Retail

Amazon’s Entry Into Omni Channel Retailing: The 5 Big Things in Amazon’s Acquisition of Aditya Birla Retail(ABRL)

 

1. That Organoleptic Feel!

The greatest difference between the traditional retailing channels and online e-commerce platforms was the feeling of touch and gratification on seeing the product in full shape offered by the former and the wide product selection as well as competing prices in the latter. With Amazon’s entry into the brick and mortar business, it can claim to provide the benefits of both to the customers.

The psychology of supermarket shopping

2.The Bigger Portion Out There

 

In spite of being a country having an estimated 281 million daily internet users, 38% of the population in urban India and 47% in urban India do not use the internet for their shopping needs. Even in countries where internet penetration is higher, the share of brick and mortar retailers is significantly high. For instance, whereas China has 82% physical stores, in the United States it is 89%. The decision to go for omnichannel retailing will definitely win the portion of market share held by the unorganized (92%)and organized (7.5%) physical retail space, which is, in fact, a huge number!

Let me have a bigger piece!

3.The Data Advantage

With a huge amount of data already telling the untold stories of consumer behavior, Amazon will surely have an edge over the conventional physical retail stores. The e-commerce giant can harness the advantages of data analytics on which it is already strong to understand the varying needs of the customers and stock the products accordingly. The physical retail space can be hence be tuned to a much more efficient serviscape.

4.Always Ahead Of The Clock

The excellent network of fulfillment centers spread across the country, touching a figure of 20 million cubic feet over 13 states can be further expanded with the introduction of physical stores. It can complement both the online and offline sales by cutting short the lead times for online delivery by fulfilling the orders through the physical stores in the immediate vicinity. For physical retail, through the exact knowledge of shopping history of the customers online, the physical experience can be fine-tuned to match the customer expectations.

5.Tackling The Smart Group

Nothing comes without a risk, isn’t it? Well, the biggest risk Amazon will be facing is dealing with the smart group of customers. Still wondering who are they?  Of course, it’s most of us! The “research shoppers”. We search in one channel and shop from another channel based on the value proposition. Studies have shown that omnichannel retailing increases the research shopping tendency by more than 25%  thereby preventing the channel-specific lock-in effects.

 

Seeds for Happy Learning :-):-)

Research Shopping/Showrooming: The propensity of consumers to search in one channel and then purchase through another channel.

Omni-channel retailing:  Integration and collaboration between retailers’ physical stores and digital stores.

References

Herhausen, D., Binder, J., Schoegel, M., & Herrmann, A. (2015). Integrating bricks with clicks: retailer-level and channel-level outcomes of online-offline channel integration. Journal of Retailing91(2), 309-325.

 

 

 

 

About the author

Shalique M.S

Research Scholar, IIM Kozhikode

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