News broke on June 16 that Amazon will buy the US grocery chain, Whole Foods, for $13.7 billion. It’s just one more push in the Amazon omnichannel expansion.
The company that started off as one of the first online booksellers has since exploded into a game-changing force to contend with.
It has its lucrative, back-end technology division, Amazon Web Services. AWS is a juggernaut onto itself. It’s on track to sell $14 billion worth of services this year.
The company is, of course, more known for its dominance of eCommerce and a sophisticated logistics operations.
This, of course, culminates in Amazon Marketplaces, a more-than-viable sales channel for millions of suppliers to launch and grow competitive businesses. It’s what makes Amazon a bigger supplier of apparel than Macy’s.
Now Amazon is stepping up its own omnichannel dominance.
Amazon Omnichannel and its Bookstores
As The Atlantic notes, Amazon has been moving into brick-and-mortar for some time. It already has eight bookstores across the US, with another six opening soon.
The stores sell physical books, with the all the covers facing outward. Thus, Amazon’s brick-and-mortar strategy seems more like the “showroom” model, less the traditional inventory turnover goal.
Crucially, Amazon capitalizes on its data proficiency in its bookstores. It encourages customers to use the Amazon app and to scan barcodes for reviews and other information. In-store pricing is also affected by data: Amazon Prime customers get better prices than other customers.
Amazon Develops Omnichannel for Groceries
Amazon looked to expand into the groceries market for years a $612 billion a year industry, according to recent data from IBISWorld.
Whole Foods gives Amazon the physical locations it needs to compete in that sector. Because customers still prefer to buy food in person, pure-play online grocery businesses have a competitive disadvantage.
The company experimented with create cashier-less grocery store technology. Now, Whole Foods gives Amazon 465 locations in North America and the UK, to compete in that market and experiment. They could apply the omnichannel they develop there to other verticals.
But No Comparison Shopping Allowed!
Part of Amazon’s omnichannel strategy may include an effort to prevent customers from literally abandoning a shopping cart purchase. The US government patent office in May granted Amazon a patent for “physical store online shopping control”. This technology will block customers using in-store wifi from requesting online content associated with Amazon competitors. In other words, they don’t want customers to compare Amazon prices with their competitors.
In addition, the technology will let Amazon make more offers to customers while they are physically shopping, on their smartphone.
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