Six Pixels of Separation - The Blog
February 4, 201412:24 PM

Some Cheez-its, A Mountain Dew, A Snickers Bar... And A Kindle

It sounds like the set-up to a bad joke, but this is no laughing matter.

As Amazon continues to grow, expand and diversify itself as one of the largest retailers and technology service providers in the world, attention is always paid when the virtual store does something physical. Every so often, rumors crop-up that the online retailer (that has a market cap of over $157 billion) is about to open up physical retail locations or is providing delivery lockers (known as Amazon Locker) or some other unique way to change the retail experience. It's the kind of news that, typically, sends shock waves through the retail and technology landscape. Some rumors are blatantly false, others are true and some of them don't work out so well. What makes Amazon so fascinating (and dangerous to their competitors), is their desire to disrupt, try and change the shopper's status quo. So, when last year's Consumer Electronics Show (CES) rolled into Las Vegas, many were surprised and intrigued by Amazon's presence.

It's not what you think.

They didn't have a typical booth on the trade show floor. They didn't engage with a celebrity tie-in for a major product launch. They didn't even throw a wild party at one of the trendy casino nightclubs, in the hopes of getting some b-list reality television star to talk about them to TMZ. Instead, they set up a Kindle vending machine inside the Las Vegas airport (near the ATM and soda pop). You may be thinking to yourself that this is nothing new. Apple, Best Buy and others have all deployed vending machines that sell electronics over the past several years. For some consumers, it's hard to imagine buying a $250 pair of headphones the same way that you buy a bag of chips on the way to catch a flight, but the technology of these machines has advanced to the stage when these more expensive and complex sales can be done without human intervention and on-the-go.

There could be something more going on here.

Amazon has a lot of muscle. Both in terms of brand affinity and a war chest to experiment with new ways of retailing. It's easy to dismiss this Kindle vending machine as simply another parlor trick. It feels like Kindles are just the beginning of this story. Vending machines could well be the perfect way in which Amazon can be on (almost) every corner of the world. They are a very cost-effective way to grow a retail presence, without the traditional infrastructure that a retail chain must endure (long leaseholds, landlords, square footage negotiations, employees, overhead, etc...). In fact, vending machines are becoming as hip and as cool as pop-up stores (if you can imagine that!). They offer a nice surprise to potential consumers who are either sitting around or passing through a public space, and are used to nothing but Pop Tarts and stale peanuts.

Retail everywhere.

This isn't about Kindle Fire tablets or Kindle Paperwhite readers. It's not about the accessories, either. This is about Amazon engaging in a "retail everywhere" strategy that the traditional retailers need to think deeply about. Amazon has optimized the online shopping experience - from Web browser to smartphone. 1-click ordering and Amazon Prime have only pushed their success to a level of near-dominance. What seems like a simple PR play of plopping vending machines in areas that may garner them some media attention, may be something much more. What we're really seeing is another step in Amazon's desire to ensure that if a consumer needs to buy something... anything... they're doing it from Amazon. What makes this even more interesting is thinking about what this can all lead to. At the SC Business Fair 2014, which took place last month in Japan, Toshiba previewed a digital signage system called, Smartphone-linked Signage, that uses Bluetooth low energy wireless technology to link digital signs with smartphones. This creates an ability to send unique offers that can be controlled and optimized by the consumer on their mobile device. What this means, is that if multiple people are staring at the same display, they may be receiving different offers or forms of content. Suddenly, you can start seeing how the convergence of digital and physical retailing can create an entirely new paradigm.

When Amazon knows all.

Right now, these vending machines will sell you an e-reader. It's simple enough. Tomorrow they could easily be linked to your Amazon account. They could easily present you with recommendations based on your historical purchases that you could buy on the spot and easily decide if you would like to get it right there or have it shipped via Amazon Prime to your front door. These vending machines could interact with your smartphone and/or tablet to create a much richer shopping experience and, suddenly, everything we always thought we knew about what a vending machine is (and can do) gets completely upended. That may seem lofty or off too much into the future, but the technology exists. It's a retail format that big brands are playing with. It's an additional direct relationship that a brand can have with a consumer.

Who knew that the future of big retail may come be coming from these little vending machines?     

The above posting is my twice-monthly column for The Huffington Post. I cross-post it here with all the links and tags for your reading pleasure, but you can check out the original version online here:

By Mitch Joel

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