In expanding its omnichannel strategy, Amazon keeps experimenting with various iterations of brick-and-mortar locations, testing out grocery concepts, book stores, and cashless sites. Another new option, currently available only in New York City, seeks to make use of one of the key features that distinguishes Amazon from other retailers—that is, its vast treasure trove of consumer reviews. At Amazon 4-Star, the only products carried are those that have earned at least a 4-star rating on the ecommerce site.
Along with this baseline guarantee, the store provides excepts from example reviews, detailing
what made the product appealing. Thus Amazon can leverage the massive amounts of data that customers freely provide it, in writing their reviews, to encourage other shoppers to consider well-rated and popular items. It is using these data precisely too, such that the products appearing in the SoHo shop are specifically popular with customers who live nearby, so that there is a localization element.
Yet this experiment is a unique approach to assortment decisions. The assortment reflects the wide range that Amazon is known for, spanning books and gadgets to home goods and kitchen utensils. With this approach, it can also define the merchandise categories in a novel way. That is, the store is organized not by product lines (e.g., all books in one location) or usage situations (e.g., everything for a kitchen placed together) but by categories that Amazon has defined from its customer data, such as Trending Around NYC, Most Wished For, and Amazon Exclusives—including of course selections of its Fire and Echo devices.
The pricing strategy also reflects Amazon’s omnichannel approach, in that shoppers in the store encounter different prices for Prime members versus non-members, just as they would on the ecommerce site. The promise of free shipping may be less relevant for these in-store shoppers, but they can still obtain a lower price by signing up for a Prime membership.
Discussion Question:
- What is the assortment strategy for the new Amazon 4-Star store?
- Do you believe this concept store will be a success? Why or why not?
Source: George Anderson, Retail Wire, September 77, 2018