There are three simple components to retail that have been blurred with the onset of online or self service retail. The first component is the actual selling of merchandise. This is when the mind of the buyer meets the mind of the seller making the offer. That is, the shopper accepts the offer that the retailer is making: their minds effectively meet. A century ago that connection of minds was mediated by the retailer and his staff. Yet, with the massive success of self service and online
retail, the selling has become largely unmediated.
The second component is the delivery of goods, which includes everything from production, inventorying, delivery to the store, and merchandising.
We can subsume all of this under the category of logistics.
The third component is payment and, for the retailer, the management of cash.
Notice that these latter two functions are primarily the retailer’s responsibility but, in the self service world, the first has largely been ceded to the shopper.
Some online retailers have found that shoppers do an adequate job of selling to themselves, even if they’re not being efficient.
But the world of retail is changing, as seen through the example of Amazon.
The real significance of Amazon is not that it is selling online, but rather that it has pioneered a return to mediated sales.
Instead of hiring staff to speed the shopper along the way, Amazon has harnessed computer algorithms to essentially do the same thing that salesmen did in the old days.
Now a computer efficiently helps the Amazon shopper find what they want, make up their minds, upsell, and reassure them they have made the right choice.
Mediated sales are returning to the self service world of retailing.
Retailers absorb online principles
There are several things that make this development propitious, with the first being that at least one bricks and mortar retailer is absorbing the trend.
Costco has adopted Amazonian techniques for leading the shopper through its store navigation and selection processes, without the computer algorithms.
There is a close relationship between the shopper’s mind as it clicks through an website and as it moves through a regular bricks and mortar store, like Costco.
Wharton Professor, Peter Fader, figured out this shopper insight by looking at how people buy products online and offline.
He assumed the instore process of deciding what juice to buy would be very different to someone browsing online through a bunch of different books or CDs.
“Until I actually looked at the data, and it turned out that the patterns were remarkably similar,” he says.
This finding is especially exciting because Amazonian principles can be adopted for any store in the world.
In some ways it is even more exciting that the full range of Amazonian selling skills will someday be an integral part of nearly all shopping trips, as smartphones become efficient shopper assistants.
Expect the retailers that master the principles without the technology to be at the forefront of retail.
It will be a world where all are enhanced by Amazonian principles within four bricks and mortar walls.
Herb Sorensen is a US-based shopper marketing scientist, international speaker, and author of Inside The Mind Of The Shopper. Email him on herb.sorensen@shopperscientist.com.