Rumor: is Amazon planning to open hundreds of brick-and-mortars?
I’m a former manager of a brick-and-mortar bookstore. I also managed a game store, worked in a Nature Company type store, and my first real job was in a novelty store.
I think I can safely say that I was a successful manager, and I think I understand something about the physical retail business, even though I haven’t been in it (except as a customer) for some time.
I was intrigued when Amazon recently opened one physical bookstore in Seattle, which I wrote about here:
Who would be foolish enough to open a new brick-and-mortar bookstore in the Age of Amazon? How about…
Well, yesterday (on Tuesday), General Growth Properties’ CEO (Chief Executive Officer), Sandeep Mathrani, answered a question in a way that suggested that Amazon might open hundreds of brick-and-mortar stores (possibly in malls).
That statement has been walked back a bit, but many analysts saw this as responsible for a deep drop in Barnes & Noble stock since the announcement (it’s down about 15%).
Do I think this is true, that Amazon is going to open hundreds of stores?
It’s possible…we’ve had these kind of leaks before that then became reality.
There has been speculation about them being much more than bookstores…maybe a place to do physical returns, for example.
I can see Amazon doing “showrooms” for books and devices, similar to the current store in Seattle.
I have a hard time seeing them doing anything close to a department store.
I don’t think that’s a good model for success in today’s world.
When you run a retail store, you are constantly fighting the rent (if you don’t own the building…which has its own complications, including property taxes).
I just don’t see it working for Amazon to have a store with 25,000 item in it. That would be a tiny fraction of what’s at Amazon.com. You can’t have people comparing what’s in the store with what’s online.
This is what I think they could do:
Showcase books, like they are doing in Seattle- Show off Amazon devices, which might include simulated rooms, like you can see in some electronic stores
- Amazon lockers, where you pick up some things you order online before you get there
- Have a Fed Ex store part of it, to handle returns, but whatever else you wanted to ship
- Maybe have a print-on-demand machine, to do print books
- Perhaps have a sort of test kitchen/coffee place, but I’m not sure about that. It would help them to have people try some of the things online
- Amazon’s “home of tomorrow”, showing off possible future things, including doing focus groups
- Author talks by Kindle Direct Publishing/Amazon imprint/Amazon independent paperbook authors
That could all make it an experience, a destination…and they really wouldn’t need to sell much in the store to have it as a driver of sales to the website and as a place for conversation.
I think, though, that most likely we would see an expansion of the Amazon Books concept first. I think they will continue to experiment with locker locations, but those two don’t necessarily go together.
Would this be the final straw for Barnes & Noble and perhaps for Books-A-Million, as some investors and writers seem to think?
I don’t really see it as the same space, as a head-to-head competition. What they would do would be very different.
I also don’t see it as having a huge impact on independent bookstores…again, different lanes.
Now, if Amazon wanted to open used bookstores, fed by their third party sellers…that would be a crushing blow for many smaller used bookstores, where there isn’t a whole lot of customer service. Stores with great customer service or other unique experiential elements would be unaffected.
I would like to see Amazon expand Amazon Books. If there was one in my area, I’d go to see it.
My intuition is that this CEO didn’t make it up out of whole cloth…that Amazon has been kicking around the idea, and perhaps has talked to malls.
As to it actually happening?
Um…I’d say I’m about 55/45 in favor of it being in the works, with us seeing the start of it this year.
I also think we need to consider that they would do it extensively outside the USA before they would do it here. There are markets where Amazon could really fill a need by opening physical stores.
Update: nice, informative
about the Amazon team involved with the brick-and-mortar retail effort. It does suggest that there could be some stores this year, perhaps eventually adding up to hundreds of stores…which is what I was trying to indicate by us “…seeing the start of it this year”.
What do you think? Does it make sense for Amazon to have hundreds of brick-and-mortar customer-frequented locations (as opposed to fulfillment centers and such)? If they did, what should they have in them? What impact would it have on existing brick-and-mortar stores? Feel free to tell me and my readers what you think by commenting on this post.
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February 4, 2016 at 8:21 pm |
Arguing from personal incredulity is always a weak debate tactic, but I’m going to do it anyway:
I buy a lot of stuff from Amazon. But even if Amazon were to open a kiosk or whatever next to every Starbucks, I would never have any reason to visit.
Online shopping takes a fraction of the time compared to the time needed to visit a B&M store and complete the transaction that way. Moreover, there are no store hours, no unexpected traffic to contend with, lines to wait in. It is very rare when I need to physically examine an item before I can proceed with a purchase, especially since the transaction is at least as reversible as having to return an item to a storefront.
Now it is certainly possible that Amazon has identified a huge population out there that doesn’t value time and convenience as much as I do (here comes the straw man), as in the famous Yogi Berra quote ‘Nobody goes there any more. It’s too crowded.’, or just prefers the sensation of shopping physically. But if that is the case, then why hasn’t Amazon done this long ago? What has changed? Just the fact that they mostly collect sales tax now?
February 6, 2016 at 3:40 am |
Thanks for writing, Tom!
Oh, let me be clear: I would absolutely go to an Amazon store in my neighborhood…but I wouldn’t expect to actually buy anything. 🙂
I would expect it to be a showroom and that’s how I think they expect it to be used, for the most part. At the holidays, people would actually shop there, but if it drove traffic to the website…
February 5, 2016 at 6:06 pm |
Well, first off, the CEO who made the original comment walked it back a bit the next day. Most of the speculating frenzy that I saw wasn’t about books, but what if Amazon’s stores were into “other stuff”
I agree with most of your ideas (except for that Print on Demand machine :grin). I especially like your idea about used books — that’s a big thing from 3P sellers that you often see in their online bookstore.
