In a move inspired by Apple’s success, reports and analysts say that Amazon might move stores to the streets. As much as people love Amazon, there’s still scrutiny over its potential success with a physical store, since it will be forced to reduce deals to support operating costs, thus losing clients.
Reuters writes that Amazon “is dipping its toes into the physical world as the largest online retailer offers more products in stores that may benefit from hands-on interaction with shoppers”. It goes without saying that such a move will improve Amazon’s ranking in the market, but just like other physical stores, it would have to ensure customers remain committed to the brand.
Industry blog Good E-Reader reported over the weekend that Amazon has plans to launch a physical store in its home town of Seattle. Apparently, you’ll be able to visit the Amazon physical store sometime in the coming months. And this is not the first time such a rumor makes it in the media.
At a National Association of Real Estate Investment Trusts conference in late 2011, industry players were talking about Amazon’s likelihood of launching a physical store. Cowen & Co. analyst Jim Friedland believes that “the primary goal of the test is to determine if a physical retail presence can accelerate sales of Kindle devices and follow-on consumption of digital content at an attractive return on invested capital”.
David Streitfeld wrote a piece in The New York Times Bits blog speculating about the same story. He said: “For years, there has been speculation that Amazon will open its own outlets, presumably to sell Amazon – label products. The idea seems far-fetched, but before 2001 so was the idea of Apple operating its own stores”.
In late January, Amazon warned it might have to face a possible operating loss in the first quarter of 2012, as it continues to focus more on expansion and new ventures. The new estimate ranges from a loss of $200 million to a profit of $100 million.
As Reuters points out, “Amazon has been growing at least twice as fast as the e-commerce sector in recent years”, but that success doesn’t come without sacrifice. “To keep up that pace, the company is expanding into new categories and regions, spending heavily on growth and crushing profit margins”, reads Reuters’ analysis.