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O2o Commerce in the Age of Amazon Table of Contents o2o Commerce in the Age of Amazon Table of Contents Amazon’s Move(s) into Brick and Mortar 2 Explore the current and future landscape of O2O commerce through the lens of Amazon, particularly the role of fulfillment and customer data. Integrating O2O Commerce: 7 Examples & Options Learn how your business can bridge the fundamental disconnect between eCommerce and traditional retail regardless of your size. • Allbirds: Start Small with Owned Retail Locations • b8ta: Instead of DIY, Use Retail-as-Service (RaaS) • Pop-ups: Connect with Customers via Micro-Retail • The 5TH: Go Global through Localized Experiences Reliance on Data for Inventory 20 and Buying Behaviors Discover the pivotal role of data in creating a single view of your customers for more efficient inventory management across acquisition channels. eCommerce and Retail: A United Future 23 Peek into the new normal of customer expectations and get your business ready for the future before Amazon beats you to it. The numbers are stark... Already, Amazon controls 49.1% of the U.S eCommerce market. Last year, Bezos’ beast became the second public company in history to be worth $1 trillion. And, by 2025, Bloomberg forecasts Amazon will officially break the trillion dollar barrier in gross revenue. However, while Amazon’s online presence dominates headlines, it’s the company’s offline activity that may usher in the most seismic changes. Just as Amazon created a new normal in eCommerce, it’s positioned to do the same in offline retail as well. The question is: What can you learn from Amazon’s journey into brick and mortar to prepare your business for the future? Table of Contents o2o Commerce in the Age of Amazon 1 Amazon’s Move(s) into Brick and Mortar Explore the current and future landscape of O2O commerce through the lens of Amazon, particularly the role of fulfillment and customer data. Amazon’s Move(s) into Brick and Mortar Since Amazon’s birth in 1995, eCommerce has exploded. Current data still places online sales at roughly 10-12% of the entire B2C retail market, but its growth rate and the digitally connected nature of in-store shopping have reshaped consumer habits along thoroughly Internet-based lines. Courtesy GeekWire In the early days of online shopping, many legacy businesses saw the Internet as an experiment and cautiously built their online channels separately from the offline parts of their operations. Unfortunately, pure eCommerce sellers took the opposite extreme: going all in online. Therein lies the problem … Businesses of both types have by-and-large failed to integrate their online and offline channels into a unified whole. Table of Contents o2o Commerce in the Age of Amazon 3 Amazon’s Move(s) into Brick and Mortar If you want your business to survive, you need to start working towards not only a seamless buying experience but — perhaps even more importantly — a single view of your customers. Given its dominance, Amazon’s shifts toward online-to-offline (O2O) commerce serves as an exemplary illustration of how to begin making this transition yourself. Amazon’s 2017 acquisition of Whole Foods for $13.7 billion made huge mainstream headlines. The purchase immediately added 464 brick and mortar locations to the company, which means the online giant can now integrate these stores with its eCommerce presence and use them for click-and-collect pick up and as warehouses to improve fulfillment. On the competitive side, Amazon dropped prices on some of the best- selling grocery staples which was said to have increased foot traffic by 33% one week after the acquisition. Amazon Prime Members can also take advantage of two-hour delivery services from Whole Foods Stores for orders over $35. The result is a combination of online and in-store goods where customers can come into local Whole Foods to pick up their Amazon order whether it be food, books, electronics, home goods … the list goes on. Customers also don’t need to worry about forgetting their grocery lists, because Amazon Alexa will sync their lists across devices. Table of Contents o2o Commerce in the Age of Amazon 4 Amazon’s Move(s) into Brick and Mortar When it comes to at-home fulfillment, customers also want and expect their fresh food delivered quickly. Amazon’s strategy of acquiring all of those physical spaces means they can use them to set up each as distribution warehouses. There’s no question that Amazon wants to make organic produce affordable and carve out its share of the grocery market, but those considerations aren’t the only reasons for acquiring Whole Foods. Businesses of both types have by-and-large failed to integrate their online and offline channels into a unified whole. Grocery buying habits, patterns, and preferences now enable Amazon to build upon what it set out to do from day one — focus relentlessly on their customers by tailoring the entire shopping