March 30, 2014
While e-commerce is on the rise and there is no shortage of Tech Press coverage about it being a $1.5 trillion industry in 2014, that number remains but a fraction of the staggering $15 trillion global commerce figure—and Amazon knows it. If you know anything about the retail giant, you know they’re not content to be a big fish in a small pond. That is why they have been making several steps to enter, and possibly dominate brick and mortar as they have with e-commerce.
What do they have currently? Not much as they have no real experience in physical retailing and retailers might not be willing to collaborate and do business with them as they see Amazon as a big competitor. But what Amazon does have is credit card information of more than 230m users, exceeding PayPal's 143m.
When Amazon started 20 years ago, the world of commerce was irrevocably changed, but that change was taking place online, not in stores. In the years since, the Amazon effect has been slowly and surely squeezing retail stores, sometimes right out of business. And while amazon has surely reaped the benefit of e-commerce growth, they are left with a growing, but still smaller piece of an incredibly lucrative pie.
How Amazon Is Targeting Physical Commerce, Payments et al.
Last year, we learned that Amazon acquired GoPago Inc., a mobile app, enabling consumers to pay for goods before picking them up at a store, with the retailer POS system to processes those orders. This was possibly the first major hint towards Amazon’s intentions to enter the retail space, but intentions were still unclear
Fast forward to 2014, where we have recently learned that Amazon will be offering brick and mortar retailers a Kindle checkout system. If successful, the implications would be tremendous. In addition to POS sales, and potential profits off sale transaction percentages, amazon would have access to a currently untapped vault of data surrounding in-store spending trends.
Not known for backing down from a fight, Amazon would have their work cut out for them by competing against giants and startups alike, of which include VeriFone Systems Inc, NCR Corp. and Square.
It has been reported that the checkout system would include Kindle tablets and credit card readers.
Not only has Amazon given little information as to what we can expect, they have also indicated that their plans could be delayed, changed or canceled at any time, which is to say, they’re testing the waters as much as possible before throwing themselves to the wolves with such an ambitious project.
Amazon Brick and Mortar
If a Kindle-based POS system doesn’t go far enough to convince you that Amazon cares about retail, news of their own physical stores set to open as early as the coming months should leave no doubt. And what better place to set up shop than in their hometown of Seattle. While details are vague, it has been indicated that the stores will be nothing but the opposite of what you will find at amazon.com. The boutique locations will be stocked with high-end, high-margin items. It can be expected that Amazon will take this opportunity to give consumers an exceptionally hands-on experience, something they have never been able to provide online. Rings a bell? Yes Apple has mastered the art and science of retailing. Other tech firms are also trying to do it - Google, Samsung, Microsoft and others.
Now that Amazon has successfully changed e-commerce, and in so doing, given brick and mortar retailers a run for their money, it only makes sense for the company to now set their sites on the still large, but weakened retail space.
Remember what Brian said in his article on Let's Talk Payments 'Amazon is also already mobile ready and can be coded into Android apps and indirectly into iOS apps. This will be a stepping stone for the future push for Amazon to enter retail payments. This will take place at about the same time Apple will move into full retail payments. The market already has PayPal so with the three very large companies in this market, the landscape will change dramatically. Each will have their own attributes and at some future date I will help decode what deeper meaning this will have for all of us, consumers and merchants. I saw this coming quite some time ago and back then I think my assertions seemed to be outlandish.'
Can Amazon stake their claim in retail? What other ways do you see Amazon using their success to enter the retail market? Let us know your thoughts and predictions in the comments below.