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?