Close
 

Why does Amazon want to open bricks-and-mortar stores, anyway?

  • News
  • February 4, 2016
  • Elly Strang
Why does Amazon want to open bricks-and-mortar stores, anyway?

Read our previous story, Is the revival of bricks and mortar putting pureplay retail at risk? 

The news didn’t come directly from Amazon itself – it came from someone in the industry.

“You’ve got Amazon opening bricks and mortar bookstores and their goal is to open, as I understand, 300 to 400,” Sandeep Manthrani, chief executive of a large US shopping mall operator, General Growth Properties, said.

It isn’t clear where Manthrani got the figures from, but some have raised the possibility of it it being a slip of the tongue after speaking with Amazon’s real estate people about their plans for expansion.

Amazon has not yet commented on the news, which is making headlines around the world.

In November, Amazon opened its first bricks-and-mortar store in Seattle in the US.

It was described as a “physical extension of Amazon.com”, seeing as book titles were chosen and organised according to online reviews and sales.

“It’s data with heart,” vice president of Amazon Books, Jennifer Cast, told the Seattle Times. “We’re taking the data we have and we’re creating physical places with it.”

It promised the prices in the store wouldn’t differ from online – the same prices which booksellers all over the world had issues with, because they didn’t include GST.

 Some seem confused as to why Amazon would want to roll out physical bookstores, so here is a breakdown of some of the theories being reported:

  1. It sees untapped potential in physical bookstores, thanks to a resurgence in sales.

Though widely reported as in danger or dying, plucky bookstores have pushed through a digital upheaval and come out the other side unscathed. There have been casualties in the form of what one co-worker called “big, soulless book chains”. Borders and Dymocks have shut their doors and quietly exited New Zealand. But those who weathered the storm, including the indie bookstores, have all done well. Last year was the first significant rise in book sales in New Zealand, with Nielsen reporting a growth in book sales volume of 7.1 percent (5.3 million books sold). Now that Amazon has well and truly dominated the online realm (see graph below) and being the competitive, dog-eat-dog business it is, it could be keen to set its sights on the physical world – particularly with bookshops doing so well.


Source: Fortune

  1. The stores will act as showrooms for its online store.

Many theorise that the ecommerce giant is trying to target people who feel overwhelmed by its huge online catalogue, or perhaps want to smell, see and touch a book before buying it, by having stores act as showrooms. It makes sense, considering a recent report by business intelligence firm L2 called ‘Death of Pureplay Retail’ found customers still regard the traditional instore experience as the most important when making a purchase (72 percent) followed closely by the store’s website (67 percent). The Seattle Times reported that at Amazon’s first bricks and mortar store “every book will face out, rather than be stacked tightly with only their spines showing. That leaves far less space for books.” Basically, the focus would be on displaying the books, rather than accommodating lots of stock.

3. It’s a way for Amazon to combat expensive shipping prices.

To keep its prices competitive, Amazon charges customers much less than what it actually pays for shipping. It spends billions a year on shipping, as seen by the graph below. Amazon’s shipping costs grew 31 percent in 2014, which is faster than its shipping revenue. Amazon may also be hit with GST when countries like New Zealand and Australia introduce a tax on overseas online sites, which would rack up additional costs. When taking this into consideration, bricks and mortar could be seen as a cheaper investment.

Amazon's costs of shipping vs. how much it charges customers for shipping​


 

  1. It gets books to people faster than any fancy drones or its Prime Now service.
    Despite same-day deliveries, Prime Now (two hour waiting time) and Amazon Prime Air (drones), nothing Amazon has come up with is faster than an instant purchase in a bookstore.  Its logic could be that if people care a lot about a book and also wanted the cheapest price, it’d be worth their while to go to a physical Amazon bookstore to buy it.
     
  2. It’s not actually happening, and everyone is freaking out for no reason.

This, too, is a possibility. The source, Manthrani, has since retracted his statement, while an anonymous source told the New York Times Amazon has “modest” plans to expand but not plans for 300 to 400 stores. For now, Amazon is keeping everyone guessing.

​ ​

This is a community discussion forum. Comment is free but please respect our rules:

  1. Don’t be abusive or use sweary type words
  2. Don’t break the law: libel, slander and defamatory comments are forbidden
  3. Don’t resort to name-calling, mean-spiritedness, or slagging off
  4. Don’t pretend to be someone else.

If we find you doing these things, your comments will be edited without recourse and you may be asked to go away and reconsider your actions.
We respect the right to free speech and anonymous comments. Don’t abuse the privilege.

