t as online-savvy. Amazon bookshops also serve as showrooms for Amazon’s Fire tablets, Kindles, and Echo smart-speakers. All products that better understood through experiencing them in the real world.

The layout of these new stores is based on data collected through online shopping experience which help to identify, track, and anticipate consumer preferences. Customers can browse a significant inventory of books based on consumer ratings taken directly from amazon.com, and average reading time based on aggregated Kindle data.

To check the price of a book, you either need to have the Amazon app on your phone or use an in-store scanning machine. Two prices are shown: the full price, and the discounted, more attractive Prime member price.

This way of displaying prices is a very clear message: Amazon Bookstores main goal is not to sell you a book or an Amazon electronic device, but to deepen your relationship with your Amazon account even further by luring you to subscribe to an Amazon Prime membership.

Prime members are becoming more central to Amazon’s success, because they spend on average almost twice as much as a non-Prime member yearly ($1,300 vs $700), and shop 25 times annually on the site versus 14 times for non-members.

Amazon Bookstores are an extension of Amazon.com: showcasing the functionality and benefits of being an Amazon Prime member; fitting perfectly in Amazon’s goal to increase brand loyalty by enriching their brand image.