Saturday, July 14, 2012

Amazon and Local Retail

I was out to lunch with some co-workers yesterday afternoon. The restaurant we went to is located in the hippest part of town - a place that had been open farmland until a few years ago. There are some nice stores in the area and folks were complaining about how frustrating it was to come shop here on a weekend - the roads were crazy busy and parking was a nightmare. This is the demographic that will be thrilled if Amazon's same day delivery model proves to be a success. I hate going out to shop myself and and don't mind waiting for a few days for something to be shipped to me if that saves me a trip to the mall. Amazon's current offering works just fine for people like me. But those that need the instant gratification of bringing the thing home as soon as they have paid for it have much to look forward to with what Amazon is trying to do. 
The sub title of the article reads, "How Amazon’s ambitious new push for same-day delivery will destroy local retail" I am wondering if there is not anything local retail can do to adapt to the Amazon strategy. A physically smaller store to be a show room rather than a retail outlet, highly personalized incentives to buy in store, an offbeat shopping experience (like WhichWich's take on selling sandwiches) come to mind.
On the Amazon end of things, does same day delivery mean, they can now take care of my grocery list - milk, fresh fruit and vegetables included ? Now, that is something a harried mom with less than stellar planning skills would love - calling in a last minute grocery list from work to be there at the door by when I come home would be quite awesome. I see an opportunity for partnerships between Amazon and local produce suppliers for something like this to work out. With Amazon's help, the sellers at our local farmer's market could now take on Walmart and such.

The other question is : would there be reason for other online retailers to make same day delivery part of their plans - and how they will entice the customer if they are not able to do that. It will likely be the choice between buying cheaper and waiting longer or a paying a little premium for same day delivery.
Finally, Amazon being successful would open up a ton of consulting opportunities in data analytics and behavioral econometrics within the retail domain. I hate resorting to cliches but just by tweaking with the delivery time, Amazon is looking to stir up all kinds of disruption in retail. But I am not sure if that is all gloom and doom for brick and mortar stores. In the best case scenario, this could trigger a virtuous cycle of innovation that truly benefits the customer - obviously those that cannot innovate fast enough will be hurt in this whole process.

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