Amazon Closes Whole Foods Deal: Good News for a Mall Near You

Carl Weinschenk

The movement of business from brick and mortar to online has been the overwhelming trend during the past 15 years. While this has transformed much of the way in which people shop, it remains true that a good percentage of folks simply like to get in their cars or on their bikes and head for the store. Indeed, brick and mortar stores are making a comeback.

A milestone in the countermove from online to brick and mortar was reached with the closing of Amazon’s $13.76 billion acquisition of Whole Foods. eWeek’s Wayne Rash takes an interesting look at how this may play out. For instance, once the supply chains are integrated, people would be able to buy food and traditional Amazon items simultaneously. The distribution points likely will be the stores for the food, however, since obviously time is more of the essence in delivery of bananas and salads than T-shirts and books.

The transition Rash describes is great and puts Amazon on a collision course with brick and mortar heavyweights such as Walmart. The bottom line is that the commercial world is on the point of learning some very important lessons:

What we're seeing here is whether an e-commerce company can integrate physical stores effectively or whether it works better when a company with physical stores integrates e-commerce. While Amazon gets all of the attention, it would be a mistake to discount Walmart's ability to compete in this arena, especially when it has Google as its partner.


Amazon is no stranger to retail. It has opened 10 bookstores during the past two years. Nat Levy of Geekwire takes a look at its newest, which is in the Bellevue Square Mall in city of the same name in Washington. The story doesn’t describe how lessons that are being learned at the stores can be applied to the Whole Foods acquisition, which the writer says “take[s] its retail footprint to a new level.” It seems likely, of course, that a significant amount of insight was gained. Amazon plans to open bookstores in New York City, Los Angeles and Walnut Creek, California, this year.

Pink Lily is a women’s clothing retailer that started online, grew to the $30 million revenue level and, this year, opened its first physical store. Forbes invited Pink Lily Co-founder, President and COO Chris Gerbig to share his thoughts. He counsels nascent businesses to start online. While existing as an online business only, he writes, the company should learn as much as possible about its customer base and build revenue as it prepares to enter the more expensive world of brick and mortar:

While many customers are switching to the convenient method of online shopping, some still like the experience of shopping at a physical store and trying on clothes. At Pink Lily, we are happy to be able to serve both types of customers. According to Forrester Research, U.S. cross-channel retail sales (influenced by the web, but made in stores) will reach $1.8 trillion this year. If you want a piece of that pie, you need to think carefully about how you choose to cut your slice. Depending on your business, that may just mean going digital first.

The move of web companies into brick and mortar seems to be more than a trickle and less than a wave. For instance, the Chinese giant Alibaba is moving aggressively into the real world. It is, as described by First Insight, using a decidedly different strategy than Amazon. The bottom line, however, is that both companies see the value of real-world stores. That’s great news for the mall and the village square.

Carl Weinschenk covers telecom for IT Business Edge. He writes about wireless technology, disaster recovery/business continuity, cellular services, the Internet of Things, machine-to-machine communications and other emerging technologies and platforms. He also covers net neutrality and related regulatory issues. Weinschenk has written about the phone companies, cable operators and related companies for decades and is senior editor of Broadband Technology Report. He can be reached at cweinsch@optonline.net and via twitter at @DailyMusicBrk.

 


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