I do see a “merchandise” possibility with some of their soft lines stuff where sizing is important — I’m particularly thinking of their Zappos subsidiary.
I also agree with Tom Semple’s points — I also buy a LOT of stuff from Amazon, and I don’t think I’D ever have an occasion to visit an Amazon B&M store.
Two other thoughts:
– I wonder if there’d be a way to leverage Alexa in the running of the store — leading to lower staff costs?
– I wonder if there isn’t a way in a B&M setting to push the sale of Prime memberships — perhaps with some in store give-a-ways or coupons?
Lastly, their facility on 34th street in Manhattan may give some clues. There, there is no on street B&M store (existing retail spaces were already under long term leases to others). They also own the building outright (it’s a 12-13 story former Ohrbach’s flagship department store). It’s a mini DC, and an Amazon regional office.
February 7, 2016 at 9:43 pm |
Thanks for writing, Edward!
Yes, it’s definitely been an evolving story.
I suspect that what happened was that this was someone who would benefit from Amazon opening hundreds of stores. They may have heard something about Amazon opening more stores, and just projected that it would be hundreds. I didn’t read it as the CEO saying that Amazon would definitely do it, just that IF Amazon opened hundreds of stores, it would be a positive indicator.
I think Alexa could be a presence in the store, but I don’t think I see added efficiencies in selling things…in the store. I want it to feel like you are stepping into another world…the lighting should be a stark contrast to outside. Buying something while you are there shouldn’t be important.
I don’t want it to go the way of the Sony Metreon, a super immersive, noisy retail/entertainment center in San Francisco which…underperformed. 🙂
February 7, 2016 at 1:49 pm |
Hey, I addressed your list of possible uses over here:
http://the-digital-reader.com/2016/02/06/san-diego-booksellers/
Rather than leave a self-serving link, I’ll paste my response below:
Some of these don’t make any sense to do under the same roof. For example, consumers tend to treat POD in a store more like a print shop then a bookstore, so there’s little reason to include a POD machine in a bookstore. And Amazon lockers don’t have to be co-located with a bookstore, so it would make more sense to place the lockers a couple miles away where rent is cheaper.
The test kitchen and “home of tomorrow” are kinda like what Amazon has done with pop up stores in the past, and they’re space intensive. But if you combine that area with the author event space, you might be able to kill two birds with one store.
And as for the FedEx store idea, that’s just another name for the unstores Amazon is installing on and near college campuses. It doesn’t really serve the same market (but it also doesn’t necessary require a lot of space so why not include it).
February 7, 2016 at 7:12 pm |
Thanks for writing, Nate!
I’m honored that you mentioned me, and appreciate that you commented here!
As to the POD machine…I made this comment about them back in 2012:
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I do think there may be some place for POD (Print-On-Demand) POS (Point of Sale) machines.
I’m not sure that a dedicated bookstore is the place for them, though. I still think the most likely scenario is that those become luxury places…great service, quality products, higher prices. I don’t think POD is going to fit that image for a bookstore.
I see them more in places like a 7-11. Get a Slurpee and a copy of Siddhartha. 🙂
Microsoft might be able to make that technology better. Right now, it takes a while to do (I would think it might take ten minutes, but I haven’t looked at it recently).
If the POD machines were a feature of a bookstore, what would the bookstore look like? Would it become a showroom, effectively…have some copies of the books to handle? If not, would getting a book in fifteen minutes be a lot more attractive than getting on in two days via Prime? It might be.
As a former bookstore manager, it doesn’t seem like it would serve the impulse need, or the browser need…but I could certainly be wrong on that.
—
–https://ilmk.wordpress.com/2012/05/06/round-up-82-pod-google-on-fire-fire-losing-marketshare/
As you can tell, I was a bit skeptical about the value to POD in a bookstore…even though the Espresso machine was in some places then:
http://www.ondemandbooks.com/
However, that skepticism assumes that the purpose of the store is to sell books in the store. POD just isn’t very efficient for that.
If, though, the purpose of the store is to be a destination location…a place to marvel, wonder, and love Amazon online more, I think it makes sense. People could watch it work (perhaps even customizing one that was more visual…like a transparent cabinet). It also shows respect for paperbooks. Think of it like the carousel at Disneyland…that was an old-fashioned ride for a cutting edge facility. Yes, people rode it (there weren’t a lot of A tickets, after all), but it was more about it being vintage.
The destination part is the same reason I would put Amazon Lockers in these…I don’t want to call them stores, I’ll call them showrooms. If you came into the store to pick up the household items you ordered online (and didn’t want stolen from outside your house), and saw a demo of an Echo Jr. (a rumored future device), that might influence you.
Nice post, by the way…for my readers, I’d suggest you take a look at it. I suspect Nate may think that suggestion makes more sense than a POD in an Amazon showroom. 😉
February 7, 2016 at 6:40 pm |
[…] But that hasn't stopped some from speculating. Writing over on his blog "I love my Kindle", Bufo Calvin has thrown together a list of all of Amazon's promotional and physical retail activities and […]
February 14, 2016 at 12:05 am |
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