February 6, 2012
Rumor: Amazon to open stores
by Dennis Johnson
Speculation is high that Amazon has had a revolutionary idea about how to better sell books: the rumor is they’re going to open stores.
In an early report on the rumors, Jason Calacanis at Launch noted that Jeff Bezos ”Bezos gets off on destroying channels” and on imitating Steve Jobs. Calacanis imagines the stores would be huge — Wal-Mart-sized — and feature lots more than books:
… the store could just be a showroom with display units of appliances and “geniuses” running around showing you the top 25 vacuums in action. Or the top 10 juicers actually making juice.
It could be Consumer Reports meets the Apple Store on crack!
There wouldn’t have to be any inventory, you would simply play with the stuff, talk to a professional and swipe your Amazon Prime credit card (or Amazon phone) and have it at your house in the next 24 to 48 hours.
As David Streitfeld notes in a New York Times report, giving credence to the rumors has been the fact that lately, Amazon has been ”relentlessly expanding into the physical,” announcing several new, 1 million-plus square foot warehouses around the country, “delivery lockers in New York and Seattle for those who cannot receive their goods at home,” and has even “been experimenting with a grocery delivery service in Seattle for several years.”
And, Streitfeld adds, while the idea may seem “farfetched, but before 2001 so was the idea of Apple operating its own stores. ’I give them two years before they’re turning out the lights on a very painful and expensive mistake,’ a consultant told BusinessWeek about Apple’s plans in what has become one of the most celebrated bad guesses of the era.”
On the other hand, he notes …
Amazon does not comment on rumors (or on much of anything, really.) But analysts do not think highly of the notion. The company wants to get closer to its customers to bridge the last mile of distribution, but not that close. “I don’t think the idea of Amazon getting more physical and adding more bricks would improve their return on invested capital,” said Brian Nowak of Nomura Securities.
Another problem: Apple, he noted, was focused on one category. Amazon ranges all over the map. Its stores might be pretty big.
But a MediaBistro report by Dianna Dilworth, meanwhile, gives one more reason why this might look good to Amazon: “Why would it make sense to open a physical store to sell digital items? Perhaps to compete with Barnes & Noble’s Nook business, which is known to have better customer service than Amazon because of in-store offerings.”
Given some of the grief brought upon Amazon lately by B&N (here, for example), and knowing how retaliatory Amazon can be (too many examples! okay this one), it’s not hard to think it might be as simple as that.
Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House. Follow him on Twitter at @mobylives