Amazon looks to muscle into publishers’ pop-up shops

Good Housekeeping’s first pop-up shop, opening its doors at the Mall of America on Oct. 3 and running through the end of the year, has a twist: everything on sale will be bought through a mobile app.

That’s because none of the 40 products the Good Housekeeping store sells are actually in stock at the 2,800-square foot store. Instead, visitors who want to buy something can use their smartphone to scan a barcode-like image on that item, called a Smile Code, which loads that item inside Amazon’s mobile app. If a customer buys that product, Amazon fulfills the sale, and Good Housekeeping gets an affiliate commission. The infrastructure that supports that process is run by Amazon Local Associates, a program Amazon built to participate in the exploding pop-up shop ecosystem.

Good Housekeeping is more than happy to offload the complexity and risk of supply chain management.

“We do not want to become a retailer,” Good Housekeeping editor in chief Jane Francisco said. “We have an opportunity to meet our audience wherever they are.”

But for publishers interested in developing their experiential or commerce revenues, Local Associates presents an uncomfortable tradeoff: Get rid of one headache, but lose the direct relationships with customers one might be able to sell to later.

The affiliate commissions offered through the program limit the monetization prospects too: While they vary by product category, the highest commission rate Amazon Local offers is 10 percent.

A few others are leery of the lousy track record that QR codes, the technology Smile Codes are modeled off, have had.

“They are definitely pushing it,” said one source at a publisher that’s discussed the Local Associates program with Amazon. “I’m just not sure users are really keen on taking out their phones while they’re shopping.”

Local Associates grew out of Amazon Associates, the affiliate program that forms the spine of so many publishers’ affiliate commerce strategies: For some publishers, Amazon Associates delivers up to 80 percent of their affiliate commerce revenues.

The Local Associates program offers a digital marketing component too: Participants get a branded storefront on Amazon’s website, called an Amazon shop. Publishers ranging from Good Housekeeping to Open House TV, a TV program that airs on NBC’s New York City affiliate, WNBC, have participated.

But the storefronts are a secondary consideration for the program, which is designed to give Amazon a role in pop-up shops, a major growth area for brands, retailers and publishers. Over the past year, publishers such as Domino and PopSugar have found success selling products at branded pop-up shops, which are mostly funded through advertisers’ experiential budgets.

“It’s a key initiative at Amazon right now to monetize IRL [real life] experiences,” said Courtney Wartman, svp of influencer marketing and commerce at Clique Brands, which participated in Local Associates this summer.

Wartman said one of Clique’s properties, Byrdie, used Smile Codes at its Byrdie Beauty Lab in July, and liked what it saw: “Conversions were through the roof,” Wartman said, though she declined to provide any hard numbers.

Wartman identified a few factors, like the fact that Byrdie or the participating brands, could merchandise the Amazon shops as they saw fit, as additional reasons she liked the program. Good Housekeeping is taking advantage of that feature too: While it sells 40 items in store, its digital shop has over 160 items.

That experience might be closer to the exception than the rule. Since it launched Smile Codes in November 2017, Amazon has worked with publishers and brands to stick them just about everywhere: In the pages of magazines, on the sides of billboards and at events. The results, so far, have been uneven: “No one is scanning them,” said one source at company that’s used SmileCodes in a campaign.

Some industry analysts see growth ahead for QR codes as a technology. At the beginning of 2018, Juniper Research released a study suggesting that 5.3 billion QR codes would be redeemed by 2022, up from 1.3 billion 2017.

And while it remains a nascent technology in a rapidly shifting retail landscape, some observers see wisdom in partnering with a company that most people are familiar with. “Good Housekeeping promoting this [Smile Codes] only works in Good Housekeeping’s favor,” said Melissa Gonzalez, the founder of the retail popup agency Lion’esque Group. “A lot of people have the Amazon app. They trust Amazon.”

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