Amazon being radical


Amazon just announced to open its first physical store. This is big news, because the official name of Amazon is Amazon.com and Amazon is one of the largest online retailers in the world. The announced about the first store therefore raised questioned about their business strategy.

Amazon is an e-commerce company operating since 1994. Their main revenue is in the US and therefore they decided to open their first store in Manhattan, New York. Even though this store is an experiment to provide face-to-face experience, this step is quite radical. Over the last twenty years there was not any physical possibility to contact Amazon.
The new megastore in New York will function as a pickup center for customers who ordered same day delivery on the internet, but also for other pickups, returns and inventory. Though this store will mainly issue packages and will not provide advice about products by store employees. CEO Jeff Bezos sees this store as an attempt to connect with customers and they store should open before the holiday-shopping season start.

I think this first store of Amazon is a radical decision which will change their business model. Critiques are quite harsh and it is not clear in which direction Amazon wants to head.

Jeff Bezos wanted to run the biggest e-commerce company in the world and now they are adapting the traditional brick-and-mortar model. I think this has something to do with the huge losses Amazon had to deal with this year. Losses are even higher than predicted and in terms of market capitalization Alibaba is the winner.

I think Amazon is just opening a first physical store to gain lots of publicity and put Alibaba more in the shadow. The IPO of Alibaba became global news and the news about Amazon stayed out.
Therefore this new store is a good publicity move, but I think Amazon has not thought this whole project through. Since they are already focusing for 20 years on internet sales, how do they want to make this store a success. Why should customers want to pick up packages themselves and will the cost of this huge building in Manhattan, New York be worth it?!

Sources:
http://bright.nl/amazon-opent-mogelijk-fysieke-winkels
http://www.cio.com/article/2827553/google-considers-amazon-as-its-biggest-search-competitor.html
http://www.ecumenicalnews.com/article/amazon-first-physical-retail-store-to-open-soon-in-new-york-city-26791

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One response to “Amazon being radical”

  1. 345614mf says :

    I do agree with you that opening a physical store might just be a publicity stunt to take the attention of Alibaba a little bit. However, I also see some reasons for opening a physical store. This because I believe not all products are ideal to be sold online. I personally do not like buying anything that is relatively expensive and/or unknown to me online. For example, I don’t know anything about refrigerators, so when I need to buy a new one I will probably go to the store and let someone who is more of an expert inform me on the advantages and disadvantages of each type of fridge. I also would like to see the actual product “in the flesh” before spending >100 euros on it. I am going to be using this fridge for a couple of years and no picture on a website can substitute a physical inspection (yet).

    For products that I am familiar with and order on a regular basis, or always order from the same website/brand, I do get that online is better than physical. But as I mentioned above, there are products that are less suitable for online shopping. So if Amazon wants to sell (more) of these products, opening a physical store is not a bad move.

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