Anyone working online in the past twenty years will be familiar with a chant that goes a little like this: Con-ver-gence, Con-ver-gence. The Convergence drive between online and offline has been all about achieving cost-saving efficiencies and tapping into the customer’s ‘dead zone’ – the time when consumers are at home in their pajamas with nothing to do but browse products and spend money.
To achieve this, bricks and mortar stores went online and started to trade across geographical boundaries and time zones and online businesses started the odd bricks and mortar store and offered increased offline branding and local access for customers. While, on paper, this approach seems destined to turn one into the other, pulling off the transformation has never been an easy thing and the reason why is highlighted by, Amazon, the example which proves the rule.
Online business models rely on two things to make money: lower staffing costs and lower inventory overheads. A warehouse and a website are a lot cheaper to run than the traditional storefront-warehouse-sales staff combination of traditional retailing, and their target audience is usually much larger. Bricks and mortar stores rely on the tactile experience of shopping and the human service touch, to keep their customers, offering digital as an additional means of convenience to their core customers.
In an ideal world the two would never meet. Those working online compete solely on price and reach customers who have no direct access to a local store. To keep overheads low they work on reduced inventory and protracted delivery dates. Local retailers, on the other hand, work on loyalty and the instant gratification of the shopping experience. You may be able to order something online cheaper, the reasoning goes, but you’ll have to forego the experience of walking into a store and walking out with your purchase minutes later.
No more. Amazon is an outlier in an industry which prides itself on outliers. From its very inception as an online bookshop it set out to solve supply chain issues which plague traditional retailers. In the process it invested heavily in technology which optimized inventory and reduced delivery time for online orders. This has allowed the company to compete with traditional retailers on what grabs instant consumer attention: prices.
From its popular price comparison app
which lets you barcode scan and price check any item in a shop and order it from Amazon to the launch of the very new Amazon Prime
which allows consumers to become members of a fee-paying elite club and enjoy specific benefits, Amazon has set out to disrupt the way we shop.
Its latest initiative is one more step in that direction. Its ‘same day delivery’ service, currently experimental
, aims to blur the lines between online and offline retailing by delivering a shopping experience that is almost as fast as that of offline stores. Aided by the brand recognition factor, Amazon’s shopping guarantees and the wider experience of online reviews, Amazon’s offering has the edge here.
Will it take off? Everything Amazon has done since it was founded in 1994 has been aimed at redefining how we shop. If local stores want to fight back they will have to step up their game on how they attract and keep local customers. Right now they are all busy shouting ‘foul’. The smart ones should take the fight to Amazon, using their websites in combination with their offline presence to deliver a service which has the best features of local shopping, online convenience and competitiveness.
They won’t. To do this local stores need to invest in technology which seamlessly links online and offline, tracks inventory across their warehouses and links everything up with an in-store or local delivery service. This takes time, money and the singular vision of an individual like Bezos. Had they started heading in that direction the moment the web came on, like Amazon did, right now they’d stand a fighting chance. They didn’t and time is something which is rapidly running out.