Bezos and the Brick

Amazon is on a quest to perfect the ‘last mile.’ Will its brick-and-mortar ambitions turn retailing on its head?

In an interview with TV talk-show host Charlie Rose, Jeff Bezos looked prepared for the inevitable question: “Are you headed to brick and mortar?”

Pausing long enough to take only a single breath, Bezos spoke confidently to one of the few reporters with whom he has gone on the record in recent years.

“We would love to, but only if we can have a truly differentiated idea,” he said. “One of the things that we don’t do very well at Amazon is do a ‘me-too’ product offering.

“The question we would always ask before we would embark on such a thing is: What’s the idea? What would we do that would be different? How would it be better? “We don’t want to do things because we can do them. … We don’t want to be redundant.”

That was Nov. 16, 2012. Today, the reigning king of online retailing is ready to turn his clicks into bricks.

More than a year after opening the first physical Amazon bookstore in his company’s hometown of Seattle, Bezos is returning to the very playbook he created two decades ago when he launched the country’s first online bookstore. First books. Then … who knows what?

Well, now we’re beginning to get an idea.

Just days before Halloween, Amazon spooked countless retailers with a rumored pilot of 2,000 click-and-collect stores. And though a company spokesperson emphatically debunked that figure—“Not even close,” she said—the digital dynamo stunned analysts with the late-fall debut of its incipient c-store Amazon Go.

A video launched on YouTube shows customers walking in and out of an 1,800-square-foot store outfitted with subway tiles, wood trim and sleek black shelves.

It’s stocked with packaged goods and prepared foods made fresh daily by chefs and favorite local purveyors. Using technology similar to that of self-driving cars, the customers’ smartphone tracks everything they pull from the shelves, eliminating the need for a checkout. It brings new meaning to the term “grab-and-go.”

On what all this means for Amazon’s future retail strategy, the company is  characteristically mum. “I can’t comment on any rumors or speculations there might be,” said Brian Olsavsky, senior vice president and CFO of Amazon.com Inc., following a question about grocery gossip during the company’s most recent earnings call.

Rumors? Speculations?

The dot-com bubble of the late 1990s boomed with audacity, brashness and, perhaps, even some justified overreaching. Absurd startups pocketed millions from a Wall Street awash with money. But soon after the balloon took off , it popped. Loudly.

Still, some businesses anchored in the web remained afloat. And one would change the world of retail.

Quarter after quarter, Amazon lost millions of dollars. It didn’t turn a profit for nearly a decade. Yet investors, thinking long term, rewarded it with greater interest.

Spearheaded by wunderkind Bezos, the Seattle-based company opened its digital doors in 1994. The online bookstore eventually outdid venerable behemoths Borders and Barnes & Noble. In a decade’s time, Borders shuttered; Barnes & Noble greatly reduced its presence.

Amazon expanded into DVDs, CDs, Blu-rays, apparel, housewares, video streaming, audiobooks, electronics and more. And while its virtual shelves proliferated, the company’s foray into the physical—AmazonFresh, Amazon Locker, drones, jumbo jets, postal carriers out on Sundays—began to take form.

It seemed scattered and incongruent, yet all moves were directed with the same goal: how to perfect the last mile, the final leg in a product’s journey to the consumer, with speed, efficiency and customer satisfaction.

“You can’t just look at any one thing Amazon does; you have to look at Amazon from 30,000 feet above,” says veteran retail and design consultant Gerald Lewis. “They’re not confined to online. Rather, online was the way for them to create a convenience channel for customers to buy things at lower prices and in more convenient ways.”

Keeping true to its reputation, Amazon officials did not respond to requests for an interview for this feature.

“Everything they do—from technology to logistics to their retail platforms—is all about finding the best way to get products into your home,” Lewis says. “So when you look at the brick and mortar they are planning, you have to view this as another laboratory for them to find out how they can … create a more unique, convenient experience for the consumer.”

Continued: Virtual Ceilings

Pages