Six Pixels of Separation - The Blog
July 13, 2012 1:59 PM

When Real Time Becomes Really Real Time

Are the rumors about Amazon true?

Here are two true stories I have heard about Amazon recently:

  • Story Number One... A friend of mine lives in New York City and is a member of Amazon Prime. They ordered some stuff very early on a Friday morning and were shocked to find a delivery to their home by lunch time of the same day. They were impressed. As I recounted this story over the past few months at live speaking events, I've had numerous people come up to me after and confirm that they have had similar experiences. Some of them weren't the exact same day, but by the next morning, etc. Many people also said that they were not even members of Amazon Prime or that they didn't pay for the expedited shipping, but it came that way, regardless.
  • Story Number Two... A senior executive with a major brand that is headquartered in Silicon Valley was pulling up to work after a lunch meeting and noticed a postal service truck near the deliveries entrance. The postman got out of the truck and rolled up the trunk to reveal a haul with nothing but Amazon boxes - of all shapes and sizes - stacked and packed into this one, fairly large, vehicle.

Amazon is changing retail.

That should come as no surprise, but Slate published a fascinating article on July 11th, 2012 titled, I Want It Today, that dissects the next generation of what Amazon is going to do to disrupt retail as we have seen it to date. From the article: "...Amazon has a new game. Now that it has agreed to collect sales taxes, the company can legally set up warehouses right inside some of the largest metropolitan areas in the nation. Why would it want to do that? Because Amazon's new goal is to get stuff to you immediately --  as soon as a few hours after you hit Buy... It's hard to overstate how thoroughly this move will shake up the retail industry. Same-day delivery has long been the holy grail of Internet retailers, something that dozens of startups have tried and failed to accomplish. (Remember Kozmo.com?) But Amazon is investing billions to make next-day delivery standard, and same-day delivery an option for lots of customers. If it can pull that off, the company will permanently alter how we shop. To put it more bluntly: Physical retailers will be hosed."

When the real time Web hits the real time world.

I'm less inclined to believe that this will kill retail. Retail is a communal experience. People do not just shop to buy the lowest price and for convenience. Many people shop and walk through shopping malls to get out, to do something and connect to their fellow citizens. It's not all about transactions. What's more interesting is what this means to our culture as the Internet and our physical worlds blend in one motion of real-time. We've already seen what happens as information transforms this way (look no further than to see how news spreads via Twitter), but it will be amazing to see this transcend from the Internet to physical items.

Slate asks an interesting question.

"For $5 extra, you can have that laptop waiting for you when you get home from work. Wouldn't you take that deal?," asks Farhad Manjoo in this article. My guess is that if you're buying something like a laptop over your lunch break and for an extra $20 you can have it by the time you get home from work, that a good majority would bite at that kind of offer. Beyond the ability for Amazon to make more money per purchase, it will be fascinating to see how it impacts the overall business. Once you can segment customers and better understand the types of premiums that consumers are willing to pay (and at what threshold levels), you're suddenly capturing the kind of consumer and retail data no one else was ever able to capture. Think about the business-to-business implications of this: Amazon will have access to a treasure trove chest of consumer insight that it can use as a bargaining chips with everyone from suppliers and affiliates to shipping companies and beyond.

What this truly means for retail?

It may no longer be about products being fresh, priced fairly and available inventory. The physical store may become much more about an experience (think about this in terms of going to the movies or to an amusement park), while Amazon (and other, inevitable, startups that will either rise up or be created) to transform how we shop online into a much more frictionless experience. Regardless, if this article is accurate, Amazon is making fast moves to act like a major retailer without even having a physical brick and mortar store. Amazing to think that Amazon.com went live in 1995. In under twenty years, just look at how much retail has been transformed.

How disruptive do you think this will be to retailers?

By Mitch Joel


Comments Comments Feed
  • Posted by AC
    AC

    "I'm less inclined to believe that this will kill retail."

    But how can it not kill retail, when they need far bigger margins? They will basically become a storefront for Amazon, where people try things out in person and go back home to buy it for less from Amazon, who will have it shipped to their door in <24 hours. I think that will make it extremely difficult for retail chains to avoid withering on the vine as they keep foot traffic but sales plummet.

    Reply
    • ...which is exactly why, the retail experience is going to have to focus a whole lot more on experience instead of just price and convenience. To me, this will be the new retail paradigm: how do you create an experience when price and convenience become a non-issue.

      Reply
  • Posted by ledannyg
    Mitch Joel

    For years I have been impressed with Amazon's delivery time. I am not a Prime member (never heard of it until today), but if I order a record on a Monday its usually there by Tuesday or Wednesday. I love supporting local independent shops, but the price, convenience and short wait times (not to mention free shipping) make Amazon a more attractive choice by far.

    Reply
  • Posted by Don O'Connor
    Mitch Joel

    Retail shopping, store to store, is an experience and always has been. All your senses get exercise during this kind of shopping. However, once that experience has been repeated numerous times there's no need to continue. Now, you shop online. Since we already know what items feel like there's no need to experience it, again. Press the Checkout Button, you're done.
    Amazon will not kill retail. However, retailers will have to focus on the experience of shopping. Movie theaters have done it, so can retailers.

    Reply
  • Posted by Min Soo Pata
    Mitch Joel

    it will be interesting to see how this will affect Hawaii and Alaska shipping/shopping

    Reply
  • Posted by Davey
    Mitch Joel

    Now we know why Amazon bought Zappo's. Sounds like they have been infusing their culture (and business model) with some of that Zappo's customer satisfaction and surprise magic. They have a massive buyer metrics database with extensive purchase behavior models.

    My guess, cell phones and perhaps even carrier status. Then they leverage their current metrics to drive targeted ads to cell phones based no useage/purchase behaviors. We'll probably see highly subsidized phones with extremely aggressive plans. The faster the adoption the better. Platform control is replacing distribution control (Wal-Mart) as the holy grail of retail. While Wal-Mart is the distribution giant, Amazon is the platform giant.

    Reply
  • Posted by Tim
    Mitch Joel

    With storage within a short drive of many large cities how long until Amazon open showrooms in some locations to pick up some of the offline market?

    Reply
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