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This is why Amazon will open physical bookstores

Mike Elgan | Feb. 9, 2016
Brick-and-mortar bookstores are a great idea for Amazon. Here's why.

Amazon hybrid drone prototype for Amazon Prime Air service 
An Amazon drone prototype. Credit: Amazon

Think about what it's like at a shopping mall in November and December: Crowds of people frantically shopping for presents. Malls are horrible places to shop for gifts. They tend to have limited quantities of incredibly ordinary products. What kind of gift are you going to buy in a mall? A scented candle?

An Amazon store in the mall reminds everyone that is the place where people can find anything and have it wrapped and delivered. Even if shoppers don't enter the store, just seeing the store is a reminder that Amazon could be the solution to holiday shopping problems.

Amazon is a major book publisher. The company offers myriad services for editing, design, formatting and distribution of hardcover and paperback books.

Amazon competes with other book publishers for authors. What other publishers can offer that Amazon cannot is coveted placement in physical bookstores. Those tables you see in a bookstore when you first enter are hot properties in the world of book marketing. And Amazon can't compete with that, until it gets its own bookstores.

Physical bookstores will help Amazon attract bigger-name authors.

One of Amazon's secrets to customer service is that it accepts returns, no questions asked. Physical bookstores would make it easy for people to return products.

They could also serve as "outlet" stores to sell returned merchandise, saving Amazon millions.

One of Amazon's big advantages is that it has so many credit cards in its system. The knowledge that Amazon already has your payment and delivery details means you don't have to enter all that information into a new site.

In order to grow, of course, Amazon has to attract new customers -- people who aren't already using its services. In fact, the majority of all retail sales still happen in physical stores. Those real-world sales are Amazon's growth opportunity.

One way to get new customers is to get their credit card information and other personal details. Amazon can do that by offering killer deals in physical stores. Once Amazon has someone's credit card, it will be able to remind that person later that buying more stuff is just a one-click deal now.

Another way Amazon eviscerates traditional retailers is via the practice of showrooming. That's where you go to a brick-and-mortar store and find the product you want but then buy it on Amazon -- sometimes standing right there in the store, using Amazon's mobile app.

Physical Amazon stores can encourage and facilitate showrooming, because they will have friendly salespeople to help you find, install and use the app. Once they teach you how to showroom in an Amazon retail store, you can continue showrooming in other stores.

The bottom line is that physical stores make total sense for Amazon from a growth perspective.

Amazon is not a "bookstore" anymore. It's the "everything store."

And eventually, it will be the "everywhere store."


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