Amazon Will Bring More Products To The Next Line.

stay Amazon In the Empire's huge business system, physical retailing has taken a place.

According to the world clothing and shoe net, according to the 2017 fourth quarter earnings report released by Amazon last week, the sales volume from the physical stores exceeded 4 billion 500 million US dollars in the quarter sales, a 250% increase over the 1 billion 300 million quarter of the three quarter. This also means that Amazon has achieved a 3.5 fold increase in physical store sales in one quarter.

Although it's an order of magnitude smaller than the $35 billion 400 million online, it's already quite impressive, knowing that offline business already accounts for 7% of Amazon's total sales.

Amazon Q4 Q4 2017 (unit: million)

Amazon's earnings report was divided into two parts online and offline in the three quarter, largely due to the acquisition of organic food supermarket Whole Foods in August last year. What needs to be explained is that sales of Whole Foods have stopped growing before Amazon's takeover, while same store sales have declined in the latest 7 quarters' earnings reports, and its board of directors has been planning to sell it.

"The three quarter offline sales are mainly from Whole Foods and Amazon Books, and other projects will also be classified into this category." Amazon CFO Brian Olsavsky said in an interview. But in the latest fourth quarters, the above situation has changed. Amazon has not calculated the year-on-year growth of the physical stores, so it is likely that this category of statistical items has changed.

A separate disclosure of the physical store's performance shows Amazon's "ambition" in the offline retail sector, and its ecological tentacles have already extended to the field.

Amazon Books

In November 2015, Amazon Amazon Books opened, which is also the first retail store launched by Amazon. The bookstore has become the preferred format under the Amazon water test line, mainly based on the high standard characteristics of the category, but it does not require a high level of supply chain management.

But the bookstore is more than a offline test. Amason's expansion to the bottom line is also reflected in the layout of fresh products.

Amazon Fresh

As early as August 2007, Amazon launched Amazon Fresh, which is similar to the concept of fresh electric business or O2O. In the Amazon Fresh operating city, Amazon Prime members can enjoy this service by paying an additional $14.99 a month, which requires 1 hours and 3 hours of delivery according to different delivery methods.

In December 2014, Amazon launched a completely service concept Prime Now, which is based on the concept of O2O. The product has an independent App, which provides Prime members with orders for daily necessities, fresh food, local restaurants and local stores. The 2 hour order is delivered free, and the extra charge is 1 hours. These services are also provided by the US O2O Unicorn Instacart.

Now, the business of Prime Now and Amazon Fresh is becoming more and more coincided, and the future is likely to merge.

The US commercial website BI quoted Morgan Stanley's investigation report that the fresh orders in Prime Now have been increasing continuously, occupying 48% of all orders. At present, Amazon's two businesses are led by the same person. The city of Amazon Fresh services is shrinking, while Prime Now is expanding.

According to the report, although Amazon has been working on Amazon Fresh for almost 10 years, it has made slow progress and is slow to make profits. This has encouraged Amazon to move to the bottom line.

AmazonFresh Pickup

In May 2017, Amazon launched the AmazonFresh Pickup, a retail store that users independently pick up. First it opened two stores at its headquarters Seattle, which functions similar to warehouses.

Pickup supports users Online procurement And payment, then to store self pick up. After the user orders, he drives to the special parking lot in the store, and the Amazon staff will deliver the goods to the user's car. The user can make an appointment to pick up the goods. The average user can pick up the goods 2 hours after the order, and the Prime member only needs 15 minutes.

According to the report of The Settle Time, when the user first arrives at Pickup, Amazon will record the user's license plate number. However, after the user patronize again, the equipment in the parking area of the Amazon will automatically scan the user's license plate to remind the store staff to send the order in time. Of course, users can also choose to cancel this automatic scanning setting.

On the official website of Amazon Fresh, you can see the categories of fresh, daily necessities, local specialties, soups, food bags and so on. This is also the main category of Whole Foods business. Whole Foods is known as a grocery store in the United States, not a supermarket. Supermarkets refer to images. Wal-Mart And Costco's all SKU covered warehouse hypermarket.

