Member Exclusive   //   June 27, 2024

Amazon Briefing: Amazon is quietly experimenting with virtual storefronts

This is the latest installment of the Amazon Briefing, a weekly Modern Retail+ column about the ever-changing Amazon ecosystem. More from the series →

More virtual stores are popping up on Amazon’s online marketplace. 

In one brightly lit store, Amazon shoppers can browse a curated selection of coffee makers neatly arranged on shelves, including models from Cuisinart and Nespresso. A similar experience is found in a neon-colored store selling electronics. Another digital world is less of a store and more like a tour of a virtual home where shoppers can browse various home goods room by room, curated by Everything Envy, an influencer duo that also conducts livestreams on Amazon. 

Finally, there are also brand-specific stores, like a three-dimensional Star Wars store, selling everything from lightsaber replicas to action figures, as well as a Lego store.

The digital stores aren’t the easiest for shoppers to find. Though Star Wars and Lego include signage on their landing pages that direct shoppers to the virtual stores, Amazon’s coffee, electronics and home goods 3D stores are trickier to locate as they don’t appear to be prominently displayed on the website. The stores can also be found on a relevant product’s listing page. For example, a product page for a Stormtrooper helmet includes a link underneath the item photo that says “View in 3D Showroom,” which when clicked upon, takes a user to the Star Wars virtual store.

It’s unclear when exactly the storefronts debuted, but they appear to be relatively new. Amazon touted its virtual home tour in a March 26 Instagram post. Everything Envy wrote a separate post about the home tour on their blog in February. Amazon declined to comment for this story, including specific questions about when each virtual storefront was rolled out and the extent to which such e-commerce experiences will be unveiled in the future. Lego and Disney, which owns the Star Wars brand, also did not respond to requests for comment. 

Amazon has dabbled with virtual reality shopping tools for years, and the growing prevalence of virtual storefronts on its web store is the latest sign that the e-commerce giant remains bullish on this type of shopping technology. Last year, Amazon partnered with 3D visualization platform Hexa to let sellers create digital twins of real-life goods that can be added to their product pages, including virtual try-on capabilities and 360 viewing. In 2020, Amazon debuted its Room Decorator tool, which helps shoppers digitally visualize furniture in their homes. Last summer, Amazon Fashion introduced virtual try-on tools for shoes from brands like Puma and Adidas, which was later expanded to include a similar tool for eyewear.

“Amazon is always experimenting with the digital shopping experience, and what we’re seeing here is a trail of Easter eggs, so to speak,” said Mike Black, chief growth officer at research firm Profitero. “They’re definitely testing it out and seeing if they can get that consumer engagement.” 

The challenge will be getting consumers on board. Amazon is not known as the go-to destination for window shopping compared to platforms like TikTok. That said, the Seattle-based company has rolled out tools to enhance product discovery on its website, including a TikTok-like news feed called Inspire.

To Melissa Minkow, director of retail strategy at digital consultancy firm CI&T, the virtual storefronts seem like a similar bid to boost product discovery on the platform, but it remains to be seen how effective the strategy will be. 

“People go to Amazon to leverage the ratings and reviews because at that point, they already have a pretty clear intention of the item they want,” said Minkow. “This removes a lot of the research components that make Amazon such a valuable shopping experience.”

It’s also a possible sign that Amazon is entertaining the viability of the metaverse, even as public interest in the metaverse has largely faded since the concept took corporate America by storm a couple of years ago. If so, Amazon isn’t alone. Last month, Walmart unveiled a virtual storefront of its own called Walmart Realm, where shoppers can shop a curated selection of digital twins of the retailer’s products, all in a three-dimensional, video game-like environment.

Amazon has been relatively tight-lipped about its metaverse plans compared to its tech peers. Facebook founder Mark Zuckerberg was so bullish on the power of the metaverse that he changed the company’s name to Meta in 2021. (Since then, the Meta CEO has traded his metaverse ambitions for AI.) By contrast, Amazon has taken a more reserved stance when it comes to the metaverse. In 2022, for example, David Limp, Amazon’s head of devices at the time said at The Wall Street Journal’s Future of Everything Festival that the company would rather focus on technology that affects the real world “here and now.” 

Still, there are plenty of other signs that Amazon has never entirely written off the metaverse. For example, the Seattle-based company has previously posted job listings seeking candidates with experience in “building 3D games, 3D digital twins, or metaverse technology.” Last year, Amazon introduced Amazon Anywhere, which allows customers to buy physical goods from its online web store while playing video games. 

Whatever the motivation behind virtual stores on Amazon, Minkow said the technology will need to improve before consumer adoption will be widespread. Although virtual stores have become more prevalent since the pandemic, Minkow generally finds the experiences clunky and difficult to navigate, including Amazon’s iterations. 

“Amazon has been a really good teacher for consumers in terms of getting them to develop new shopping behaviors,” said Minkow. “But until virtual store experiences are easier to maneuver and provide differentiated value, they’re just not a platform that I see shoppers embracing.

Prime Day sneak peek

Amazon finally disclosed that Prime Day will happen on July 16 and 17. Earlier this week, Modern Retail spoke with analysts and industry experts about what brands and customers alike can expect from the upcoming sales event. According to a new estimate from data intelligence firm Similarweb, Amazon should bring in $14.7 billion in revenue this year, making it the biggest Prime Day ever.

Here are some new data points to help contextualize that growth. 

Shoppers are splurging on higher-end cosmetics
Even as inflation-weary consumers increasingly have traded down to less expensive products across most product categories, cosmetics are bucking that trend, according to a report released Wednesday by Adobe.

While shares of units sold of personal care products fell by nearly 11% for the months of April and May, compared to January levels, cosmetics told a different story. For example, the most expensive lipsticks rose by more than 37% over the same period. Similarly, in fragrances, the more expensive goods jumped by more than 19%. 

It makes sense as Amazon has increasingly pitched itself as a go-to destination for beauty and personal care sales, courting more such brands to its platform, including prestige labels, Modern Retail previously reported. It’s a sign that cosmetics sales will likely be a top-performing product category this upcoming Prime Day.

Beauty and personal care will be top of mind for shoppers this Prime Day
The cosmetics, skin care and fragrance product category has surged in popularity among consumers, according to a report released Wednesday by Coresight Research analyst Aditya Kaushik. 

Asked what goods they expected to shop this upcoming Prime Day, nearly 25% of respondents said cosmetics, skin care and fragrance products, up 5% from the year before. According to Coresight’s 2024 Prime Day survey, that puts the cosmetics, skin care and fragrance product category in fourth place in terms of overall rankings. In 2023, the same category ranked ninth place. 

There’s still room for pessimism
A Coresight survey conducted in late May 2024 found that three-quarters of shoppers in the U.S. expect to browse or buy products during Prime Day, with nearly 34% expecting to spend. However, in 2023, actual spending behavior was significantly lower than plans indicated. 

“This paints a pessimistic picture for the event this year if actual behavior follows the same pattern, particularly as plans to spend are down 11.2 percentage points versus in 2023,” Kaushik wrote in the report. “However, increased spending by engaged shoppers this year could somewhat offset a reduction in number of shoppers, in terms of dollar spending.”

Amazon news to know

  • Amazon is reportedly upping its competition with Temu. The company plans to launch a shopping section featuring cheap items that can be shipped directly from China, The Information reports.
  • Amazon’s market cap has surpassed $2 trillion, putting it in a select group of other companies like Alphabet, Nvidia and Apple.
  • Amazon is working on a ChatGPT competitor, Business Insider reports.

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