Amazon has totally disrupted the publishing industry by becoming one of the most successful print and e-book seller in the world. The allure of cheap books was one of the primary factors that contributed to the demise of Boarders and has seriously hampered Barnes and Noble’s digital efforts. This was why it was so shocking to everyone when Amazon opened a physical bookstore last year in Seattle. A new report claims that this was just the start of Amazons retail ambitions and they might open up 300-400 locations in the US.
Sandeep Mathrani, chief executive of large mall operator General Growth Properties Inc., disclosed Amazons plans in an earnings call with analysts Tuesday. “You’ve got Amazon opening brick-and-mortar bookstores and their goal is to open, as I understand, 300 to 400,” said Mr. Mathrani in response to a question about mall traffic.
He added that “the last mile is all important” in terms of engaging with customers, noting that other major online retailers like Bonobos, Birchbox, and Warby Parker have plans for their own brick-and-mortar expansions throughout the United States. “It’s a very interesting evolution, because the cost of the last mile is that important,” Mathrani said to investors. “The mall business, if you appreciate that it’s more focused on fashion, is very different than a staple business where you’re buying commodity. In the mall business, the impact of eCommerce is a lot less—it’s actually your friend, not your enemy.”
Amazon opening 300 to 400 locations is very bullish. Barnes and Noble only operates 640 stores and Books-A-Million Inc. only maintains 255. Both companies spent years building out their retail operations. In addition to its one bookstore, Amazon already has a presence in Westfield Corp. malls, where it has set up permanent kiosks selling devices, cases and branded apparel.
If the bookstore expansion plans are true, Amazon wouldn’t be the first tech giant to go the brick-and-mortar route. Apple opened its first Apple Store in 2001 to showcase its computers and mobile devices. Microsoft, which has more than 100 physical stores across North America, opened a flagship store in Manhattan in September. Google and Samsung have also tinkered with the idea to some degree.
Some industry experts think Amazon does have the capability to open a large number of bookstores, but only if they also turn into mini-distribution hubs for Prime Members.
“The bigger, less irony-laden thing that Amazon is working on right now is same-day delivery for Amazon Prime members. Currently, same-day delivery is sporadically available — for some products, in some cities, some of the time. It feels kind of like magic when it works, but it’s not nearly predictable enough right now to be a real driver of business rather than an impressive occasional delight for customers.”
“Same-day delivery requires stockpiles of merchandise that are more numerous and located more directly adjacent to population and transportation hubs than the company’s existing warehouses. The geography of same-day delivery depots, in other words, looks a lot like the geography of classic big-box stores. You wouldn’t have just one Borders serve an entire region. Instead, a given metro area would feature one or more downtown locations plus a bunch of mall spots in the surrounding suburbs. The goal was to ensure that nobody who bought books regularly was ever all that far from a Borders.”
The entire book selling and publishing industry is buzzing right now about Amazon opening up more bookstores. Whether it becomes a reality or not, remains to be seen.