Amazon Advances Retail-as-a-Service with ‘Local Selling’

Amazon continues to double down on its next conquest: Retail-as-a-service (RaaS). As we’ve examined, this includes everything from its Just-Walk-Out technology (JWO), Amazon Go stores (which were a trojan horse for JWO), experimental tech-fueled salons, and its Amazon One palm scanners.

The latest move came late last week when Amazon rolled out in-store pickup options for local retailers. Known as “Local Selling” it offers retailers with a local presence the ability to offer in-store pickup and delivery to their customers. Think of it as a turnkey local fulfillment and logistics engine.

The catch is that the program is only available to Amazon sellers. The capabilities that it offers aren’t integrated with retailers’ eCommerce websites, but rather on their Amazon storefronts and product pages. So though it qualifies as RaaS, Amazon isn’t fully spinning out the capability. We’ll call it RaaS lite.

Will Retail-as-a-Service Transform Local Shopping?

Walled Garden

Drilling deeper into Local Selling, it’s built primarily around in-store pickup and local delivery. In both cases, retailers can customize their program based on their capabilities and other factors such as delivery radius. These are otherwise functions that are difficult and costly to build in-house.

From the customer’s perspective, they’ll see a “store pickup” tab on eligible Amazon product pages. Once they choose that option and place an order, they’ll get a notification when the item is ready for pickup. They then have a five-day pickup window, and are charged when pickup occurs.

As noted, shoppers can also choose local delivery. This is fulfilled by the retailer, as Amazon’s Local Selling platform doesn’t come with actual delivery legwork. Instead, it adds the option to the checkout flow, then connects customers to the retailer to arrange delivery details and time windows.

The program is also similar to Amazon’s 2019 “Counter” program that let customers pick up their Amazon orders at local retailers that it partnered directly with. The difference with Local Selling is that it empowers local retailers to offer their own pick-up options… albeit within Amazon’s walled garden.

Amazon Goes Full “Retail as a Service”

RaaS Playbook

Back to Amazon’s RaaS play, this is just the latest step (or half-step, as noted). Amazon is taking the things it does best and spinning them out as products. If this sounds familiar, it’s the AWS playbook – a product that was built to fulfill internal computing needs, then spun out as its own offer.

Why is Amazon doing this with RaaS? It’s all about revenue growth and diversification. And like AWS, it has achieved supremacy in areas like logistics & fulfillment. That investment pays off as Amazon squeezes more value out of the eCommerce engine and best practices that it spent years building.

The other benefit to Amazon is to make its third-party seller program more attractive. Local Selling is only available to these Amazon sellers, as noted. This third party network has become increasingly important to Amazon as not only a source of product breadth and affiliate revenues… but also ad dollars.

We’ll keep watching as that plays out. Meanwhile, Amazon’s early retail partners for the new program include Sears Hometown Store, Best Buy, Mattress Warehouse, Beach Camera, Adorama, DataVision, Exclusive Furniture, and World Wide Stereo. Other retailers can apply starting today.

73 Percent of Amazon Sellers Buy Ads

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