Amazon’s Physical Retail Strategy

Amazon hopes to use its newly launched payment-card reader as a first step in turning hundreds of thousands of small businesses into a brick-and-mortar presence for the e-commerce giant, according to Re/code.

Re/code said the plan is to start by getting small merchants to use the $10 payment card reader as an in-store point of sale device, then build up the supporting software to include real-time inventory management.

That will make it possible for the merchants (or Amazon itself) to sell products directly on Amazon’s site and for customers to either pick them up in-store or have them delivered the same day they’re ordered, probably through a crowd-sourced network of delivery people.

Amazon CEO Jeff Bezos “thinks about all of the core assets as platforms and wants to drive maximum utilization through the platforms to get more efficient, achieve greater scale, build competitive advantage, etc,” a former Amazon employee told Re/code. “To drive scale and utilization, you need to put as much through the system as possible. So if they can execute on building out local delivery, their appetite will be endless.”

The ambitious plan, however, will first depend on convincing tens or hundreds of thousands of retailers to adopt Amazon’s credit card reader, checkout software, real-time inventory management and delivery system. That will depend on convincing merchants—small and especially large—that this isn’t going to result in Amazon stealing business from them.

Amazon didn’t respond to Re/code’s requests seeking comment. But Market Platform Dynamics CEO Karen Webster has her own comments about Amazon’s brick-and-mortar plans — and how the rest of the payments world will respond.


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