Expert Column: Much Ado About Amazon Bricks


On Sept. 10, the Wall Street Journal and others announced Amazon is looking to purchase some Manhattan commercial real estate, and right away, many are ready to go long on RadioShack for the obvious play: that Amazon is going to go big time into traditional bricks and mortar and RadioShack is the perfect acquisition.

Well, hold on a moment before cracking open your virtual piggy bank for that stock purchase. Assuming Amazon is going to leap into physical stores and buy RadioShack stock (or any ailing retailer’s stock), is a sure fire way of (come January) holding onto some rather soiled retailer stock.

The truth is, Amazon has been working on a number of initiatives to create ever-faster delivery.  And just as there is to date no army of drones delivering iPads to far away locations in the Rocky Mountains, there is probably not going to be a full chain of Amazon stores occupying every Main Street anytime soon either. 

Why? Because Amazon does not need to buy any national retailer -- for even as cheap as RadioShack might be.  In fact, Amazon need not buy any additional real estate to build its business via a traditional retail location.  That's because its shoppers already have access to all the retailer real estate in existence, by proxy, through the inglorious practice of “Showrooming.” This practice can be featured at the Best Buy, Macy’s or any other retailer near you.  And Amazon gets the benefit of retail’s unique “touch and feel the product” process without all the pesky lease agreements that turn other retailers into more expensive alternatives.

Amazon will no doubt continue to search for very practical ways of honing one of the many key things it does best – providing all manner of products you may or may not know you want, all at very attractive prices with minimal delivery times.  And that is just fine.  Clicks without bricks has been pretty darn successful for Amazon.

So whether Amazon adds a retail store or two -- or 200 -- is incidental. This “move to retail” is equivalent to its Amazon Lockers program which the company has expanded to many cities, but which has not led to a spur in demand for nationwide locker locations.  Greyhound bus stations are indeed quite safe from the long arm of Amazon as is much of Manhattan.

The fact that Amazon needs a warehouse location to decrease delivery times for the large amount of deliveries in Manhattan is perfectly understandable.  And if you have not driven in Manhattan recently, well, you might as well plunk down your warehouse in midtown because driving more than 40 blocks alone may take more time than the two days Amazon Prime delivery promises.

Admittedly, picking a 34th street location near Macy’s is a high-visibility move, but many companies look to the advertising value of their Manhattan location.  For example, the M&M’s store has not begat stores across the nation selling only this one manufacturer’s candy.  

So I could be wrong, and in a month, you purchasers of RadioShack stock may be laughing all the way to your personal drone landing hub.  However, I suggest we rest assured that Amazon is doing what all businesses should do – ensuring that they keep getting better at the core benefits that make them essential.  And for Amazon, one of those benefits is fast delivery, which may indeed morph into in-store pick-up.

As long as American retail provides showrooms, Amazon will continue to be click-based, even if it has the audacity to make its warehouses brick-based, and occasionally open a store onto the physical sidewalk of a city near you. 


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