Having conquered online retail, Amazon.com, Inc. (NASDAQ:AMZN) has become increasingly adventurous with its expansion plans. AMZN has pushed into streaming video and music services, it sells a growing range of consumer electronics (including the popular Echo smart speaker), the company’s AWS servers seem to power half the internet, it’s begun opening Amazon bookstores and it’s even experimenting with its own grocery stores.
Now there is a report the company is mulling additional physical Amazon store options, including potentially going head-to-head against Apple Inc.’s (NASDAQ:AAPL) Apple Store.
Amazon’s Expansion Into Physical Bookstores
AMZN has been blamed for the demise of many brick-and-mortar bookstores, from independent bookshops to the Borders chain. The company’s ruthless pricing, open 24/7 website and Kindle e-books have been an unstoppable force. So it caught many people off guard when an Amazon store selling books opened in Seattle in 2015.
This was an actual, physical bookstore — just like the ones it had been methodically putting out of business. There are now five of these Amazon Books locations open, with more to come. AMZN stocks them with best-seller titles, and uses them to showcase its devices. But with its growing hardware aspirations and the success of the Echo, there could be a new kind of Amazon store in the works.
The New York Times ran an in-depth piece over the weekend that details AMZN’s growing physical retail ambitions. The article suggests that while many observers have been focused on Amazon’s experiments with grocery stores, the company has been exploring the possibility of taking on one of the most successful retailers of all: Apple.
Apple began its own expansion into physical retail stores 16 years ago. The company has grown its Apple Store into a retail juggernaut with nearly 500 locations worldwide and it consistently tops the list of sales per square foot.
According to the NYT article, AMZN is exploring the idea of an Amazon Store that uses the same concept as the highly successful Apple Store. It would showcase Amazon’s growing offering of hardware.
This has grown from Kindle e-readers to include tablets, Fire TV video streamers and the surprise-hit Echo smart speaker. Like Apple, AMZN could give customers hands-on demos of the products and also use the devices to showcase its subscription video and music streaming services. The stores could also include a selection of top-selling consumer electronics from Amazon.com.
The company is also reportedly considering physical Amazon Stores that would sell furniture and appliances. This approach would let customers examine the products first-hand — essentially turning Amazon into its own show-rooming experience. It might also include a virtual reality element, with VR technology being used to show what the furniture might look like in a customer’s home.
Is the Amazon Store Likely?
The Apple Store experience has proven difficult to copy. Microsoft Corporation (NASDAQ:MSFT) started opening its own retail stores in 2009, with an approach that looked suspiciously similar to AAPL’s. That effort hasn’t managed to replicate Apple’s success, although Microsoft is still stubbornly hanging on.
In a typical mall situation, an Amazon store could be near an Apple Store competing and a consumer electronics giant like Best Buy Co Inc (NYSE:BBY). Trying to lure in shoppers to try Amazon devices and maybe a smattering of popular gadgets like wireless speakers and a TV or two wouldn’t exactly be a slam dunk in this situation.
At this point, AMZN is merely exploring options. The company may decide having multiple retail locations — each specializing in different product categories — doesn’t make sense. You may eventually end up with an Amazon Store selling consumer electronics sitting across from an Apple Store in your local mall.
Or, there could be an Amazon Books location with a store-within-a-store demonstrating Kindle, Echo and Amazon Music Unlimited. Either way, Amazon’s retail ambitions have outgrown the web alone and it needs ways to convince consumers to try out its hardware — ideally, with a hands on experience.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
