There isn’t a perfect equation or an optimal route for expanding into new markets because every Brand and every market has their own distinctiveness, but what every expanding Brand needs is a clear strategy to ensure every move is deliberate and thought out. Amazon – leading e-commerce Brand that carries everything “From A to Z” – has developed a strategy and is preparing to expand into a market that many wouldn’t have seen coming … but it might just be crazy enough to work.
When other brands are developing strategies to move into the digital space, Amazon will attempt to do the opposite, introducing a physical component to shopping online. Over the past several months, Amazon has been testing out physical retail locations as the Brand recently announced its new approach to breaking into the $600 billion-dollar grocery industry: AmazonFresh. Amazon is methodically testing this idea with select audiences, currently available only to Amazon employees, and the Company hopes to soon introduce Amazon Prime members, giving them the ability to order their groceries online and pick them up from the curb within minutes. Okay yes, ordering online and picking up in store isn’t something consumers aren’t accustomed too, with retail giants such as Walmart already having the “click and collect” grocery option.
Where Amazon takes retail technology up a notch, as they traditionally do, is in their Amazon Go retail locations, completely removing the need to go online and “click” … meaning you will be able to simply “collect.” These physical locations will be using the most advanced shopping technology, featuring their “Just Walk Out Shopping experience, simply use the Amazon Go app to enter the store, take the products you want, and go! No lines, no checkout.”
After finding huge success with e-commerce, why would Amazon move into the brick and mortar space, especially in an era that seems to be going primarily digital? Amazon saw the opportunity to innovate the consumers’ physical shopping experience, something they continue to do in the online retail market, while also realizing that some products sell better in physical form, in this case, groceries. In places like the grocery market, visual appeal is critical as things like freshness and taste can be more easily ascertained in person than online; something Amazon is all too familiar with as it is estimated that online grocery sales account for only 1-3% of profits. “Consumers are understandably reluctant to have someone else pick out their fruits, vegetables, meats, fish, and chicken.” Consumer reluctance combined with the razor thin profit margins present in the grocery space, means that if Amazon is truly committed to breaking into the market while continuing to innovate, Amazon Go seems like the next logical step.
As with any successful Brand extension, Amazon’s ability to keep their Brand consistent and understanding the Brand’s core during the expansion is critical. Consumers want to be led towards new products from brands they trust, with “48% of Americans [wanting] brands to know them and help them discover new products or services that fit their needs.” The core of Amazon’s Brand is innovation in shopping, with millions of consumers already having a positive relationship and loyalty with the Amazon Brand. As they venture into this new market, Amazon must honor their existing online presence in terms of the Brand’s look and feel, as well as the innovative interactions and buying experience – with Amazon consistently being one step ahead of consumers and knowing what they want, or should want, to pick up next. In fact, a survey of nearly two million people aged 18-36 – a key demographic for any digital Brand – found that “they expect a consistent experience from brands whether they interact online, in store, or via phone.”
Watching one of the most successful brands in the world handle expanding into new markets will be fascinating to watch and one that many brands have potential to learn from. It is now up to Amazon to maintain control over their Brand in these new areas to help determine if their new services will succeed or fail.