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Episode 85
October 16, 2018

Amazon Cake Mix®

We review Amazon's Four Star store concept - is it "Analogue Amazon" or is it just the Service Merchandise of 2018? How does Amazon prevent it from becoming mostly Alexa devices or 100% in-house brands? Does realtime pricing affect classism? Listen now!

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this episode sponsored by

Main Takeaways:

  • Amazon takes a third (actually more like fifth) leap into physical retail.
  • Phillip takes a trip down memory lane, was Service Merchandise the original Amazon?
  • This episode would make it into Amazon's 4-star store.
  • Retailers may want to jump on the Amazon copycat train for better in-store curation.

Amazon Opens Yet Another Retail Space: Is Brick and Mortar Back?

What Can Other Retailers Learn From the Amazon In-store Model?

Online vs. In-Store Shopping: Customer Experience Edition:

  • The question remains, why would a customer patronize one of Amazon's brick and mortar stores, be it Amazon 4-star, Amazon Go, or Amazon Books when there's convenience in ordering online?
  • Or if you live in certain parts of the country there's Amazon Prime Now with extra convenient two-hour shipping.
  • Well, it's all about the experience that the customer is looking for, with Amazon in-store and online offering different modalities.
  • An online, Amazon prime experience seems to be all about convenience. And really, who would ever want to have to leave their house to shop?
  • Brian makes the case that this kind of retail experience is all about discovery, and finding the best of Amazon.
  • Phillip time-travels to the 1980's, to a store called Service Merchandise, a catalog store with an Amazon vibe. I.e,. real-world analog Amazon.

Will Amazon 4-Star be the Best of Amazon or All About Alexa?

Retail Tech is moving fast and Future Commerce is moving faster.

Have you had an Amazon 4-Star experience? Let us know all your thoughts at

Download MP3 (25.1 MB)

Brian: [00:01:41] Hello and welcome to Future Commerce, the podcast about cutting edge and next generation commerce. I'm Brian.

Phillip: [00:01:46] I'm Phillip.

Brian: [00:01:48] Today, we have a fun and exciting topic. We're going to keep it short. We're going to keep it on point, we hope. {laughter}  We're gonna talk about Amazon 4-star.

Phillip: [00:01:59] I would rate this episode as four stars, Brian.

Brian: [00:02:02] I would give it five.

Phillip: [00:02:04] I'm going to give it five. I'm going to give it five stars. Yes.

Brian: [00:02:09] Good. I'm glad you're giving it five stars. Because as long as you're above four stars, you can make it into the Amazon 4-star store, which is exciting.

Phillip: [00:02:18] And we're going to get deep into that. But what you should do is go give us a five star, and you can do that over at Apple podcast, Stitcher Premium, Google podcasts, or even on Spotify, or anywhere where you consume podcasts or on any smart speaker device with the phrase "Play Future Commerce podcasts." Now, we've had some reports that that may or may not work. And I'm starting to believe that Amazon is getting smart about the way that they're providing podcasts recommendations. So interesting stuff happening there, but we do want your feedback on today's show. So if all else fails, head over to and leave us some feedback on our site. OK. Brian, what is Amazon 4-star?

Brian: [00:03:00] So Amazon 4-star is Amazon's third jump into physical retail, and it is a store that sells products that are above 4 star rating on, which is super cool and also almost inevitable that this would come about.

Phillip: [00:03:25] Yeah. Yeah. The fact is that this is the first Amazon store that is basically replicating Amazon's selling model in real life. Categorized, you know, shopping experience of, you know, of something that you could replicate like from a category perspective in Amazon. Products of all types that are sort of grouped together loosely by, you know, nothing more than people wished for these items, people gifted these items, you know, and generally probably a high quality item because it's been well rated.

Brian: [00:04:04] Yeah. Although there's been a lot of gamification in ratings lately, or I should say sort of...

Phillip: [00:04:11] That's a whole other... {laughter}.

Brian: [00:04:11] Find a way to get above that 4 star, just so you can get into the physical store. I'm going to imagine that Amazon is not going let that happen. I mean, they've got limited space in the store. So they're still making choices about which 4 star products and above get into the store. They've got millions and millions of products on the site. So this is still a curated selection of products. Really, it's Amazon being able to pick out whatever products they want to put up with their store.

Phillip: [00:04:45] Yeah. Ahead of this store opening, you said this is the third store, the other two would be what? Amazon Go and Amazon Books?

