Amazon is cashing in on consumer's desire for convenience and the blurring lines between online and offline experiences with Amazon Go. The prototype store opened in Seattle last week, with people lining up to experience the cashless, checkout-free brick and mortar store, where customers can just walk in, take what they want and go. All transactions are handled transparently via in-store systems and the Amazon Go mobile app. According to the Amazon Go website, “All you need is an Amazon account, the free Amazon Go app and a recent-generation iPhone or Android phone.”

Retailers that have yet to take full advantage of consumer use of mobile devices should be paying attention to the results of Amazon Go and other mobile commerce trials. The delivery of mobile experiences offers a terrific starting point for dismantling the separation between offline and online retail channels.

Follow Amazon Go's Lead

Amazon Go is the current pinnacle of efforts to blur in-store and online experiences (read my post on Amazon’s acquisition of Whole Foods to learn how Amazon has evolved its investment in this area). The mini grocery store in Seattle builds on the retail model of mobile devices fueling in-person commerce — the concept that you can buy something without having to pull out a wallet to do so.

When customers arrive at the Amazon Go store, their phones trigger a sensor turnstile as they walk in. Customers then select their goods as they would in any boutique grocery store (offerings include wine, beverages, produce, meat, sandwiches and salads). Each item is coded to help in-store cameras, scanners and infrared sensors detect selections. Whey they’re done shopping, customers simply walk out through the sensor turnstiles; the Go app processes their transactions and they get digital receipts on their phones.

Experiments like Amazon Go create real-time data. In most mobile commerce operations, information is gathered via smartphone systems such as apps or chatbots. At the Amazon Go store, data acquisition comes from cameras and sensors that track inventory and the activity of customers. Marketers are mainly interested in aggregate data showing trends in customer activity — the information Amazon gathers from the Go experiment could improve predictive analytic models behind customer-facing services. If the concept takes off and Amazon opens more Go stores, it’s not hard to imagine the company being able to refine its algorithms so they can let customers know where the nearest Amazon Go is and help them find their preferred product choices.

For Many, Mobile Is the Only Way to Go

A look at global markets reveals how indispensable a combination mobile-offline operation could be to retail strategy. Many people only have mobile devices because they cannot afford laptop or desktop PCs. The end result is rapid adoption of mobile services in places like China. Alibaba, the China-based tech giant that rivals Amazon in online commerce and cloud platforms, has been spurring mobile payments alongside another major player in China, Tencent. 

Alibaba’s Alipay payment platform commands a sizable percentage of the mobile payment market, according to Nikkei Asian Review. The marketplace acceptance of the smartphone as the go-to consumer device implies that retailers and other businesses should eliminate operational divides between online and offline ventures if they want to be globally competitive.

The consumer acceptance of smartphones also shifted customer expectations for service behind an online discovery or purchase. That shift inspired the evolution of analytics. In its ascendancy, analytics provided observational metrics — what could be observed from webpage activity.

But as people learned to use smartphones to search online, they also broadened the engagement activity — first through usage of social media, then later apps and chatbots. Consumers turned to their phones first, creating real-time data and the real-life instances associated with the data. All of this shifted metrics from being observational to a more attribution-influenced analysis meant to stitch together the story behind a customer experiences prior to a click. The need to add a statistical approach to attribution led to predictive analytics. It also gave birth to new thinking among savvy marketers — to consider online activity as integral to marketing attribution overall and as a key element in budgetary decisions.

Learning Opportunities

Start Small with Online/Offline Experiments

Managers unsure where to start blending online and offline operationsshould consider small-scale personalized initiatives. Just as Amazon has started Amazon Go with just one store, marketers should consider what tasks can be simplified for their customers’ convenience, then review how that service is delivered and take small steps toward that goal. Some issues may not be apparent at first, but examining results from a trial period can reveal what processes should be improved.

Another step is to apply analytics with a particular attention to attribution. Marketers can better understand sales activity attribution and reporting bottlenecks within limited-scale retail launches.

The analytics platform should also be a building block to a predictive analytics stack in which data from different sources can be blended.

A predictive analytics model can ultimately provide dynamic forecast guidance to determine where and when to send an offer. Better forecasts will also highlight inventory issues, leading to higher-quality discussions on operational resources.

Consumer behavior based on viewing a product online and then visiting a store to pick up that item is now a retail standard. RetailDive notes that, according to a report from the National Retail Federation’s Consumer View tracking service, 70 percent of shoppers are aware of mobile payment capabilities and the BOPIS (buy online, pick up in store) model. That awareness has shown up in sales for the retailers nimble enough to blend online and offline experiences, besting competitors that may soon find themselves out of business.

Thus, marketers should expect more experiments like Amazon Go to provide an experience that can complement personal smartphone usage. It also means marketers must no longer think of ecommerce as a separate channel, because today’s shoppers don’t see it that way. To them, online commerce is just commerce.

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