A Blog by Jonathan Low


Dec 22, 2018

Amazon's New Physical Stores Show How Boring Algorithmic Shopping Is

Convenience has driven Amazon to its current success.

But will too much curation undermine Amazon's business model by simply boring consumers so much that they actively seek more exciting alternatives? JL

Sofie Werthan reports in Slate:

Surely with Amazon’s vast inventory, the store would yield some cool discoveries. Instead, the items felt familiar (kitchen tongs, Brita filters,). If it’s one of the top-selling items on Amazon, you have seen it. You go to Amazon when you need batteries or shampoo, not to to find something surprising. By expanding into brick-and-mortar retail, Amazon is “going to take data about what we do online and marry it to data about what we do offline. That enables them to spot patterns. But is convenience a worthwhile trade-off for less privacy and fewer options? Amazon is ideal for the functions of daily life, not the serendipitous moments.
Amazon’s domination of the online shopping market has only increased (the company’s revenue grew 38 percent last year), but it has struggled to establish itself as a destination for discovery shopping. You go to Amazon when you know you need batteries or another bottle of shampoo, not to browse through the website to find something delightful and surprising. Amazon is ideal for the utilitarian functions of daily life, not the serendipitous moments.
Now, the company is experimenting with a new retail experience to try to change that. The concept is intriguing: brick-and-mortar stores, stocked with products with Amazon.com ratings of four stars and above. In addition to highly rated products, the 4-star stores also carry new and trending items and top sellers, and customers can test out Amazon’s electronic devices and smart home accessories.
The Amazon 4-star stores are the tech giant’s latest foray into retail, following in the footsteps of its cashier-less Amazon Go convenience stores, Amazon bookstores, temporary Amazon pop-ups, and the acquisition of Whole Foods. (Full disclosure: My mother works at Whole Foods.)
Amazon launched the first 4-star store in New York City’s SoHo neighborhood in late September and expanded to Lone Tree, Colorado, in November. The third store opened in my hometown of Berkeley, California, soon afterward.
I am a fairly regular Amazon customer and a Prime member. Like many users, the main appeal for me is convenience—I use Amazon when I don’t have time to make a trip to the store. With holiday shopping season upon us, I decided to check out Amazon’s newest 4-star store for myself.
When I arrived, I was struck by how similar the physical store is to its online counterpart. The store’s aesthetics are spartan—the only decorations in sight were a few cardboard Christmas trees placed on the tables and a large digital signboard flashing the in-store deals of the day. Real customer reviews from the website were placed alongside items, and digital price tags were synced up to show the products’ ratings on Amazon.com. Like the website, the 4-star store carries products from a wide range of categories, including electronics, cookware, small kitchen appliances, books, office supplies, home décor, toys, games, and baby registry items. There are also some thematic groupings, like “Frequently Bought Together,” “Most Wished for on Amazon.com,” and “Trending Around Berkeley.”
The apparent randomness of the store’s inventory underscores its reliance on data to curate its selection. Take, for example, the store’s “Top-Selling Around Berkeley” section, which included a jar of CeraVe moisturizing cream, an Amazon Basics six-outlet surge protector (two-pack), the book White Fragility by Robin DiAngelo, and an Oral-B electric toothbrush all together on a small table. Perhaps a cultural anthropologist could derive meaning from such an aggregation, but not me. While this hodgepodge, algorithmic aesthetic can work online, it is disorienting in the real world.
As I perused the store’s sections, my eyes began to glaze over. The sheer volume of haphazardly arranged objects was way too much to process at once. There is a rotating selection of approximately 2,300 products crammed into the Berkeley store, with some items being swapped out weekly, according to the Verge. Cardboard boxes of inventory were piled up under the tables, reminiscent of an Amazon warehouse, as New York Times critic Jon Caramanica noted. (Caramanica’s review of the SoHo store was especially harsh. He characterized his shopping experience as “joyless, arbitrary, spiritually empty.”)
The one area in which the 4-star store succeeded in grabbing my attention was its display of Amazon home devices. As I briefly paused at a table stocked with an Amazon Echo and an assortment of compatible accessories, one of the store’s employees began making his pitch. Pointing to a small fan on the table, he demonstrated how an Alexa-compatible smart plug could turn appliances on and off. After asking my favorite color, the employee asked Alexa to change the color of a lamp’s smart lightbulb to blue. On we went: The employee asked Alexa to queue up a playlist of my favorite music (bluegrass) as he detailed a litany of the tasks Alexa can perform.