experience. No doubt, those 464 physical stores will provide a wealth of new data for its already existing private label products across health and household, home and kitchen, clothing, shoes and jewellery. Shortly after the acquisition of Whole Foods was announced, Amazon hit the retail industry with more of the unexpected. A futuristic convenience store, Amazon Go, that uses artificial intelligence and cameras to track what customers are taking off the shelves, and automatically charging the cost to the customer through their Amazon Go app. Table of Contents o2o Commerce in the Age of Amazon 5 Amazon’s Move(s) into Brick and Mortar There’s been debate over whether this acquisition and the move into brick-and-mortar will play out well for Amazon, given its approach of selling high-quality goods at a lower-price point to customers accustomed to the ‘high-price, high-quality’ mentality. But there is one thing we know for certain: shopping habits will continue to evolve, which means business models and technologies need to evolve with them. Amazon thinks three steps ahead, so the quicker other retailers can start to harness the right tools and technology in their business to support the customer buying journey of the future, the better chance they have of surviving the changing face of retail. But … how? Table of Contents o2o Commerce in the Age of Amazon 6 Integrating O2O Commerce: Examples & Options Learn how your business can bridge the fundamental disconnect between eCommerce and traditional retail regardless of your size. Integrating O2O Commerce: Examples & Options Despite the rise in eCommerce capabilities, more than 55% of consumers visit stores before buying online indicating that shoppers still want to see, touch and feel products. What’s more, considering 82.5% of all retail sales will happen inside physical stores as late as 2021, there is a powerful incentive beyond Amazon for online retailers to consider what their options are in the offline space. Table of Contents o2o Commerce in the Age of Amazon 8 Integrating O2O Commerce: Examples & Options Allbirds: Start Small with Owned Retail Locations As a test-case, consider Allbirds. In just two years, Allbirds has gone from an idea to selling over one million pairs of shoes. The brand is fiercely passionate about not only learning from their customers to improve products and services, but it’s also fiercely protective of the brand itself. Courtesy Allbirds Allbirds is changing how the world buy sneakers. Initially launched as a direct-to-consumer eCommerce business, Allbirds has quickly grown in reverse by introducing two brick-and-mortar stores, the first in their San Francisco headquarters. Table of Contents o2o Commerce in the Age of Amazon 9 Integrating O2O Commerce: Examples & Options In an interview, Allbirds co-founder Joey Zwillinger explained that they carved out about 400 square feet just so they could learn from customers who visited their store everyday. In addition, the brand differentiates itself in two ways. First, with its product. Allbirds uses wool as the main material for its sneakers (the founders originated from New Zealand). A clever natural material to use for shoes as it keeps customers’ feet warm in the colder seasons but wicks moisture in the warmer months. Its shoes are unisex, and the latest design they’ve introduced is the navy- hue-colored sneakers called Starry Night, which was inspired by New York, the city that never sleeps. Table of Contents o2o Commerce in the Age of Amazon 10 Integrating O2O Commerce: Examples & Options The Allbirds shopfront in Soho. Courtesy Allbirds Second, Allbirds has staunchly refused to enter traditional big-box stores. As Zwillinger explained to Footwear News: “If we went and did omnichannel, we would sell more shoes, but we would get into discounting. We don’t want to do that. It would commoditize a product we think is really special. Instead, Allbirds has remained fully in control of both its online and offline expressions, merging the two on their own terms by owning its brick-and- mortar stores. Thankfully, for small-to-medium businesses, owning brick-and-mortar stores is far from the only path to offline success. Table of Contents o2o Commerce in the Age of Amazon 11 Integrating O2O Commerce: Examples & Options b8ta: Instead of DIY, Use Retail-as-Service (RaaS) b8ta is an innovative technology start-up that has revived retail, offering a new retail-as-a-service concept. b8ta helps people discover and try new products on the market from brands and makers that don’t have direct access to storefront real-estate. b8ta stores are designed for discovering, trying and buying the latest innovative products. Courtesy b8ta Table of Contents o2o Commerce in the Age of Amazon 12 Integrating O2O Commerce: Examples & Options Since the company was founded in 2015, they have already received $35 million in funding and have more than 78 locations.
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