This week Amazon celebrated the grand opening of its first staffed pick-up and drop off location at Purdue University, a move that connects the brand with its more humble beginnings. Education was embedded into the brand’s early DNA when the first product it ever sold was a science textbook, and, while it has become known as an online shopping destination where consumers can buy just about anything, it remains a popular source of back-to-school items. According to Mintel’s Back-to-School Shopping US 2015 report, 36% of all back-to-school shoppers visited Amazon during 2014. Although not as high as the share of shoppers who visited Walmart (78%), it is statistically equal to the share who visited any office supply store. The brand becomes even more popular when considering shoppers who are buying for college students. Nearly half of shoppers who bought BTS items for college or university students (other than themselves) visited Amazon, and 50% of college students buying for themselves also visited the site. What does Amazon’s on-campus partnership mean for retail? The often-cited weakness of online-only retail, or e-tail, is that the lack of physical storefronts makes it impossible for these businesses to recreate some of the positive experiences that brick-and-mortar stores can offer. Naturally, some industry commentators, including TechCrunch’s Darrel Etherington, have already cautioned that Amazon’s latest announcement should be cause for concern for other retailers. As Etherington noted, the brand is already planning to expand its presence on Purdue’s campus. If successful, it’s likely that it will want to further grow its physical presence. So, should other retailers be worried? 36% of all back-to-school shoppers visited Amazon during 2014 While Amazon is not immune to making mistakes, the company consistently does several things exceptionally well. The brand benefits from long-held industry recognition for being a leader in highly effective supply chain management, which has allowed it to operate efficiently and achieve high order fulfillment as well as pioneer value-centric features like free two-day shipping. Further, this is not Amazon entering into a new market – instead, it is capitalizing on an already engaged following by delivering even more value to its college-aged customers. From a consumer perspective, the company’s strong track record of excellent service translates to a deep level of trust. Mintel data shows this trust is why Amazon attracts a large share of shoppers even in product categories that usually depend on the look and feel of an item. According to Mintel’s Shopping for Home Decor US 2014 report, for example, shoppers overwhelmingly preferred to buy decor items in-store overall, yet 40% still reported buying decor items from Amazon. Furthermore, this isn’t the first time an online-only retailer started opening physical locations. Online apparel retailer Bonobos opened six similar locations in 2012, where customers can schedule appointments to try out clothing in different sizes, but placed orders through the Bonobos website. According to Bonobos CEO Andy Dunn, each store was on track to earn $250,000 in sales within the first six months of opening. Will Amazon stop at universities? It makes a lot of sense for Amazon’s venture into staffed brick-and-mortar locations to start with colleges. As previously mentioned, the brand has considerable traction among back-to-college shoppers, and the Purdue location will likely give it a greater presence in that regard, especially when combined with planned services such as free one-day shipping for textbooks and other products for Purdue students. However, history shows that when Amazon succeeds, it expands the scale of that success, and it is likely that this initiative will serve as a testing ground to see whether larger investment in brick-and-mortar infrastructure would be worth the operational cost. According to a February 2015 article in Bloomberg, Amazon has expressed interest in acquiring some of RadioShack’s physical stores following the electronics retailers’ bankruptcy filing, which would give Amazon the opportunity to showcase a greater range of products and expand its brick-and-mortar infrastructure beyond the back-to-school market. Ultimately, this move signals the increasingly interconnected nature of ecommerce and brick-and-mortar retail. While online-only stores have started investing in physical infrastructure, traditional retailers have also been heavily investing in their digital channels. It is tempting to focus largely on price and product selection when looking to the success of businesses like Amazon. While these are dominant factors, particularly for online shopping, the value of retailers’ services cannot be ignored, particularly given the wealth of multichannel research that many consumers conduct before making a purchase. For instance, according to Mintel’s Online Shopping US 2014 report, more than one-fifth of consumers performed every type of research studied, which included comparing prices on a mobile device while at a physical store, browsing for pictures of items for inspiration for what to buy and reading product and service reviews. As initiatives such as Amazon’s evolve, it will not be enough to just offer lower prices. Increasingly, the competitive battleground of retail will be in the ability to effectively meet customers’ needs offline, online and at every other point of interaction with the brand. You might also be interested in: No related posts.