Why Amazon.com, Inc. (NASDAQ:AMZN)’s Physical Store Drive May Hit A Snag

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Amazon.com, Inc. (NASDAQ:AMZN)’s management has been so pleased with the performance of the company’s physical bookstore that they plan to open more such stores in the near future. But beyond Amazon Books locations, the company is also planning to venture into physical grocery stores as part of its omnichannel strategy. Will it work? That’s the question those on Wall Street are asking.

More book stores and a learning opportunity

Amazon.com, Inc. (NASDAQ:AMZN) chose its hometown of Seattle to experiment with a physical bookstore. The experience has been amazing for the company and its customers and the management wants to expand the concept to more locations. At the company’s recent annual shareholder meeting, CEO, Jeff Bezos, talked of plans to open more Amazon Books locations. Details were not provided about the number of new bookstores the company will open or their specific locations.

According to Amazon officials, the idea of opening physical bookstores is not necessarily to pursue new revenue immediately, but learn about how physical store concept works and how the company can use it to broaden its omnichannel retail model.

Grocery stores

Perhaps that explains why Amazon.com, Inc. (NASDAQ:AMZN) is also said to be considering opening more physical grocery stores. Such stores should provide Amazon customers with convenient pick up of regular food supplies.

What is Amazon doing?

While some are watching Amazon’s physical store movement with awe, analysts are not surprised. They say that the physical store concept would enable Amazon to strengthen its brand loyalty. The analysts see Amazon borrowing a leaf from Apple Inc. (NASDAQ:AAPL) and Starbucks Corporation (NASDAQ:SBUX) in the physical retail store strategy.

Will it work?

The billion-dollar question is whether Amazon.com, Inc. (NASDAQ:AMZN)’s physical store strategy will work. While the strategy may help the company to fuel the practice of buying online, picking up in store, there are risks to it. For example, there is no guarantee that the concept that has worked well in Seattle can be replicated with the same level of success everywhere. Additionally, some believe that legacy booksellers and grocers have a better chance of success at what Amazon is trying than the e-commerce giant.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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