Why would Amazon open a department store?

Enrique Dans
Oct 12, 2014 · 2 min read

Amazon has just announced that it is opening a store in an exclusive corner of New York, a few blocks from the Empire State Building in a former department store. So how come a company that more or less invented online retailing has decided to get physical?

On the one hand, a “real” shop is a good place for people to collect or return goods, at the same time as allowing them to showroom or webroom, researching goods online then wanting to see them in the flesh, or wanting to see them in the flesh and then buying them more cheaply online respectively. Amazon had apparently thought about opening a store in its home city of Seattle, but dropped the idea for lack of customer throughput.

So why New York? Probably because the company would also locate its logistics in the building as well, allowing it to service Manhattan, one of the world’s busiest delivery areas. If the experiment works, Amazon would then begin a very carefully planned rollout of other outlets to restricted, high-demand areas with plenty of passersby. .

The company has already tried selling Kindles through big retailers such as Wal-Mart or Target, but both chains pulled the ebooks from their shelves a few months apart when they saw Kindle’s pulling power and the impact of Kindles on content sales. What’s more, Amazon has also experimented with pop-up stores, as well as developing a network of lockers in convenience stores and other similar locations where customers can pick up their deliveries.

Some might see Amazon’s move as paradoxical, particularly when its online retailing approach has put so many other shops out of business, among them Borders. But it makes sense, and is surely more than just a symbolic act of presence.

(En español, aquí)

Enrique Dans

On the effects of technology innovation on people, companies and society (writing in Spanish at enriquedans.com since 2003)

    Enrique Dans

    Written by

    Professor of Innovation at IE Business School and blogger at enriquedans.com

    Enrique Dans

    On the effects of technology innovation on people, companies and society (writing in Spanish at enriquedans.com since 2003)

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