The personalized pitch was compelling and did a decent job of showcasing the wide variety of functions Amazon’s devices and accessories can perform. This was one area where traditional retail definitely has an edge over the online realm—getting to mess around with an Echo in a store helped illustrate how useful it could be to my own life. It struck me as odd, then, that most of Amazon’s devices and smart home products were relegated to the back of the store, not showcased front and center.
So the disorganized, overstuffed layout could be improved, but what about the products themselves? In a word: underwhelming. Before visiting the 4-star store, I was intrigued by the idea of curating Amazon’s highest-rated items. Surely with Amazon’s vast inventory, I thought, the store would yield some cool, unexpected discoveries. Instead, most of the items felt familiar (think: kitchen tongs, a Harry Potter box set, Brita filters, Amazon-brand puffer jackets). If it’s one of the top-selling items on Amazon, chances are you probably have seen it before.
Barbara Kahn, a professor of marketing at the Wharton School at the University of Pennsylvania, explained to me that this makes sense from a business perspective. According to Kahn, “You’re not going to see the long tail”—that is, the niche products—in the store. “You’re going to see what people call the big head, what the majority likes.” Since the products in the 4-star store have proved to be consistently popular online, it is safe to bet that they will sell well in a store.
Stacy Mitchell, the co-director of the Institute for Local Self-Reliance, says the generic assortment of items in the 4-star store is in part a function of Amazon’s online model. “It’s basically impossible to introduce a new product on Amazon,” Mitchell told me. “You can put it there, but how’s anyone going to know that it exists? How can you get it to show up early in search results?” Unless a company has a massive marketing budget or launches a national advertising campaign, it can be challenging to get new and interesting products to rise to the top of Amazon’s ratings. This limits the pool of products that are likely to make it into the 4-star store at all. Mitchell warns that “Amazon’s dominance from a consumer point of view … means fewer options” in retail.
The 4-star store is, at its core, powered and strengthened by customer data. Every element of the store is based on “customer ratings, reviews and sales data from the hundreds [of] millions of products online,” according to Amazon’s description of the store. This information shapes the product selection, but the store itself is yet another mechanism to collect data by encouraging customers to sync their in-store purchases to their Amazon Prime accounts.
(Each item in the 4-star store is labeled with two separate prices: Prime members pay the Amazon.com price, while customers who are not Prime members must pay the manufacturer’s suggested price.) Customers can also sign up for a 30-day free trial of Prime in the 4-star store, making the data collection process nearly seamless. This rapaciousness for data has certain benefits for consumers, but there is also something insidious about Amazon’s ability to continuously gobble up people’s information and turn it into profit.
Once I started thinking critically about the details, the novelty started to fade, and the 4-star store seemed more unsettling than innovative. As I looked at the “Trending Around Berkeley” section, I became aware of my own participation in Amazon’s curation process. As a Prime customer getting packages delivered to my Berkeley address, I was helping shape the Amazon 4-star store’s selection. Did that just make me a cog in the proverbial Amazon machine? A depersonalized data point?
Of course, almost all businesses—especially large chain retailers—use customers’ information to shape their inventory, displays, and marketing. But Amazon’s grasp on its customers’ information is much more far-reaching and sophisticated. Most businesses do not have access to the breadth and depth of data that Amazon collects, and Kahn notes that even many large chain retailers that collect data are not leveraging it to the same extent as Amazon.
“The amount of information that [Amazon is] gathering is beyond what most people realize,” Mitchell told me. By expanding into brick-and-mortar retail, Mitchell predicts that Amazon is “going to be able to take that trove of data they have about what we do online and marry it to a trove of data about what we do offline. And that enables them to spot all kinds of patterns, and they will use that information to huge advantage.” Mitchell acknowledges that this data cache “in some ways works to our personal convenience as shoppers.” But is convenience a worthwhile trade-off for less privacy and fewer options, both online and in stores?
I left the 4-star store with a diffuse sense of ennui about capitalism (and without buying anything). Not exactly the reaction a business would like to elicit in shoppers. As I exited, I encountered one last layer of data collection: a kiosk asking me to review my shopping experience. I declined to leave a rating.


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