Amazon Shutting (Real) Shops: What This Says About E-Commerce And Subscriptions
April 13, 2022
Vindicia’s Chief Revenue Officer Jack Bullock explores the deeper meaning behind Amazon opting to go back on its initiative to start physical shops and head back to the solely online model.
When Amazon started opening brick-and-mortar stores, many in the industry were shocked. After all, Amazon was THE online superstore; it had spawned a whole new generation of online shoppers. Yet, in 2015, Amazon did an about-turn and opened its first physical bookstore. This was followed by other ventures in physical retail, including homewares and toys, as well as pop-up stores and the Amazon Go cashless convenience store.
But then the pandemic hit, and Amazon has now announced it will close 68 of its brick-and-mortar bookstores and other shops.
Shifting sands
Even as e-commerce steadily rose in the past decade, there was still a palpable feeling that the physical in-store experience was something special and irreplaceable. Since time immemorial, people have engaged in face-to-face commerce, in markets and stores all over the world. But then came COVID and people turned to online shopping on a global scale like never before.
“40% of US adults say they enjoy shopping in-store less than before the pandemic.”
By May 2020, over 6 in 10 American adults had reported buying something online for the first time. As the world now enters the post-pandemic phase, in-store shopping is rising again, but e-commerce is still gaining solid ground. By 2023, online sales are predicted to account for 27% of all retail consumer purchases – an unheard-of figure.
Yet, COVID has changed us: 40% of US adults say they enjoy shopping in-store less than before the pandemic, and a further 15% say their enthusiasm for in-store shopping has “waned.”
It’s on these shifting sands that Amazon seemingly failed its experiment with brick-and-mortar stores.
Hassle free, but human
Amazon was the first to understand that consumer behavior had changed when it launched its online bookstore. Then, in response to consumer demand for in-store experiences, it launched into physical retail. Now, as it shuts 68 of its stores and retreats back to the digital realm, Amazon can see that consumers want more.
“They want a hassle-free, convenient experience, with the products and services they need at their fingertips, smoothly and seamlessly.”
They don’t just want to click and buy online, yet they don’t want just the regular experience of going into a store either. They want both – and more.
They want a hassle-free, convenient experience, with the products and services they need at their fingertips, smoothly and seamlessly. But they also want the personal connection, a feeling that issues will be taken care of without their intervention, and that the shopping experience will anticipate their needs, connect them to the products they love, and overcome any obstacles without undue burden on their shoulders, or email inbox, or credit card.
What keeps customers connected
Whether it’s Netflix, or dog food, or vitamins, every consumer has their favorite products and services that they need and/or want on a regular and ongoing basis. Some are necessities, some are “luxuries,” some fall into both these categories.
“No matter what the product, it is upon the company to make sure that its customers are given the opportunity to consume those products.”
But no matter what the product, it is upon the company to make sure that its customers are given the opportunity to consume those products – without friction – and to help them to continue to consume them, day after day, month after month. That’s the key to retention, and as Amazon has shown us, you don’t need a physical store to do it. What you need is subscriptions.
Beyond brick and mortar, beyond the e-store
Subscriptions take today’s consumers outside of the shopping experiences that they are used to and connect them to amazing brand experiences in a seamless and satisfying way. With the help of Vindicia’s subscription tech-stack that covers the full journey, from acquisition to retention to churn prevention, businesses can capture customers where they are, and connect them via their credit cards with products and services they love, and keep them connected indefinitely. That’s the way to enhance the customer’s lifetime value, and boost revenue.
Yes, consumers have changed, and business must change with them. Amazon’s latest move is proof of that.
About The Author
Jack Bullock
Jack brings 25 years of sales and sales management experience to Vindicia. Prior to joining Vindicia, he was senior vice president of digital commerce sales for Pitney Bowes, where his responsibilities included overall management of the global sales organization. Jack has extensive experience in enterprise software, including senior management positions with Infor and Vitria. Jack began his career at Oracle and has also held sales and sales management positions at Forte Software. Jack holds a Master of Business Administration degree from University of Colorado and a B.S. in Computer Information Systems from Missouri State University.