 

Hemp products go beyond the specialty shelves

  • News
  • March 25, 2019
  • Sarah Dunn
Hemp products go beyond the specialty shelves

Since hemp seeds’ legalisation for growing, manufacture and sale in November 2018, supermarkets have quickly pivoted to include hemp products such as protein powder in their health food and specialty sections, but the trendy ingredient has already found its way into mainstream product categories.

Read more
 
 

No longer just for hippies: Is hemp the next coconut oil?

  • News
  • March 25, 2019
  • Sarah Dunn
No longer just for hippies: Is hemp the next coconut oil?

The Naturally Good Expo, held over June 2 – 3 in Sydney, will bring retailers, brands and practitioners together to learn about all things healthy, organic and natural. Among the topics discussed by industry leaders at the expo is the recent legalisation of hemp – it’s popping up everywhere. We asked John Leith of supplier Hemp Oz and speaker Susan Tapper of Holistic Marketing Healthy Sales for more information about this exciting new product category.

Read more
 
 

Military-style semi-automatics ban announced

  • News
  • March 21, 2019
  • The Register team
Military-style semi-automatics ban announced

As of 3pm on March 21, a wide range of semi-automatic weapons have been reclassified under section 74A(c) of the Arms Act as requiring an E endorsement on a firearms license. This means they can no longer be sold to those with A-category gun licenses, and their purchase now requires police approval.

Read more
 

Social scoreboard

Zavy and The Register have worked together to create a scoreboard that compares how the top 25 traditional media advertising spenders in New Zealand have performed on social media over the past 30 days, updated in real time.

 
topics
Concept to closet
Business coverage of New Zealand Fashion Week.
Town centres
A positive retail environment over the past 12 ...
Amazon Arrival
Keeping up with all things Amazon as it ...
The Retail Yearbook 2017
As we battle our way through the busiest ...
Hospitality enhancing retail
Some think food and integrated hospitality offerings will ...
The future is bright
We spoke with four retailers in their twenties ...
Spotlight on signage
At first glance, the humble in-store sign might ...
Red Awards 2016
The Red Awards for retail interior design celebrate ...
Auckland Unitary Plan
Auckland is changing. The Unitary Plan will decide ...
How to open a store
Sarah Dunn considers what it would take to ...
All things to all people
Kiwi retailers share their omnichannel strategies.
Rising stars
Retail's top young achievers.
Delivering on your promises
The sale isn't over until your item is ...
Retail in heartland New Zealand
Retailers keep the regions pumping, but how strong ...
Sisterhood
Women in retail help one another. We spoke ...
The changing face of retail
Shifting demographics are creating big changes in New ...
The retail yearbook
With the help of experts in the retail ...
Retail rogues
We put the spotlight on staff training. Jai ...
Here come the giants
Topshop has arrived in Auckland’s CBD, David Jones ...
Window shopping: A spotlight on social media
Sarah Dunn and Elly Strang look at how ...
From retail to e-tail
Ecommerce has become part of the way mainstream ...
Loyalty in the digital age
How are retailers maintaining loyalty? Sarah Dunn, Elly ...
The Innovators | In partnership with Spark Business
Technology is rapidly changing the retail industry as ...
 

Retailers gather for insights at NZ Retail and The Register's breakfast

  • News
  • March 21, 2019
  • The Register
Retailers gather for insights at NZ Retail and The Register's breakfast

NZ Retail and The Register’s sales and marketing breakfast saw dozens of Kiwi retailers come together to network, sharing tips and tricks and absorbing expert advice.

Read more
 
 

Who stole Christmas?

  • News
  • March 21, 2019
  • Kelly Withers
Who stole Christmas?

Results are starting to trickle in from Christmas 2018/2019, and for many retailers, they're a little disappointing. Paydar chief executive and co-founder Kelly Withers explores the data.

Read more
 

Chinese businesspeople raise millions for Christchurch victims

  • News
  • March 21, 2019
  • Radio New Zealand
Chinese businesspeople raise millions for Christchurch victims

A group of visiting Chinese businesspeople have raised $2.35 million for victims of the Christchurch mass shooting.

Read more
 
Next page
Results for
Topics
Jobs
About us.

The Register provides essential industry news and intelligence, updated daily. And the digital newsletter delivers the latest news to your inbox twice a week — for free!

©2009–2015 Tangible Media. All rights reserved.
Use of this site constitutes acceptance of our Privacy policy.

Advertise
The Register

editor@theregister.co.nz

Content marketing/advertising? Email anita.hayhoe@icg.co.nz or call 022 639 3004

View Media Kit

}