Amazon Fresh sales category, source: Amazon Fresh official website

But Amazon did not simply choose to make fresh choices for the next line, but more because the business model encountered bottlenecks in fresh and everyday necessities. Consumers are still accustomed to buying offline, they are the lowest penetration of e-commerce categories.

For those products with long shelf-life, consumers are willing to plan procurement ahead of time, hoarding storage in advance, and can tolerate waiting for some time. But for fresh commodities with shorter shelf life, purchasing decisions are usually made when demand is met, and hope to be satisfied immediately.

If the restaurant is regarded as a pure offline business, and consumers are the most sensitive to demand satisfaction, then fresh is a form of time sensitivity between catering and other categories. The pattern of O2O first occurs in restaurants, and then spreads to fresh and other retail categories.

In addition, there are also some factors, such as fresh commodities often need cold chain logistics, online operation logistics costs are higher, the standardization of traditional fresh products is lower, consumers are accustomed to face to face selection.

From O2O Amazon Fresh to warehouse store Pickup, and then to the real retail store like Whole Foods, Amazon is gradually moving to the line in the process of tackling the problem of retail efficiency of fresh products.

After fresh produce, Amazon still has daily necessities under the layout line. Although users' immediate demand for such goods is not high, they will buy at high frequencies, and SKU will be relatively concentrated. For operators, the demand for these commodities is stable, and the long tail effect on the line is weak. It is also suitable for arriving at warehouses or stores in advance.

For this category, Amazon also has an independent service, Prime Pantry, which provides weekly delivery of non fresh foods and daily necessities.

In the future, Amazon plans to bring more products into line.

According to New York Times, Amazon is now exploring the physical stores selling furniture, household appliances and electronic products, and pharmacies are planning.

After Amazon Fresh Pickup, Amazon has launched Instant Pickup, which will expand the sales category of Pickup stores, users can place orders online, and pick up goods at Pickup stores. But at present, Instant Pickup is only opened in crowded schools.

Instant Pickup

Amazonian changes can also find similar cases in China, and there is a very appropriate concept - new retail. As a model of new retail in China, the box horse fresh life also starts with fresh products, and adopts the mode of store and warehouse integration. Ali is buying big retail stores, and Jingdong and Tencent are doing the same.

New York Times has also reported that Amazon is exploring a new store mode, which can undertake cross passenger traffic while serving as a warehouse hub for logistics delivery.

That is, Amazon may integrate its store with its Prime Now or Amazon Fresh's O2O business. "Amazon bought more than Whole Foods stores, but 431 quality distribution points." Wall Street journal Financial Editor Dennis K. Bermanb said on Twitter after Amazon's acquisition of Whole Foods.

This is exactly the same as the "retail store integration" that the new domestic retail players are already practicing. In this regard, China obviously moves faster, and the first box store was born in 2016.

Amazon Go

It is noteworthy that both Amazon and new retail players in China are exploring unmanned retail stores.

Amazon put forward the model of Amazon Go as early as 2016, and it officially opened after more than a year. This is a food supermarket without a cash register. Amazon calls it "Just Walk Out Shopping", which is based on the application of image recognition technology.

However, Amazon Go does not emphasize nobody, but rather focuses on improving user shopping experience and reducing the cost of labor in the settlement link brought about by the independent cash register system.

In addition, Amazon's planned store models may also increase robots and explore UAVs delivery. The profit margin of the model is more than 20%, and the number of traditional food retail is 1.7%.

If you can achieve the balance between experience and cost, Amazon may open more Amazon Go and apply the system to Whole Foods stores and other cooperative retailers, just as it sells its own AWS and Alexa.

In the future, Amazon's series of offline mode tests will not rule out the integration. At present, the Whole Foods area is set up on the page of Amazon Fresh, and the fresh supply chain of Whole Foods has been integrated into the Amazon system.

In the future, Amazon stores may be like this: they can provide Whole Foods with commodity categories, or even more; like Amazon Go, there are no cashiers, few salesmen; customers can choose to place orders online, drive to pick up goods, that is, Pickup mode. As well as stores have large storage areas at the same time, so as to complete the order delivery quickly.

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