Amazon Pop-Ups? Don’t Kid Yourself

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\"AmazonThe distribution century marches on. Its poster child and undisputed leader, Amazon, continues to amaze most people perhaps, but not me.  I see Amazon’s bigger picture as it relates to its plans to open about 100 pop-up stores in malls across the U.S. (as reported by “Business Insider”).

First of all, let me remind you what the distribution century means and how Jeff Bezos “got it” and figured out how to leverage and lead it. In an over-competed marketplace, it’s axiomatic that for retailers, brands, products and services to win, they must figure out how to distribute their value to consumers first, faster and more often than the multitude of equally compelling competitors. In other words, a great new product or service is just the price of entry. It’s a given, as is providing a great experience. Distribution now trumps all. It’s all about gaining quicker and easier access to consumers, and providing quicker and easier access for consumers.  This was coined “preemptive distribution” as one of the three new rules in my co-authored book, The New Rules of Retail.  

To be able to implement this strategy, one must place value on every compatible digital and physical distribution platform possible.  And some of these channels might be competitors’. Synergistic platforms include J. Crew and Brooks Brothers on Nordstrom’s platform as well as a growing number of other examples.  And, of course, Amazon itself is one of the most powerful and fastest-growing platforms in the world. It has nearly two million third-party merchants, many of which consider Amazon to be their dire competitive enemy.  However, they are compelled to stay with Amazon. Why? Because it’s all about being on every distribution platform that works to get in front of consumers first, faster and more often than the overwhelming number of equally compelling competitors.

Amazon is the leader in understanding and implementing this numero uno strategy.  And that explains their launch of physical distribution platforms, aka stores.  Their earlier bookstore tests and now pop-ups are just a “head-fake” interim step before they aggressively roll out small boutique-like specialty chains dedicated to product categories that consumers desire to have physical contact with: books, electronic devices, beauty, and oh, yes — apparel.  It’s been estimated that Amazon will be the top apparel retailer in the U.S. by 2017, thus overtaking Macy\’s.

Pop-Ups To Permanent

These 300-500 square-foot pop-ups feature Amazon-branded devices, including Kindle e-readers, Fire TV and Echo. The presentation is showroom-like so consumers can interact with/try out/get comfortable with the devices, which is impossible to do online.  Because of this, Amazon gets a doubling down traffic synergy: new traffic to the pop-ups and increased traffic to their site following the physical learning experience.

Currently with close to 30 pop-ups, according to “Business Insider,” and popping up every day (pun intended), it’s projected that Amazon’s fleet will reach 100 in 2017. These numbers would suggest the test is over. In fact, data-crazed Amazon is finding that wherever a pop-up is launched, traffic on their site from that geographic area, increases.

Add to this, and confirming that this pop-up strategy is morphing into a permanent channel, (if it had not been planned as permanent from the get-go), is the fact that they’ve been on a hiring binge.  One job post said Amazon pop-up stores “…has emerged from the test phase with a goal to expand and grow.”  That pretty much says it. And, by the way, they are not hiring run-of-the-mill associates.  The pop-ups are being run by Amazon’s device team, not the retail team that runs the bookstores. So they’re looking for people with the skills necessary to effectively interact with, and educate consumers on the attributes of Echo and other tech necessities.

Mi Casa Es Su Casa

As Amazon gains traffic through its pop-ups, the brand may increasingly gain wholesale distribution through traditional legacy channels.  For example, Amazon was kicked out of Target in 2012, but has recently been invited back in.

Wow! Can you remember when channels of distribution were discreet? Department stores wouldn’t be caught dead allowing a competitor to operate on their distribution platform.  Or if a wholesale brand that they carried opened a store across the street, the department store would kick them out. Not today.  It’s mi casa es su casa. … my distribution platform is your distribution platform.  So if consumers shopping Target happily find it convenient to buy Amazon products there, you can bet other legacy players will happily invite Amazon, along with other third-party brands they are eagerly pursuing.

It’s An Olympic Sprint, Folks

Amazon is not just marching on. It’s like an Olympic sprint as their growth rate dwarfs the overall industry. During Q2 of this year, Amazon’s global retail revenue grew 23 percent year-over-year.  The total online and offline retail revenues grew a mere 2 percent.

Picture Jeff Bezos crossing 50 meters in the Olympics’ 100-meter sprint, while the other runners have just left their starting blocks.

Amazon has scale. Amazon has deep pockets and deep-pocketed investors.  Amazon doesn’t have to show a profit.  Amazon has the most flexible, agile, efficient and fastest distribution platform on earth.  Amazon has the potential to be the largest marketplace in the world, capable of distributing anything to anybody, first, faster and more often, wherever, and whenever the consumer desires, 24/7

So being halfway through the 100-meter sprint means nothing to Bezos because he has an unlimited track to run on. Indeed, there is no finish line for Jeff Bezos and Amazon.



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