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Last week, with no advanced fanfare, Amazon opened up a completely new brick-and-mortar concept in Manhattan’s SoHo shopping district called the Amazon 4-Star store. The premise is as the name implies: every single item in the store has a rating of 4 stars or more on Amazon.com, with an exception for a few items that are new and trending.
Inside, the store looks like a mess. But that’s kind of the point.
The 4-Star store is, “designed to be a place where customers can come discover products they love,” Cameron Janes, vice president of Amazon physical retail, told Yahoo Finance inside the store on the day it opened. “It’s a highly curated selection of products… meant to be a reflection of our customers.”
Translation: It is a physical showroom for Amazon.com.
There’s an obvious irony here. For years, as Amazon has grown, physical stores have complained about customers “showrooming” — browsing merchandise at a store, taking notes or photos on their phones, and then going home to order it online from Amazon for a cheaper price.
Now Amazon is encouraging customers to showroom in its own store. At the 4-Star store, you can buy the items and walk out with them or pull out your phone and order them from Amazon if you don’t want to carry them out on the spot. Prime members get the Prime price, but non-Prime members can shop in the store as well, and pay retail price. The only thing you can’t do is pay at the register and have the items shipped to you, it’s the checkout method that digital-first retailers like Bonobos use at their stores.
Amazon 4-Star is just the latest example of Amazon’s push into brick-and-mortar, but it is certainly the weirdest. In addition to now owning Whole Foods, Amazon has opened 17 physical bookstores in major cities, plus four Amazon Go stores, where customers swipe their phones when they walk in, grab the food items they want, and walk out without ever going to a cashier. Amazon 4-Star does have cashiers.
The store is a strange hodgepodge. There are sections for electronics, toys, kitchen and cooking, books, bathroom, pets; and sections organized based on website characteristics like New and Trending or Most Added to Wish Lists. One table, Top Selling Around NYC, had paperback books, a blender, hand sanitizer pumps, and a water-filter pitcher.
“It looks like someone who doesn’t know how to put a store together put a store together,” said Yahoo Finance’s Dan Howley on our Final Round live show. “It reminds me of HomeGoods, which is kind of like a garage sale,” said Yahoo Finance’s Rick Newman.
But what looks like a mess belies methodical curation, Janes said. “We have a team of curators, and they’re looking at all sorts of information — obviously at sales, ratings, and reviews, but they’re also looking at things like, What are people putting on their wishlist? What are people pre-ordering? What’s selling in the area?”
The store is an effort by Amazon to show that humans work at Amazon. Janes lamented that people say Amazon’s physical bookstores, “are all arranged by computer algorithms. That’s not the case. And here, too, it is highly-curated.”
That’s half-true. The bookstores have many sections strictly based on digital metrics like sales rankings and popularity by genre or region, plus a few quirkier groupings chosen by Amazon’s human curators. The 4-Star store appears to have more quirky curation than the bookstores, but is still limited to the highest-rated items, plus new items on Amazon.com that are trending well, and thus are likely to have 4-star ratings soon enough anyway.
Of course, there are far more high-rated items on Amazon.com than can fit in the store, and that’s where Amazon’s team of human curators comes in. They hand-select the items in the store based on a range of criteria.
But the store is likely to have a self-fulfilling effect: featuring items that are already popular on Amazon will make the same items more popular.
Amazon doesn’t need the 4-Star store to bring in sales. It is a public statement, and a corporate experiment. The physical bookstores are not generating big sales either.
As Piper Jaffray writes in a research note, “While this particular store doesn’t seem overly compelling on its own… we think it’s another positive step toward a hybrid online-offline world that lets Amazon service online customers at breakeven cost and sell a few Prime subscriptions along the way.”
We are all watching in real-time as Amazon tests the waters and tries new things in brick-and-mortar. Bloomberg reports that Amazon wants to open 3,000 Go stores by 2021. For brick-and-mortar retailers, it is a scary plan.