Brian: [00:04:54] Right. Yeah.

Phillip: [00:04:57] Ok.

Brian: [00:04:57] They may have some other stuff in stores or in brick and mortar as well. This is the third I'm aware of at least.

Phillip: [00:05:05] Yeah. Where is Amazon 4-star concept located?

Brian: [00:05:09] That's a great question. I believe...

Phillip: [00:05:12] Yeah. I shouldn't. I'm like teeing you up. It's on Soho in Spring Street in New York City, which is...

Brian: [00:05:19] I think they're going to open on in Berkeley, as well, I just read.

Phillip: [00:05:21] Yeah. And it's on Spring Street between Crosby and Lafayette, which is if you are into Hamilton at all, means something. Unsurprisingly, I think the thing that you would expect is that this store will be packed to the brim. Oh, you know what? We forgot about Whole Foods. Whole Foods is a an Amazon retail experience now right?

Brian: [00:05:46] Very good point. Yes.

Brian: [00:05:49] So but it's packed to the brim with a lot of Amazon's product offerings. So you're going to see, you know, Kindles, you're going to see a lot of their electronics. You're going to see a lot of Alexa devices.

Brian: [00:06:03] Amazon basics.

Phillip: [00:06:06] Amazon what?

Brian: [00:06:08] Basics.

Phillip: [00:06:08] Oh, Basics. Yes. I thought you said cake mix, and I was like... {laughter}

Brian: [00:06:13] No. Basics.  Sorry, I'm getting over a cold, so...

Phillip: [00:06:18] No, I love that. That's... And we now have a show title, which is everything I've ever wanted.

Brian: [00:06:24] Amazon cake mix. I kind of want that.

Phillip: [00:06:26] I kind of wanted it, too. But, yeah, Amazon Basics. You're gonna see a lot of that and probably a lot of their in-house brands. Right? Probably on the fashion side. And as you would also probably expect, because if you've been at Whole Foods since the acquisition, you will notice that you're gonna get a different pricing structure if you're prime member. You're gonna see that here, too. So you're gonna get preferred pricing.

Brian: [00:06:55] Not only are you gonna get preferred pricing, you're gonna get real-time pricing because they've eliminated all the paper tags underneath your items that you would normally see in a brick and mortar experience. Instead, they've replaced them with real time digital displays that show the rating and the price and in real time.

Phillip: [00:07:16] Wow. So, OK, so that's what it is. I'm curious to pick your brain on how this is different. The thing that people sort of usually critique about an in-store experience is that outside of Amazon's product offering, what would stop any other retailer from creating an end cap that says "4 star rated on Amazon?" This seems like the kind of thing that could be easily replicated by any other retailer. What do you what do you think about that?

Brian: [00:07:58] Sure. Yeah. I mean, I think it could actually, if they had that kind of data and that kind of reputation for having that much rating data.

Phillip: [00:08:11] Right.

Brian: [00:08:11] In some ways, you could kind of argue that this is what retailers should be doing right now, anyway. If you have a product assortment from several brands, if you're a true retailer, you should be curating stuff that's over 4 stars. Right? And you could try new stuff. And then if it's bad, then you get rid of it, and you don't sell it. Your selection of quality should really reflect that data to begin with. But I think what's interesting about this is this is one of the first examples of someone using their online data to drive their offline data in a very transparent way. Merchants might be doing this now anyway, potentially. We just wouldn't know because it's not transparent. Right?

Phillip: [00:09:10] Right.

Brian: [00:09:11] Of course, they're not displaying real time ratings in pricing. I definitely expect to see this happen more. I expect that prices on things will change more frequently you will be using digital displays to reflect that. Which honestly, there's the part of me that's excited about that, and there's a part of me that's not excited about that. What if grocery is all of a sudden like gas, as a result of this? So you go to the store and one day the price of apples has gone up by 6 cents. The next day it's gone up by another 6 cents. And then there're trends, and it's like this real time market. I would imagine that for low income purchasers, this could get really, really frustrating in terms of budgeting if we got to that level.

Phillip: [00:10:14] Right. Right. It's tough. It's tough to really... The Amazon experience, if you're a Prime member, is likely less about price shopping and more about the convenience of getting exactly what you're looking for, the moment you actually want it. You're probably sold on something prior to the actual purchase. A lot of the browse that happens on Amazon, at least for me, isn't more about product discovery and product comparison. Amazon has other products for that. But as a Prime member, when I'm shopping, I'm not looking for a bunch of competing products based on ratings so much. I'm looking for making the final purchase that was already a well considered and research purpose ahead of time.

