Why the Amazon News is Not About Books At All

amazontrackingRumored news of Bezos’ plans to open 300-400 brick and mortar bookstores has the industry abuzz. We are standing witness to the holy grail of retail analytics.

Apparently the brick-and-mortar bookstore that Amazon opened in Seattle is only the tip of the iceberg for the retail giant, if industry news of the last two days can be believed.

“Sandeep Mathrani, chief executive of the mall operator General Growth Properties, was answering questions from analysts on Tuesday about foot traffic in malls when he said, of Amazon’s bookstore plans, ‘Their goal is to open, as I understand, 300 to 400 bookstores,’ according to a recording of the call,” reports Nick Wingfield in the New York Times

Similar reports are coming in from Greg Bensinger in the Wall Street Journal and Rob Salkowitz in Forbes among others. So far Amazon is staying tight-lipped, and we can only imagine the scene at HQ yesterday when the news broke.

One of the more humorous reports comes from Gizmodo, where Matt Novak writes that “Amazon apparently thinks that the future is in dead trees.”

“According to CNBC, Amazon will attempt to sell books at the same price that they offer online, which is particularly amusing given how Amazon spent the past two decades driving booksellers like B. Dalton, Borders, and Waldenbooks out of business by undercutting their prices. Physical bookstores quickly turned into showroom floors where people would browse and then go buy books for cheap at Amazon,” Novak writes.

At first glance, the news appears to be all about books. Consumers like the real bookstore experience, so Amazon will provide it, by gum. But a deeper analysis makes us believe there’s much more to it.

“The news here isn’t Amazon; it’s GGP [the mall ownership company that Mathrani heads],” suggests Christian Stork in LinkedIn.

Stork goes a great job of explaining how consumer data is the real story here, as online data profiles and browsing habits can merge with real world foot traffic and the possibility for on-the-spot upsell. It’s an insightful analysis, tying in the free shopper Wi-Fi plans of GGP with the barcode-driven pricing policies of the physical Amazon store. In short, to buy a book in one of these stores the customer will be giving away a boat load of data with each purchase…and continue to do so as long as they remain connected to the enticing free Wi-Fi through the mall.

“This all leads to the holy grail of business intelligence: Cross-channel analytics,” explains Stork. “That’s industry-speak for ‘correlating web behavior with brick-and-mortar activity’ according to [an Aruba Networks] white paper. And it’s exactly what I think Amazon and GGP hope to do.”

As someone who has effectively disrupted the way the free world shops, it’s only natural to assume the Bezos has far more in mind that making money from print books. Salkowitz, who has followed the story of Amazon’s brick-and-mortar adventures previously, agrees.

“I speculated that the Amazon retail store was actually a proof-of-concept for the company’s state of the art data-based commerce model,” he writes. “By requiring customers to scan shelf tags to get the price of merchandise in the store, Amazon ingeniously found a way to associate in-store shoppers with their online profile, opening up new opportunities for upselling, cross-selling, improved service delivery, and potentially personalized pricing. The actual customer for this service, I speculated, was not the book-loving public but other large retail enterprises who might be coaxed onto Amazon’s revenue-generating cloud computing platform, Amazon Web Services.”

If other retailers in GGP’s portfolios can be moved onto Amazon’s cloud with promises of a real-time stream of live shopping action, we’re looking at data collection of evil genius proportions, no matter what the customer is buying. This goes way beyond books.

Still, a brick and mortar bookstore? Yep, I’ll bite.