Question

From the concept of AmazonGo (Venturing into traditional retail), Could Amazon’s offline retail marketing concept expand globally for consumers? Why or why not?

Please answer in detail with at least 2 pages

Answer 1

Amazon’s offline retail:

Amazon which is a dominant player in the e-commerce industry, has ventured into offline retail with the acquisition of Whole Foods and initiation of Amazon Go. Amazon Go helps a customer pay for his expenses of shopping using his smartphone without the need of a credit card or billing machine.

Reasons for Amazon to enter offline retail:

1. The consumer shift to online shopping is increasing but at a very low rate. (25% in 2014 to 29% in 2016 to 31% in 2018)
2. As per a PwC survey 70% of global shoppers prefer a brick and motor model for shopping
3. About 91% of the US spending’s have been in physical stores for the year 2016 and there is not a significant improvement thereafter
4. Offline shopping reduces the shipping expenses for Amazon
5. Increased Human Shopping experience. A combination of lower prices and physical shopping experience can make Amazon stand out among its competitors
6. It helps in Building loyalty among consumers and a source of selling it subscription based services (Offline stores that sell products at online rate to Prime subscription members)
7. It brings in the factor of convenience to customers. Amazon’s voice assistant Alexa and Dash helps consumers to scan barcodes and use microphones to order their repeated purchases hassle free. This makes it more easy to customize services offered to a customer

Plan with brick and motor investments:

With the acquisition of Whole foods and implementation of Amazon Go Amazon has the following strategies in mind with its offline retail

• Data analytics:

The purchase of Whole foods has helped Amazon gain access to its data bank which holds the details of shopper’s purchase and consumption behavior. This helps Amazon attaining the necessary retail intelligence and helps them in selling add on services like Amazon Prime, Alexa etc. based on the purchase pattern of individual customers.

• Access to Private label products:

Whole Foods has for itself an extensive list of private label products which Amazon can capitalize on. This coupled with the best delivery and service practices of Amazon makes it a brand to look out for among consumers

• Increases reach and service:

Amazon’s acquisition of offline players has helped it to expand its footprint in areas where it had no access before. This in turn has provided it with additional selling grounds for its add on services.

• Fasten transition to online shopping:

Acquisition of offline stores and clubbing its features with online services like Amazon Go and Amazon Prime helps to bridge the gap between online and offline shopping. This in turn will speed up the transition of consumers from offline to online shopping at faster rates than what is observed at present

Thus from the above discussion its seen that Amazon’s venturing into offline spaces will only be beneficial for it as its helps Amazon gain better understanding of the purchase patterns to customize its services, provides additional platforms to hard sell its add on services and hasten up the transition from the offline to online shopping.