Brian: [00:13:47] Yeah, I don't know. The way that I use Prime often is, I have something that I want to buy, and then I'll find it on the Web somewhere or something else will trigger it. And then I'll just go to Amazon and buy it because I get free two day shipping. Like if it costs me a dollar or more, I don't really care. I think that this store though, will be a lot more about discovery. When someone goes in, it's not because they are looking to buy something they could just bought on Prime anyway. They could get that delivered to their house in two days or less for free. So when someone goes to this store, it's gonna be because they want to do a little bit of browsing of Amazon recommended products, essentially, and do a little product discovery. What else are the people buying and finding interesting and finding worthwhile? Because why else would we go into a store when we can just buy from Amazon on Prime and have it delivered to our house in seconds? Especially if you're into an urban area like Soho, or like the Bay Area where Prime now is like at your fingertips, two hours free delivery. I guess the benefit of this store is really about finding the best of Amazon. So I would go to this if I was giving you a gift, and I was having trouble thinking about what to get.

Phillip: [00:15:25] Yeah. So you're bringing up... You're going right where I was wanting to go with this, which is in many cases, the shopping or the browse experience is more enabled by an in-person moment where you can take in a lot of visual stimulus all at once. Like me seeing a table that's chock-full of toys that are highly rated for me to give as a gift is just a much better experience for me, as a human being, than scrolling through an endless, infinite scroll on a mobile device, trying to figure out which one works, or which one just triggers for me like, "Oh, yeah, they would totally love this Harry Potter Lego set. And that's what I want." Also, "It's a sizable, big box. That looks like a substantial gift, whereas this other thing is a tiny box." Well, you don't get that visual comparison anywhere but in real life, because I mean, not that you couldn't. One day maybe with AR, we will. But me seeing a tiny little box next to a big box, I might be more intrigued to spend the same amount of money on the bigger box that looks more substantial. I'm not going to get that from a two hundred pixel image in a category listing page. Right? So I love this idea for discovery when it's a product purchase outside of something for myself that I'm already probably thinking about. The thing that I'm... I had like one of those flashback moments to when I was a kid and my mom, when I was real small, we went to a store, and we went shopping to buy like a KitchenAid mixer. Those countertop stand mixers.

Brian: [00:17:26] Yeah.

Phillip: [00:17:26] And my mom was a baker, and she sort of had a good idea of what she wanted. And we went to a store called Service Merchandise. Have you ever been there?

Brian: [00:17:37] No, I've never been there.

Phillip: [00:17:37] You remember that? The Service Merchandise, when I was a kid was like real world analog Amazon. Everything that you could ever think of existed in one big room with a bunch of these little kiosks. It was like, "Here's a few products for the home." And it was like Amazon in real life. But in 1985. And nothing could be purchased off the showroom floor. It was like a shoppable catalog because they actually had a catalog business. You had to take a hang tag. And you take it to the back, and then the thing comes down the conveyor belt, and you pay.

Brian: [00:18:13] That sounds kind of futuristic to me.

Phillip: [00:18:18] This feels like we've come full circle because this Amazon concept feels like Service Merchandise 30 years later, which for all intents and purposes, is Service Merchandise or old school catalog, but done in a modern way. It's just an interesting... I'm very interested to why it triggered that feeling of being a kid waiting for that product to come down the conveyor belt or shopping in like a shoppable, real life catalog. So very cool.

Brian: [00:18:54] It is interesting.

Phillip: [00:18:55] It's interesting.

Brian: [00:18:55] Again, I know that like the browsing experience is really an obvious part of this and like sort of that real life catalog bit. But I really feel like the data part of this is really interesting and sort of the transcending the physical and digital. I'm really excited about providing real time data to customers in-store, in display. To me that's the groundbreaking part of this is you're going to base your in-store assortment off of online data. I think that that's the part where other retailers are going to really take notice. There's lots of browsing experiences out there. Already. Right? And so that's nothing new. But using the data that Amazon has to help drive that in-store experience and really going, and this is going to sound really cheesy, but like digital first, if you will. And it's using online as like the primary driver for how you structure your physical store, that's groundbreaking stuff.

