Amazon goes offline: Why small businesses need to take note

What the online retail giant’s move into physical bookstores means for the future of small business

August 26, 2016
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Amazon goes offline: Why small businesses need to take note
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Amazon goes offline: Why small businesses need to take note

As originally published here.

Amazon’s data-based retail model has revolutionized ecommerce. Amazon pioneered the use of data to analyze customer habits and purchasing behavior, tailoring the online shopping experience — from recommended products to incentivized offers — at the individual customer level. This personalization is powerful, and Amazon’s success is proof.

Why, then, would the same company that transformed online retail want to go back into the physical world?

The most valuable data that small businesses aren’t using

When a customer walks into a store, that store doesn’t know their purchase history, can’t see which products they’ve previously considered or rejected, or what purchase pattern archetype they most closely match. This data is incredibly valuable, but essentially hidden in our physical world. What if it wasn’t?

Amazon seeks to find out exactly that, by opening brick-and-mortar bookstores. As WNYC reported last week, Amazon is starting small, with just three bookstores on the horizon. The first opened in November in Seattle, Washington, and two more are planned in San Diego, California, and Portland, Oregon, respectively.

When a customer enters an Amazon bookstore, they can browse and wander aisles of books just like they would in any other store. The difference? Prices and other product details don’t exist. Not in the physical store, at least. To find price and other information, customers have to use an app.

And as soon as a customer opens that app, all of their data — their purchase history, customer type, etc — is suddenly accessible to the retailer. As a result, the customer sees a curated, personalized experience — from recommended products to incentivized offers — based on data that was previously unavailable for the retailer to digest and deliver on.

Creating more powerful experiences

Ecommerce isn’t going anywhere, but there will always be some customers, or some products, that simply warrant or demand a physical interaction for a transaction to take place. Bringing the power of customer data currently used by online retailers to physical stores, then, becomes a sure path to profitability for small businesses with physical stores.

And it’s a win-win. The customer gets the benefit of a personalized shopping experience in a brick-and-mortar store. The retailer gets the benefit of customer data that can be used to increase transactions and profitability for every single customer. It is, we believe, the best of both worlds.

Will history repeat itself?

Just as Amazon launched as an online bookstore 20 years ago, Amazon is launching a physical bookstore today. And just as Amazon started with books but diversified its online business to include clothes, furniture, jewelry, even food items, the same can be expected of Amazon’s physical business. Today, Amazon sells books in stores. Over the coming years, with a wealth of powerful customer data and the ability to personalize shopping experiences, would it be so hard to imagine Amazon selling gas? Could your station compete?

It’s time to use big data to power your small business

Like Amazon, we’re betting big on personalization. When you act more like an online retailer, and treat each customer individually, you can significantly increase profitability, customer satisfaction, and business sustainability.

As we detailed in our previous post, Upside uses personalized data to promote only profit-increasing actions. Based on an Upside user’s historical transaction history at your station, Upside calculates an expected baseline of that individual user’s profit at your station before they started using Upside. Then, Upside only promotes their next profitable action — an additional fill-up, a purchase in your store, a car wash — so you never discount an action they would have taken without Upside.

The best part?

You already have the data to strengthen your small business.

As a small business owner, you’re sitting on top of a wealth of incredibly powerful customer data. Data that could get more customers, buying more, at your station. It’s time to unlock that power, to adapt to this new hybrid retail world, and to compete in a more sophisticated way. Transactions will increase. Profits will increase. And you’ve already got the data.

With Upside’s platform, you can use that data to transform your business.

Upside is the easy-to-use revenue generation platform that gets more customers, buying more, at your station. Ready to get in touch? Sign up to learn more about how your station will profit with Upside’s proven model.

Amazon goes offline: Why small businesses need to take note

Alex Kinnier

Linkedin - Upside

As co-founder and CEO of Upside, Alex Kinnier is working to transform brick-and-mortar commerce. His success in growing Upside into a company driving $5B+ in commerce annually was informed by his years of experience leading product development teams at Opower, Google, and Procter & Gamble. Outside the office, Alex is an ardent technologist and investor, always on the cutting edge of products with the potential to change the world.

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