Amazon stores could pressure back-end operations

Online retailer Amazon (NASDAQ:AMZN) is eyeing the physical world with plans to open stores. And in spite of the e-commerce giant's prowess at just about everything it attempts, the real-world effort could put pressure on its back-end operations.

Amazon will open two pop-up shops in time for the holidays in San Francisco and Sacramento to showcase its branded line of electronics and hardware including the Fire Phone and Kindle.

"We're excited to open new pop-up kiosks in San Francisco and Sacramento in time for the holidays so that customers can try out our new devices," a spokeswoman told GeekWire. "The team is moving incredibly quickly–already this year we've launched Fire TV, Fire phone, new Fire tablets, new Kindle e-readers, and a bunch of new features and services. While customers can already see our products online and at retailers like Best Buy and Staples, we wanted to provide another option to try out our full line-up leading into the holidays."

There is also a location being readied in New York City. The store will serve more as a warehouse and fulfillment center—or "dark store"—for same-day deliveries in the city.

Both efforts are tests for the 20-year-old Internet pure play, but will likely teach the retailer a thing or two about selling in the physical world such as POS systems and managing inventory in real time.

"Amazon has done similar things before, namely with lockers, but this is a different kind of approach," said Jeff Rauscher, director of solutions design for Redwood Software. "From a back office perspective… the POS will have to be a bit more sophisticated and more automated. The IT side will have to work harder, there will be more components IT will need to move around to adapt the model in order to be successful."

Amazon shoppers today must wait for items, even those who take advantage of one-hour or same-day delivery. A customer in a store has very different expectations. "Once the customer walks through the door, it might change the equation for Amazon," he said.

For the first time, Amazon will have to deal with inventory for orders not yet paid for, just like any multi-channel retailer.  

"The customer has adapted to them, and in this case they may have to do some adapting to the customer," said Rauscher. "Amazon is up to the challenge, but the back end needs to be very mobile and the systems much more flexible."

For more:
-See this GeekWire article

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