Phillip: [00:20:24] At some point, what... Oh, my gosh. I'm not Magento on the brain because of my other podcast. I'm sorry. At some point, Amazon has to decide. There has to be a... I guess spit it out. Amazon could fill this store with only Amazon stuff.

Brian: [00:20:44] Right.

Phillip: [00:20:45] They have to strike a balance between non-Amazon stuff. I think recently... Was is Scott Galloway? Or L2 that had a digest of 32 in-house brands that you may or may not even know was an Amazon brand?

Brian: [00:21:02] There are thousands.

Phillip: [00:21:03] There're so many in-house brands that you may not even know are in-house brands, they could fill a whole store with it. Aside from notable brands, like Lego or KitchenAid, Amazon could be positioning its own products, which might be intriguing to some people. It could be scary to others. In fact, you could probably make an entire Alexa store at this point because at an Amazon event recently they just came out with twenty five new ones.

Brian: [00:21:30] I know we haven't even talked about that yet.

Phillip: [00:21:32] We haven't even talked about that because it's kind of tiring. I'm tired of it, honestly. A store like this makes a lot of sense for me if they are highlighting, truly, products that have really great ratings, and it's about discovery. I would never walk into a store... I don't go into Whole Foods with the intention of buying an Amazon Echo. And I wouldn't go into this store with the intention of buying only Amazon branded products. While they need to coexist alongside everything else, the whole point of this store is the everything else, in my opinion.

Brian: [00:22:11] Yeah, I don't think that they're gonna do that. I don't think they're going to have only Amazon products. I will say this... This is just what every retailer does. I mean, if you look at... We've talked about this before, but if you look at the Kirkland brands, you know, from Costco, they have items for almost every category. This is not surprising. I think that the difference is with Amazon, it's several different brands. With Costco you know you're getting Kirkland's. With Amazon, it's a little bit harder to discern if you're buying an Amazon brands unless you did research on it, which was kind of weird.

Phillip: [00:22:49] Well, leave it to California. California will pass a law at some point requiring them to have a notice that that it's an Amazon in-house brand. That that will happen eventually, I'm sure. Last thing, too, since you mentioned Costco. Costco is no longer the highest paying minimum wage retailer in the country because Amazon... There's a whole story there, and there's some caveats to the announcement, which there are journalistic entities out there for you to get the whole story. But Amazon just announced that they will be instituting $15 minimum wage. Costco previously having a $14 minimum wage. But I think it's interesting...

Brian: [00:23:26] As long as you don't mind skipping your bathroom breaks. I think that...

Phillip: [00:23:30] {laughter} Dang. OK. So. Yeah. Yeah. For quality of life perspective, I'm sure Costco is a much nicer place to work.

Brian: [00:23:38] Just kidding.

Phillip: [00:23:39] Plus you get like a $1 hotdog? I mean, you know, unless it's a 4 star rated $1 hot dog, I don't think I want the Amazon hot dog. Anyway, we hadn't covered it. I'm really glad we did. Any final thoughts about Amazon 4-star?

Brian: [00:23:56] Yeah, I'm just really excited to see how other retailers respond. I think that we're gonna see a lot of copycatting. Obviously not exact copies, but it's going to spur a new set of store experiences. And I'm excited about that. And there's lots of technology out there to help provide this. PERCH is a company that does real time, digital display for in-store experiences, and there's a bunch of other ones out there. I think finally we're gonna start to see the in-store take on that truly digital feel, and it's going to really start to seem seamless. Your shopping experiences. Finally. The vision of omni channel is going to really come to life for actual consumers in a consistent way, like across lots of brands and experiences in stores. And so that's really exciting. And I do love that Amazon's pushing this. I think that someone needed to do this, and Amazon was the right one to kind of hit the market first and be the first to market. So I love that.

Phillip: [00:25:14] I love it. If you would love to visit Amazon 4-star yourself, we want to hear about your experience, and we want you to tell us all about it. You can do that at Hit up the Disqus comment box on the episode page, and tell us what you think. Do you like this? Do you not like this? Have you seen it? What is it like in person? We want to know, and I think Brian and I will be planning a field trip, and we'll cover it live when we're in New York in just a few weeks time for an industry event.

Brian: [00:25:42] Yeah.

Phillip: [00:25:42] So it's gonna be really cool. Stay tuned for that. But thanks for listening. What do we usually say?

Brian: [00:25:50] Retail moves fast...

Phillip: [00:25:50] And Future Commerce is moving faster. Thanks.

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