Consumers May Want an Amazon Retail Store, But That’s Not a Good Enough Reason for Amazon to Open More

Editor's Note: This is a repost to replace a post that somehow vanished into the ether.

amazonPundits have been speculating on the topic of Amazon and retail for over 4 years now (longer, in fact than Google's own retail efforts). In all that time most of the arguments could be summed up as "wouldn't it be cool", but yesterday The Telegraphreported on what they think is a killer reason for Amazon to open a retail store: customers want it (in the UK, at least).

A poll conducted back in March found that 53% of respondents wanted the retailer to open a store in the UK.  Amazon was in fact the only online retailer that the survey group actually wanted to open a store; the second most popular response came from the 32% of respondents who said they would not like to see any online retailer on the high street (Ebay came third, with 28%).

chart

To be clear, that survey came from the UK, but if consumers in the US show similar interest then Amazon could expect a friendly reception should they expand their retail efforts beyond the handful of unstores operating on college campuses.

So does this mean Amazon erred when they passed on buying Borders' store leases when that chain collapsed in 2011? Did Amazon make a mistake when they didn't acquire Radio Shack leases earlier this year?

I'd love to hear what you think, but this blogger would have to say no.

Consumer interest is great and all, but that amounts to little more than buzz.  It tells us that consumers like the idea but not that they would patronize the stores, and it doesn't tell us how Amazon would make the space pay for itself. What would the staff do in said store?

I don't know, and in fact I don't think Amazon knows for sure; that's why they only have those handful of unstores on college campuses. They're testing the idea.

Sure, Amazon has physical operations both in its warehouses and in the Amazon Lockers dotting the landscape in the US and UK, but those are antithetical to a retail operation. They follow Amazon's established practice of using a high capital investment to defray operating costs, while a retail store would involve hiring employees and paying a monthly lease plus utilities.

If you ask me, I think Amazon's future retail efforts are going to look more like Amazon's physical retail efforts in Japan and India. Amazon hasn't opened stores in those countries; instead, the online retailer has been partnering with small retailers like gas stations and convenience stores. The local retailers act as local agents for Amazon, enabling Amazon's customers to pick up and drop off packages.

Edit: A reader informs me that Amazon already has that kind of arrangement with post offices and stores in the UK. Thanks, Mike!

Apply that idea here in the US and we would have Amazon partnering with, for example, Mailboxes etc (or the UPS Store as it is now known).

I don't know how this would translate to the UK, but in the US a partnership with the UPS Store would give Amazon all the advantages of a network of retail stores without the headaches of store leases, payroll, or other ongoing expenses.

Now tell me, wouldn't that make more sense than Amazon opening their own retail store?

image via BGR

About Nate Hoffelder (11579 Articles)
Nate Hoffelder is the founder and editor of The Digital Reader:"I've been into reading ebooks since forever, but I only got my first ereader in July 2007. Everything quickly spiraled out of control from there. Before I started this blog in January 2010 I covered ebooks, ebook readers, and digital publishing for about 2 years as a part of MobileRead Forums. It's a great community, and being a member is a joy. But I thought I could make something out of how I covered the news for MobileRead, so I started this blog."

2 Comments on Consumers May Want an Amazon Retail Store, But That’s Not a Good Enough Reason for Amazon to Open More

  1. It really doesn’t make any kind of sense me at all – the thought that Amazon MIGHT want to open up a brick&mortar retail outlet. Maybe a seasonal kiosk, just to goose up a little holiday action – but nothing permanent.

    Why?

    Think of it this way – and I apologize in advance for the crappy metaphor but I am trying to get ready to go my day job and just feel compelled to comment once.

    Let’s say you are running a household. Let’s say you have decided that your family is spending too much on dish washing expenses. Let’s say that you decide that the best way to save money is to encourage your family to drink right out of the tap, instead of using a glass.

    SO – you put up a sign that says DRINK FROM THIS TAP OR DIE and you hide all the glasses.

    You do NOT leave a glass on the side of the sink if you are trying to encourage your family to start hanging their faces over the sink and making glub-glub sounds.

    Same thing with Amazon.

    Amazon WANTS to encourage online shopping.

    Why support the bad habit of the old school retailer by putting all of that cash into building a retail outlet that ISN’T virtual?

    That’s my theory, anyways.

    Now I have got to get going to my Skinner box cubicle to earn my weekly paycheque.

    Which is mostly virtual and quickly spent.
    🙂

    • Why support the bad habit of the old school retailer by putting all of that cash into building a retail outlet that ISN’T virtual?

      And that’s why I think partnering with small local retailers is more likely.

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