Asleep at the Wheel
While the rest of the retail world is just now waking up to the fact that eCommerce will soon be the primary way that consumers shop, pioneers in the eComm industry are rapidly inventing new and more efficient ways for consumers to discover products that they love.
It’s important to understand that we are still in the infancy of the eCommerce lifecycle. Although Amazon’s next day shipping may seem incredible to us now, the way we shop online as it exists today will feel prehistoric compared to how we “shop” in the future.
In my newsletter last week, I talked about how Amazon is launching brick-and-mortar grocery stores that will be fully integrated with their Alexa smart speaker. Alexa will be able to connect with the high tech grocery stores to help customers place orders, schedule deliveries, make grocery lists, and recommend products that you may have forgotten.
This all got me thinking…How much of our shopping in the future will be done by us and how much of it will be executed by technology?
The Replenishment Model
I’m currently reading the book “Reingeering Retail” by Doug Stephens, and in it, he broaches the idea of the replenishment model. It’s a theory that in a future state, connected devices paired with robust analytics will manage most of our day-to-day product purchase decisions.
Stephen asserts that in the future commoditized day-to-day products, which have become a burden to purchase in-store, yet are desperately vital to our lives, such as toothpaste, shampoo, laundry detergent, olive oil, Ziploc bags, etc. will be entirely managed by Artificial Intelligence.
I think he’s spot on.
This shift will change retail, shopping, and marketing forever. The biggest change is that the platforms that manage the AI; Amazon, Shopify, Walmart, will hold almost all of the power. Instead of marketing to consumers, brands in these categories will be marketing to the tech company that controls the algorithms that make the purchasing decisions.
The fundamental frameworks that have made up the retail landscape for the last century are being completely upended. Over the next decade, I think the activity of “shopping”; going to a store and searching for products yourself, will feel completely outdated. But then the question becomes; how will we shop when AI does the shopping for us?
My gut feeling is that shopping in the future will be much more centered around decision-making than searching. What do you think?
Retail + Tech News:
- Background: Apple’s app store takes a 30% cut of every dollar that consumers spend on new apps or in-app purchases. They have been able to get away with this for over a decade because of their proprietary technology and massive customer network.
- Details: However, Fornite, which is one of the most lucrative apps on the app store in terms of in-app purchases is fighting back. They created a code that circumvents Apple’s payment system to allow users to pay Fortnite directly. In response, Apple has removed Fortnite from its app store, barring at least a billion users from using the app. Fortnite published an epic rebuttal to Apple, creating a parody of Apple’s infamous commercial introducing the first Macintosh computer.
- Background: As Amazon continues to dominate the eCommerce world, traditional retail stores are still struggling to rebound. Malls specifically are having a challenging time, and now Simon Property Group, one of the largest mall owners in America, is in talks with Amazon to fill its vacancies with Amazon fulfillment centers.
- Details: Amazon is looking for space closer to where customers live as it builds out its one-day delivery strategy. Malls are typically closer to residential areas than large warehouses on the outskirts of a city. As in-store retail feels more and more like a distant memory, leasing out malls as distribution centers could be a good solution.
Traditional Retail News:
- Background: The current business climate in New York City is dismal. Large retailers and restaurants are closing their doors much faster in the city than in other parts of the country as they are heavily reliant on tourists and commuters.
- Details: Things are getting ugly in the Big Apple. Many stores facing declining revenues are not paying rent and others are considering closing their doors permanently. The few stores that are open have seen little foot traffic and iconic streets like 5th Avenue and Madison Avenue have emptied.
Other News This Week:
- California Renters Struggle
- China’s Retail Sales Dip
- New York Restaurants Close
- Farfetch Sales Soared
- What it would take for Walmart to catch Amazon
- There are 13,000 empty apartments in Manhattan …
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Xoxo Jackie
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