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Amazon to Open 300-400 Stores – Nah, Just a Rumor…

02.20.2016, Uncategorized, by .

Last week, a rumor was started when a mall executive off-handedly mentioned that Amazon might open 300-400 bricks and mortar stores. People started getting all excited and upset. Book executives pontificated about the value of bricks and mortar and how Amazon is realizing the need for a presence. The media went gaga — and this was all just based on a throw-away comment by an executive not even associated with the Seattle monster. The executive quickly recanted the comment and Amazon refused to comment.

Amazon has opened one bookstore in Seattle. They have ads up for employment in another location in southern California. Who knows what will happen next? But even a hint of what Amazon might do gathered a lot of angst and comments.

Screen Shot 2016-02-20 at 9.27.16 AMBarnes and Noble stock took an immediate 17% drop on the rumor that Amazon was entering their playground. Although the news was corrected, B&N’s stock┬áhas not recovered. To be fair, it has been in a tailspin all year, so the market analysts were already looking for a reason to sell. As of today, B&N stock is down 72% since July 17 (when it was $28.66 a share). It is now $8.30.

So what if the rumor is true? It doesn’t really matter.

What if Amazon actually opened 300-400 stores?

What would happen? Why?

  1. Amazon has more consumer data and spending habits than most any company in the Universe. They could use this information to better target the areas of where optimal locations would be. They already have the addresses of millions of customers, know their buying habits and how much they spend a year.
  2. When Amazon tried to publish physical books and be “more like a NY publisher” they were stymied to make it successful. Although they had a partnership with HMH for sales and distribution, the stores who compete with Amazon didn’t want to carry their titles. So, although it a digital world, there is still a necessity for physical locations to sell certain types of books. This would give Amazon a platform for doing so.
  3. Glut of retail space plus Amazon’s market power could create a series of favorable leases. This might be the perfect time for Amazon to commit to hundreds of locations as retail offers better deals for them.
  4. Amazon is great at “counter programming.” In a world where bricks and mortar stores are closing everywhere, there is an opportunity for Amazon to go against the tide. As others are retreating, Amazon can attack.
  5. Apple is successful at retail. No doubt there is a huge difference between the two tech giants. Apple used the “need to fix the device” reason to open up stores. But since these two companies compete on so many levels, an Amazon store might be a way to compete.
  6. Amazon could use the stores to sell basically anything, Given books is just an opening to all the crap Amazon sells. Having retail outlets might open up opportunities to sell other things. Perhaps music? There are no record stores left.
  7. Would give Amazon a place for consumers to pick up orders that they can’t have shipped home or to the office. Plus, Amazon could offer specials if picked up at a location. They currently have lockers in the major cities, why not put the lockers in the stores — or make the stores into lockers?

The bottom line is regardless of what Amazon does or does not do, even rumor has a profound impact on the bookselling and publishing industry.

 

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