It has been widely reported that this summer Amazon will release a Kindle-based point-of-sale system for small and mid-sized brick-and-mortar retailers.
Amazon’s move affirms that the future of retail is bringing the best of e-commerce technology into retail stores. And, from their point of view, it makes complete sense that Amazon would want to enter the physical shopping world. While Amazon has become the ubiquitous e-commerce destination, more than 90 percent of retail business is still done in brick-and-mortar stores. That’s a huge amount of spending data that Amazon would no doubt benefit from.
But what about the other side? According to The Wall Street Journal, Amazon considered attracting customers by allowing retailers to offer promotions or discounts through Amazon.com or Amazon Local daily deals. It’s true that in this multichannel shopping environment, being able to successfully sell products through the Amazon Marketplace has become increasingly important to independent retailers. But they should think long and hard before taking that carrot.
If Amazon is inserted into an independent retailer and gains access to all of their SKUs, customer profiles and sales, what happens to the business in the long term? Brick-and-mortar stores compete by creating a shopping experience that cannot be replicated online. But eventually, Amazon will have the opportunity to sell the exact products to the exact customers who may have previously visited the retail store in person or through the store’s own website. At that point, goods become a commodity, and the retailers will be forced to compete on price. And we all know who wins that game.
So, what can independent retailers do to avoid getting swallowed up by online giants?
Create an experience worth getting off the couch for
E-commerce and mobile commerce continue to grow, but so does the shop-local movement. And there’s a reason for it. Consumers are fatigued from the big-box, one-size-fits all shopping that dominated the last decade, and crave a curated, personalized experience. Retailers have a unique opportunity to tap into that emotional drive and connect with consumers in a way that can’t be accomplished through text on a screen.
The caveat is, while shoppers want to support local business and enjoy the in-store experience, they now expect the same level of convenience and real-time service they get from online shopping in the physical environment. And some stores are delivering on this by bringing in mobile checkout, putting real-time inventory tracking in the hands of salespeople, and giving employees tablets that allow them to show shoppers interactive and even personalized product information and recommendations, mimicking that online experience.
One of the reasons e-commerce has been successful is because it extends the relationship with the customer beyond the shopping experience, employing easy-to-use technologies to push personalized product recommendations and tailored discounts. Physical retailers can do the same, both by extending their brand online and by bringing social into their store so they aren’t just requesting email addresses or Instagram follows at checkout.
Marc Jacobs’s New York pop-up store is a pretty innovative example of how to engage the “shopper 3.0,” allowing customers to exchange tweets, Instagram photos and Facebook posts for goods. It made social an integral part of the experience, creating a two-way interaction that lasted long after the customers left the store.
In the end, keep your data
Mobile checkout is on its way to becoming the de facto standard in stores, and there are plenty of point-of-sale vendors that offer affordable systems with that feature. There are also some providers on the market now that offer sales-data analysis and online store extensions, the main add-ons Amazon is considering.
There is no question that physical retailers must bring technology into their stores to compete for the tech-savvy, deal-barraged consumer. But be aware of who you let into your house, and make sure they have your best interest in mind. If giving a potential competitor access to your data seems a little risky … it just might be.
Dax Dasilva is the founder, CEO and creative mind behind LightSpeed, which provides retailers the simplest way to build, manage and grow their businesses. Founded in 2005, LightSpeed offers retail-management and point-of-sale tools that are used by 18,000 stores across 30 countries to reinvent the shopping experience. Reach him @dax_dasilva.
This article originally appeared on Recode.net.