Insights / Multichannel

A Retrograde Shift: Online Giants are Coming Back to Earth

Amazon and Google want to increase their brands’ visibility by opening physical retail stores. Will the move bring these tech giants down to Earth, or do they still have their heads stuck in the clouds?

There has been plenty of hype lately about large online organisations toying with the idea of opening physical stores. Notably, both Amazon and Google are trialling the idea in a bid to attract new consumers in a novel ‘backwards’ shift.

The model has been likened to Apple’s retail footprint, with a large online presence being showcased in boutique bricks and mortar stores. At the same time, the move from ephemeral to physical has already been made successfully in several cases, most astoundingly by the mobile game Angry Birds, which now has two outlets in Finland.

“There is a growing realisation among the leading bricks and mortar retailers that the in-store customers and the online shopper are not distinct, siloed groupings – there is a very substantial overlap,” said Dr. Windsor Holden, principal analyst at Juniper Research.

“This rather belated recognition has certainly benefited companies such as Barnes & Noble, which is using the mobile device as a hub with which to marry the physical and digital worlds,” Holden told Mobile Commerce Daily.

A physical store will always be an effective way of solidifying customer relations, demonstrating product and really presenting the best of the business. In that sense, it is easy to see the thinking behind the large online tech giants wanting to set up shop alongside the likes of Apple.

However, there is plenty of evidence to suggest that online retail growth is not slowing, causing many questions to be raised regarding the longevity and viability of the traditional shop.

Amazon Retail Store

A physical retail outlet for Amazon is due to open in Seattle later this year. Credit: Geek.com

“I am not wholly convinced of the benefits of moving into the physical storefront space,” said Holden.

“There is a strong case for arguing that what is happening with the physical storefronts is really the beginning of what may well be a prolonged end game – that they are in fact sweating their physical assets before there is an even greater shift to online purchase,” he said.

Regardless of whether or not the traditional store has an expiry date, Google and Amazon both feel that some physical presence can only improve their standing within the retail community. The push for higher visibility is really just further evidence that there are no longer discrete channels in retail. The rise of mobile, the importance of weighty, relevant content and the blurring of on- and offline stores all support this idea.

In Australia, we see the big department stores like Myer and David Jones rushing to develop successful e-commerce websites, while simultaneously pressuring their suppliers to lower their prices.

It all points towards a fundamental paradigm shift. Retailers can specialise as much as they want in terms of their product offering, but to continue to be truly competitive and ultimately successful, it is crucial to make the most of every available channel. In fact, it would probably benefit retailers to stop thinking in terms of ‘channels’ in general.

There is really only one market for any given product – the challenge is to realise every facet of it.

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