Amazon 'gets' millennial demands; that makes it a threat

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Even in tough sectors, like apparel, Amazon has been able to attract millennials. According to a Slice Intelligence report, millennials spend more on clothes from Amazon than from any other online store despite the fact that Amazon is not known for trendy fashion or cutting-edge fashion marketing.

Already responsible for more than $200 billion in annual spending, the millennials are one of the largest generations in history. Their buying power and habits are reshaping the economy, driving retail decision-making and shaping the purchasing and payments landscape for years to come.

They are unique and opportunistic with purchase habits that push traditional boundaries, like buying from a company with loyalty programs incentives and preferring flexible payment options, and no retailer understands the importance and contours of this generation better than Amazon.

David Paul Morris/Bloomberg

Millennial purchases are fueled by convenience, efficiency and value, and with the recent announcement of Instant Pick Up, Amazon has taken another step in the right direction by fine-tuning its marketing tactics for its millennial customer base. The service provides instant (within minutes) delivery for essential items, like snacks, cellphone charges, headphones, etc., from convenient pickup locations, available only at select college campuses.

It’s a smart and multifaceted move as it uses campus locations and incentives to bring in new customers, promote its Prime loyalty program to students (i.e., millennials), and bridge the online shopping experience with real-time gratification of shopping in-store.

Amazon understands that even with the explosive growth in its e-commerce platforms, 90% of worldwide retail spending is still in brick-and-mortar stores. By implementing services like Instant Pickup, Amazon is bridging the online and offline world of retailing and providing a more robust shopping experience.

The first Amazon Go convenience store was recently launched in Seattle, and the acquisition of Whole Foods Market Inc. for $13.7 billion shows that it is aiming to increase its presence in brick-and-mortar retail. Instant Pickup is a complement to these all these recent movements as it’s building trust and loyalty with the younger section of the millennial generation at the same time.

If Instant Pickup becomes highly successful, it wouldn’t come as a surprise if Amazon developed a similar service to other retail outlets via AWS on a subscription basis with Amazon Pay, creating a cloud-based physical storefront.

According to marketplacepulse.com Amazon has 185,000 retailers in the US site and another 200,000 internationally — potentially as many of 400,000 retailers that this service could trickle down to. Such a service could provide inventory management and optimization, helping retailers manage what they sell on Amazon, both through their physical store and online store. Ease of reconciliation for accounting and payments would benefit as well. Therefore, opening the door for Amazon Pay to infiltrate the physical storefront, something PayPal has been trying for years.

There is a great convergence happening between physical retailing and online shopping, and Amazon is at the head of it.