One of Amazon’s ongoing conquests that we continue to track is retail-as-a-service (Raas). Partly to expand its business and diversify revenue, the idea is that Amazon can bring its signature logistics and streamlining tech to retailers. It’s hoping this grows its business in similar ways that AWS did.
This includes its “Just Walk Out” cashier-less technology that was incubated in Amazon Go stores before spinning out as the centerpiece of its RaaS play. For those unfamiliar, it uses computer vision and other tech to track items as you shop and charge you automatically, thus avoiding checkout bottlenecks.
Beyond the cashierless component, Amazon’s retail tech continues to evolve into other digital infusions. Benefits include better customer flows throughout a given store; convenience (thus loyalty); and cost-efficiency. In true Amazon fashion, the latter leads to lowered costs for competitive edge.
After all, Jeff Bezos likes to say, “your margin is my opportunity.” This is what he’s talking about. And retail is next in his crosshairs for disruption.
The Next Move
After piloting its retail tech at Amazon Go, airport-based convenience chains, salons, grocery and even Starbucks, Amazon has now tipped its hand for the next move: clothing stores. Last week, it announced that it’s launching a physical clothing store later this year at the American at Brand in Los Angeles.
The store will feature a digitally-infused shopping experience that lets customers choose items and style/color variants on digital touchscreens throughout the store. Once they select an item they can add it to their (digital) cart which sends the item to a fitting room or (physical) checkout counter.
In addition to the larger volume of inventory that can be displayed through these digital shopping formats, there will be a selection of physical clothes on display. This will be done to accommodate traditional shopping habits and the folks that want to browse aisles in all manner of pre-Covid glory.
But even that physical part of the shopping flow is digitally-infused. When shoppers see an item they like, they can scan its QR code (touchless) using the Amazon Shopping App to choose size and color variants. They can then send items to the fitting room. The app even opens the fitting room door.
In all cases, the shopping flow blends the best of online and offline commerce. The “endless aisle” benefits of e-Commerce are present, along with the IRL ability to try things on. The only eCommerce benefit missing from this equation is shopping from your couch… but life is full of trade-offs.
As for the apparel itself, Amazon says the store will offer “hundreds of brands” that are chosen based on both expert curation and algorithms. The former will bring in fashion creators and experts, while the latter will logically tap into Amazon’s online sentiment engines (think: “best sellers”).
Up Its Sleeve
In all of the above, it’s worth acknowledging that the shopping flow is at least partly driven by Covid-era demand signals. That flow involves minimal human interaction or handling apparel. the eCommerce-like touchscreens (though they involve “touch”) reduce physical interaction.
Panning back, where this gets interesting is the ripple effect across the retail sector. Others could eventually be compelled to adopt similar in-store streamlining technology out of competitive pressure. That could be from Amazon, or other RaaS startups stimulated to fill a demand gap.
And it’s already happening, considering well-funded companies like Standard, Leap, and Mercaux. As competition and margin compression ratchet up, it will attract new players and alternate approaches. We could also see RaaS specialization in various retail sub-verticals like luxury, big box, etc.
Back to Amazon’s latest move into clothing, it’s largely experimental. So it may go nowhere or it may be a sign of things to come on a broader scale. That could mean more hybrid stores that blend clothing and digital shopping or Amazon’s first of many moves into clothing through retail partners.
As we’ve predicted, Amazon will continue to expand into more retail categories. Meanwhile, its clothing-vertical experiment joins the growing list of vertical conquests including convenience, grocery, salons, and coffee. What retail (or food) category could be next up its sleeve? We’ll be watching.