ZDNet has some more speculation on the possibility of Amazon opening physical stores, sparked by the recent announcement Wal-Mart would no longer be carrying Amazon’s devices. Wal-Mart, ZDNet thinks, fears Amazon’s increasing dominance in retail through the “mobile cash register” of its tablet, and doesn’t want to put itself in the position of helping its competition.
The article quotes a Reuters article speculating, though the Reuters article actually doesn’t do much more than say Amazon might do it. And people have been saying that for months now, ever since Amazon started capitulating to the states demanding that it collect sales tax within their borders. If Amazon has to collect sales tax in a state anyway, it might as well add physical facilities there as well, not least because they can be such handy things when it comes to receiving deliveries of things ordered on-line. (I had an $18 Amazon package of ballpoint pens stolen from my doorstep a couple of weeks ago. Where’s an Amazon Locker when you need it?)
Do I think Amazon will come out with physical stores? Perhaps, eventually. I don’t know if they’ll ever be as ubiquitous as Wal-Marts or even Barnes & Nobles, but then again you don’t exactly see an Apple Store on every street corner either. Amazon has demonstrated some fairly creative ways of using other forums to drive commerce to its digital stores. Case in point: it recently came out that the next version of Ubuntu Linux will feature Amazon affiliate links in its desktop search, as a way of driving some affiliate revenue for Canonical while ostensibly providing more useful search results to Ubuntu users.
A common argument I hear against the Amazon store idea is that it’s very very difficult to have physical stores turn a profit in this day of on-line shopping. Just look at what’s happening to Best Buy right now. Amazon is supposedly much too canny to pour its money down a hole like that.
But on the other hand, Amazon has done some pretty-crazy-seeming things before—like giving away “free” two-day shipping on anything for just $79 per year as part of its Prime program, then adding streaming movies, an e-book lending library, and other benefits to the program, or selling best-sellers hand over fist at a loss of several dollars per e-book in order to build out its e-book platform. And yet far from being derided (except by people like this fellow who seems absolutely positive that Amazon continuing its Prime program is a sure sign the company is about to go to the dogs and insists this means it’s time to short the stock), it’s universally feared for its incredible competitive savvy by every major publisher and bookstore owner in business to the point where Apple and five of the Big Six (allegedly) had to foment an illegal conspiracy in order to keep the big bully under control.
If Amazon can figure out how to make physical stores increase overall revenue more than they cost to operate the bricks and mortar, it’s a sure bet it’ll put up exactly as many of them as it takes to maximize those benefits. I’m almost positive they have armies of bean-counters working secretly behind the scenes even now, crunching numbers and sliding beads on abaci to work out exactly what the best strategies for stores would be and where to put them.
It will be interesting to see what happens if Amazon stores start coming to town…