A little over a month ago the WSJ reported on a rumor to the effect that Amazon was planning to open up to 400 bookstores. The rumor was quickly denied by Amazon, and the source of the rumor (mall operator CEO Sandeep Mathrani) recanted less than 24 hours later, so you would think that the rumor was dead.
But as I sit here reading the latest press release from Amazon, I am reminded of that rumor and am wondering whether it might be about half true.
Oh, I don't think Amazon is going to open 400 bookstores; Amazon Books is all about the data, and when it comes to generating info about browsing behavior 400 stores aren't 400 times as useful as a single source (or two, counting the upcoming store in San Diego).
But Amazon's pickup locations, on the other hand, are a separate matter.
Amazon announced on Friday that it was opening a pickup location just off the campus of the University of Akron. That's their ninth location announced in the past 18 months, and the rate is increasing. Amazon has opened five unstores since last February (Purdue) and they plan to open four more by the end of this summer.
That's nine announced locations, compared to a single bookstore (Amazon has not announced the San Diego bookstore yet).
So tell me, what are the chances that the rumored 300 to 400 stores actually referred to pickup locations?
Before you answer, let's revisit the original source. Here's the quote from General Growth Properties CEO Sandeep Mathrani in a more complete context. Note the reference to "the last mile":
And just case in point, you go to Amazon opening bricks and mortar book stores and their goal is to open as I understand 300 to 400 book stores, and it should sit back and say that the last mile is all important, which is why Bonobo’s is opening bricks and mortar stores and Warby Parker is opening bricks and mortar stores and Birchbox is cutting their overhead to open bricks and mortar stores.
In this instance, "the last mile" is a term used in supply chain management and transportation planning (Wikipedia). It refers to the most expensive part of the delivery cost. That would be the last mile of a trip, i.e. the segment between your front door and the local FedEx/UPS distribution center.
The reference to the last mile in the above quote never really made any sense in relation to Amazon Books (although some went to bizarre lengths to invent a connection).
Amazon's bookstore carries only a limited number of books, and isn't designed to serve the rest of Amazon's online business. You can't even buy a book on Amazon.com and pick it up in store, so Amazon Books is clearly not a "last mile" solution.
Do you know what is a solution?
Amazon delivery lockers in your local convenience store. Also, delivery drones.
And last but not least, Amazon's pickup locations.
Mathrani's mention of the last mile makes a lot more sense if we assume that it refers to pickup locations rather than bookstores. Each of those locations becomes Amazon's local CS center where customers can pick up packages, return orders, and get technical assistance.
Those would be great reasons for Amazon to open 300 to 400 locations, don't you think?
I think so, and just to put that number in perspective, let me lay some statistics on you.
UPS has over 3,000 UPS Stores in the US, and FedEx has 1,800 FedEx Kinko's stores. That's 4,800 locations where you can ship or pick up a package. In comparison, Amazon is rumored to have a goal of opening 300 to 400 stores.
All of a sudden, that figure no longer looks wildly unlikely plan; instead it is positively parsimonious compared to the giants in the industry. It is less the reinvention of the big box retailer, as Yglesias suggested in the link above, than it is an adaptation of the Apple Store concept.
Which again, fits with Mathrani's statements.
I know that I disbelieved Mathrani when the story first broke, but in light of recent developments I think I got it wrong.
image by SounderBruce