Amazon has opened a physical store in Seattle. The gimmick is that there are no prices. You log into your Amazon with your smartphone and then it shows your the price.
There is a great bit in Michael Crichton’s ‘Rising Sun’ where it is said that the Japanese corporations think in very long timelines and that will give them am unbeatable competitive edge over clueless Americans. Well, Crichton was wrong about Japan, but he wasn’t wrong about how some large institutions play a -really- long game.
This Amazon Store concept frightens me because it could be a harbinger of a world where price competition goes away. People may not be old enough to remember, but there was a time not too long ago where lots of items had ‘variable pricing’; like buying a car. You never knew if you were getting a good deal because every price was ‘negotiated’.
I believe that Amazon is ‘Priming’ people for a world that is so ‘frictionless’ (ie. so easy to purchase) that they won’t bother comparison shopping anymore and Amazon will give everyone different prices according to what their ‘metadata’. In other words, the highest price their algorithms decide the buyer is willing to pay without question. Seattle is a great test case for this since there are so many affluent people who frankly don’t care about low prices anymore.
Right now these stores seem silly–a bit like the Apple Watch. But I believe Amazon is putting its toe in the water and will be patiently waiting for the idea to grow on people–just as they have waited over a decade to actually start making money. And when/if this idea catches on? Look out.
Because when all that ‘big data’ makes customer-specific-pricing normative prices will become much higher for all of us. They may have the market force to drive the very idea of transparent pricing out of the window–just as Walmart’s great power exerts so much influence over -vendor- pricing (in an admittedly different way). The irony is that Amazon got so big by having low prices. Not anymore. Having the price out on the shelf is something we take for granted. But it’s not a given. And we’ll miss it when Amazon taketh away.