Why Amazon retail stores make sense
The online retailer may open a test boutique store, according to reports. You know, the idea isn't half bad.
One digital publishing site is reporting that the company plans to open a test store in Seattle sometime this year. The company envisions a boutique-style store focused on selling Kindle e-readers as well as books from the Amazon Exclusives line, reports the Good E-Reader site. Amazon is not commenting on the reports.
Post continues below.
Some investors are bewildered by the news. Didn't Amazon make a big business by avoiding the traditional retail structure? Doesn't this go against everything the company stands for?
At one time, the answer might have been yes. But times are changing for Amazon. Here's why at least exploring a store makes sense:
1. Amazon now sells its own devices. It wants people to buy Kindle e-readers and the new Kindle Fire tablet, but it can't physically show them these gadgets first. People need to visit Target (TGT) or another retailer that carries Kindles, or they need to know someone who owns one. People want to play with one before buying, and this would help Amazon's sales.
2. Amazon needs to provide tech support. When my Kindle began having problems, Amazon couldn't help me much on the phone. The company simply replaced the Kindle instead of trying to work through the problem. If Amazon had a product store with its own version of Apple's (AAPL) Genius Bar in the back, it might be able to cut down on replacement costs by helping customers through their technical issues.
3. Amazon needs a place for its own books. The company is becoming a publisher with its own line of exclusive books. But it's having a devil of a time selling those books through traditional retail channels. Rival Barnes & Noble (BKS) says it won't sell books published by Amazon in its stores. Amazon needs a place where it can showcase its books to readers.
4. Taxes are becoming less of an issue. States are getting mighty tired of residents ordering from Amazon in order to skip paying sales tax. Amazon will begin charging California residents a sales tax this year. Texas sent the company a bill worth millions of dollars for unpaid sales taxes. Setting up a retail store in any state would require Amazon to begin collecting sales taxes from all residents in that state. Amazon normally would shy away from this, but states are going after the company regardless.
Amazon has been rumored to be opening its own retail stores for years. The company even received a patent in 2009 for a storefront-type building that some thought would lead to physical locations.
MORE ON MSN MONEY
VIDEO ON MSN MONEY
how about a amazon store downtown or at a local mall. we need more stores like amazon, location is good, good products, wide choices!
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.