Amazon, Google, eBay, and Paypal Establish a Physical Retail Presence

“Store-based retailers need to bridge the gap between the digital and the physical world!”  If this isn’t your first retail rodeo you will have heard this before.  You have probably heard of, or have an opinion on, effective ways to bridge the gap.

However, multi-channel integration is a two-way street says Google, eBay, Paypal, and Amazon.  They are embracing the reverse end of this thought.  The giants are building a physical presence in an attempt to mitigate some of the problems facing the players in the pureplay e-commerce sector.  These companies are attempting to reduce brand and device confusion among customers, provide additional points of purchase in an attempt to boost impulse buys, spread awareness about product capabilities, and create hype.

Google Physical Stores

GOOGLE’S ANDROIDLAND

 

Google's Androidland - Melbourne, Australia

Google has created a physical base for the Android!  The Androidland department can be found in the Telstra flagship store, an Australian based mobile telecommunications company.  Interestingly, it opened less than a week before the announcement that the Android Market had reached the 10 billion app download mark.

Androidland features displays and games that will help shoppers learn about Android phones and tablets.   It is a physical location for customers to learn more about Google’s products and software.  The department, which is very similar to the Apple Store concept in that it is not device-centric, is all about creating an Android-themed experience.

It is not just about boosting sales either.  Because the Android software is open source, many manufacturers have incorporated it into their devices.  So, the hope is that this first Androidland store will reduce brand and device confusion in an industry that is very new and that can be quite confusing.

The Melbourne store-within-a-store is the site of Google’s second step toward establishing a physical retail presence.

GOOGLE’S CHROMEZONE

Google's Chromezone - London, UK

September 2011, Google used the same store-within-a-store approach in PC World/Curry’s to open its first branded brick-and-mortar store, “Chromezone.”  The PC World on London’s Tottenham Court Road features a 285 square foot department (above) which includes Google’s new Chromebook laptops and accessories.

These physical stores come more than a year after Google’s first attempt to create a retail outlet failed miserably.  In Spring 2010, after being in place for just 4 months, Google decided to pull the plug on their attempt to create an online storefront for the HTC Nexus One.  The problem was that (1) there were no salespeople – neither online nor in-person – to provide answers to customers’ questions, and (2)there was no physical location where customers could go to touch the product, pick it up, or give it a test run.

If Google’s Chromezone & Androidland test stores are successful we could potentially see hundreds of these stores selling not only Google’s affiliate products, but more importantly all of its services (AdWords for small businesses, Google Offers, Picasa subscriptions, Google Talk, mobile phones.)

WHAT IF?

Consider a world in which Google stores, selling Androids, Chromebooks, and its next generation services are as dominant and exciting as Apple Stores.  Wireless providers would all but go out of business. People would go to the phone provider to choose the phone first, then choose the service plan and provider from the brand’s store. No longer will companies like Verizon, AT&T, Telstra, Vodafone, and Orange be the primary destination for phone buying.

While these SWAS models mark Google’s first foray into store-based retail, it will be interesting to see what the first standalone Google store will look like.

eBay Pop-Up Store

EBAY CHRISTMAS BOUTIQUE

Ebay Christmas Boutique - London, UK

From Dec. 1 – Dec. 5 shoppers caught a glimpse of Ebay’s first physical retail outlet in London.  Although there are a number of eBay Drop Off Stores which, for a percent of the final sale price, sell your products on the online auction site (like the store many remember from the Steve Carell movie “The 40-Year-Old Virgin”), this store allowed customers to make purchases from the location. The store, which also sells brand-new items at a fixed price, was open during the busiest shopping weekend of the year in order to create a less stressful and more hands on experience for consumers on ‘SuperSunday.’

The eBay Christmas Boutique was all about showcasing a new way to shop.  All 30 brands and 350 different products in the store included Quick Response (QR) codes which, when scanned with a tablet or smartphone, would automatically guide you to purchase on eBay.co.uk

The store is good because on the busiest shopping day of the year it allowed people to browse and interact with products they want, scan the barcode, and leave without having to lug heavy items or having to fight over the limited selection in-store.

The store is bad because people without smartphones or people who are unfamiliar with QR Codes are unable to make purchases. It brings people to a crowded store to buy products that can easily be bought from the comfort of their couch.

Note: this was not eBay’s first holiday season pop-up shop.  eBay opened a 5,500-square-foot store on West 57th Street in New York City in November 2009.

eBay’s pop-up shop is very similar to the QR Code Driven Mobile Shopping Walls we have seen roll out by more and more retailers over the past year.  The idea which began with Tesco Homeplus in South Korea, has just recently been embraced by Toys “R” Us.

Amazon’s Physical Presence

AMAZON LOCKERS

Amazon Lockers - Manhattan, NY

In early September, Amazon started putting lockers in 7-Eleven stores in the US and then expanded the initiatives reach by putting the lockers in high traffic areas of shopping malls in the UK.  Amazon’s move toward establishing a real physical presence is not a storefront, but rather it is an alternate shipping option for the e-commerce giant’s customers. The lockers provide added benefits, for example, because they allow customers: (1) to surprise a roommate, spouse, or child with a gift, (2) to ship to locations other than their home, because they are away on business or vacation, and need a local pick up point, and (3) to save on shipping costs by allowing Amazon to ship in bulk.

Paypal’s Physical Presence

PAYPAL TECHNOLOGY SHOWROOM

Paypal Store - Manhattan, NY

Paypal, the online payment service, opened a storefront in Manhattan to showcase its range of payment options to clients.  While the store is not open to the public, the physical location allows PayPal to invite merchants to come visit a space where they will have the opportunity to get real-time demos of new payment technologies in realistic point of sale scenarios.

What it Means

While not all of these major online companies are opening stores with the direct intention to add another revenue stream, it will be interesting to see which test stores are effective in the long term.   The idea is to showcase products previously only available online, generate hype around the holiday season or around new product lines, clarify consumer concerns, and showcase new technologies.

About Sean Deale

Sean is a Retail Industry analyst at RetailNet Group LLC. His focus is on tracking the leading retail growth platforms and the strategies behind them.

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