‘For us, a big part of it is being paranoid. We’re at our best when we’ve got a competitor that’s really challenging us.’

Walmart chairman Greg Penner, 2017⁴⁰

Under Lore, Walmart.com has been taking a two-pronged approach to digital acquisitions, targeting either 1) speciality retailers with deep merchandising expertise, strong product content and established relationships with vendors; or 2) digitally native vertical brands in a bid to differentiate from the competition. And by the competition, we mean Amazon.

Amazon makes it move

Jeff Bezos was asked in a 2012 interview whether he would ever consider opening stores. ‘We would love to but only if we can have a truly differentiated idea. One of the things that we don’t do very well at Amazon is do a me-too product offering.’

He continued, ‘…when I look at physical retail stores, it’s very well served. The people who operate physical retail stores are very good at it. 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?’⁴¹

Since that interview, Bezos has opened:

• Amazon-branded kiosks in shopping centres across America;
• collection lockers in retail stores, malls, libraries, universities and even apartment buildings;
• from LA to London, pop-up stores that swap price tags for scannable barcodes;
• bookstores that aren’t really designed to sell books;
• America’s first cashier-less supermarket;
• Alexa concessions and Amazon product returns areas in some of its most feared competitors’ stores;
• Treasure Truck (essentially Black Friday on wheels);
• a 4-star store that only stocks products with high online ratings;
• and a couple of drive-through supermarkets.

No, Amazon is not a me-too retailer.

Historically, Amazon’s physical space was designed to serve one of two purposes: showcase their devices or act as a collection site for online orders. As you can see from Table 5.1, Amazon’s initial move into bricks and mortar retailing was through collection lockers, college campus drop-off/pick-up sites and mall pop-ups.

Table 5.1    Evolution of Amazon’s bricks and mortar presence

Year launched	Concept	Primary function	Description	Exclusive to Prime
2011	Amazon Lockers	Fulfilment	Parcel delivery lockers found in retail stores, shopping centres, offices, libraries, gyms and more. Allows Amazon to overcome two of the biggest barriers to online shopping: missed deliveries and inconvenient returns.	No
2014	Amazon Pop-Up	Technology	300–500 sq ft sites that allow shoppers to interact with Amazon’s devices such as Kindles, Fire tablets and Echo in real life. Started out in malls; now also features in Whole Foods and Kohl’s stores (Best Buy in the US and Shoppers Stop in India also feature smaller Alexa concessions).	No
2015	Campus Pick-Up Point	Fulfilment	Amazon’s first fully-staffed pickup and drop-off collection point. Caters to college students across US campuses. In 2017, this was enhanced with the launch of Instant Pickup, allowing shoppers to collect from a nearby locker within two minutes of placing the order (since discontinued).	No
2015	Amazon Books	Retail/Technology	Bookstores with uniquely digital features: book covers face out and Prime members receive preferential pricing. About 75% of space dedicated to books. Designed to drive Prime membership and, as with the pop-ups, get shoppers interacting with Amazon technology in a physical setting.	No
2016	Treasure Truck	Retail	Amazon handpicks daily deals which are communicated to shoppers by text. Shoppers are then alerted to the location of the truck to collect their goods. Creates an urgency to buy and adds an element of fun to what is typically a functional shopping experience.	No
2017	AmazonFresh Pickup	Fulfilment	Online grocery collection service very similar to popular French ‘Drive’ concept. Amazon uses licence plate recognition technology to reduce waiting times, and orders are delivered directly into the trunk of the shopper’s car.	Yes
2017	The Hub	Fulfilment	Parcel delivery lockers for apartment buildings. Like the famous yellow Amazon lockers, The Hub is fully self-service, open 24/7, and accepts deliveries from all carriers.	No
2017	Whole Foods Market	Retail	Acquisition of 450+ supermarkets across North America and the UK. Amazon was attracted to Whole Foods for its strong perishable offer (67% of sales); strong own label; urban presence; and strong overlap with Prime customer base. Amazon is officially no longer a pure-play online retailer.	No
2017	Amazon Returns	Fulfilment	Unique agreement with Kohl’s department stores where Amazon shoppers can return unwanted online orders to their local Kohl’s. Addresses the perennial headache that is online returns, while driving footfall to Kohl’s. We expect this to be rolled out internationally.	No
2018	Amazon Go	Retail	First checkout-free store. Shoppers scan their Amazon app to enter. The high-tech convenience store uses a combination of computer vision, sensor fusion and deep learning to create a frictionless customer experience.	No
2019 and beyond	Fashion or furniture stores would be a logical next step

NOTE Amazon Go officially opened its doors to the public in 2018

SOURCE Amazon; author research as of June 2018

However, it was Amazon’s rather ironic launch of physical bookstores in 2015 that marked a genuine shift in strategy, as this was the first time Amazon mimicked digital merchandising and pricing in a physical setting. ‘We’ve applied 20 years of online bookselling experience to build a store that integrates the benefits of offline and online book shopping’, said Jennifer Cast, Vice President of Amazon Books.⁴²

The most helpful online review is displayed as well as the overall rating and number of customer reviews. Product recommendations in the form of ‘if you like this, then you’ll love…’ signage has been brought to the physical shelf. Book covers face out as they would do online, and books must have at least 4-star recommendations to make it on to the shelf. This means a much more curated assortment; the stores only stock about five titles per three linear feet of shelving, while most bookstores offer more than triple that figure.⁴³ Around 25 per cent of the space is dedicated to sales of non-book items such as Bose speakers and French presses, but also a lot of Amazon’s own devices – Kindles, Echo speakers, Fire tablets as well as its own-label Basics range of electronic accessories.