Why Amazon built a bookstore

No, it probably won't make money. But it's still a good idea.

Amazon Books displays all its book covers on its shelves rather than the conventional book spines.
(Image credit: Courtesy of Amazon)

Amazon is opening a bookstore. Yes, an actual bookstore. It's called, imaginatively, Amazon Books.

Please go to another columnist for a wry quip about the irony.

The shop features a few Amazon touches. For example, the selection is based in part on reviews posted to the website. My favorite is that the books are lined on the shelves with the cover, not the spine, facing outward. It's beautiful, and clever — in the age of, well, Amazon, a bookstore isn't about inventory, it's about curation and ambiance. No need to stack as many books as possible on the shelves, just optimize the space for beauty and discovery. It's amazing, really, that actual bookstores haven't done it before.

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But what does it mean for the future of Amazon, books, and retail?

There's been speculation for years about Amazon opening physical stores, but they were thought to be showcases for the company's ever expanding suite of gadgets — e-readers, phones, tablets. And while Amazon Books has some space dedicated to showing off the company's gadgets, naturally, it's still mostly a bookstore. The books are also the same price as on the website, so it seems unlikely that the stores will turn a profit — the reason Amazon's books are so cheap to begin with is because it doesn't sell them out of stores.

The way to think about Amazon Books, then, is as a marketing expense. Apple started it. In an era where Apple sold computers that were different than what most people were used to, Steve Jobs felt that retail stores weren't selling people correctly on the Mac, and so he decided Apple could do a better job. Because Apple sells high-margin electronics, the Apple Stores, originally a marketing expense, are now a huge profit center.

The idea took off. Apple Stores are a 3D ad with sounds and smell. They take people inside an experience. Apple Stores are about the architecture and the friendliness of the staff, and all those Apple touches, like taking payments on iPhones instead of at the register. When it works, it's a great concept. It's why Microsoft has also gotten in on the action.

Which is why those sorts of concept stores, or marketing stores, are sometimes thought to be the future of retail. Because, guess what, retail isn't doing great. Shopping malls, once the backbone of the American economy, are in trouble. The combination of online shopping and the real estate crisis have left the industry in crisis. But there aren't enough Apples or Microsofts or Amazons around in the world to replace all the stores that are going to shut down.

Meanwhile, what's in it for Amazon?

Brad Stone's book on Amazon, The Everything Store, gets some things right and some things wrong about Amazon, but the most fascinating of its many scoops is a memo by Jeff Bezos that outlines one of his biggest fears about Amazon.

Amazon, Bezos has said from the start and preaches like gospel, is the most consumer-centric company in the world. We all love its prices, its convenience, its great customer service. Amazon works very hard to be beloved by its customers. But there's a problem: As companies get bigger and bigger, and have more fingers in more pies, they cease being loved. Amazon spent most of its existence as an underdog, and people like an underdog. Now it's a behemoth. Nobody likes corporate behemoths. When you're a corporate behemoth, newspapers like to write Big Stories that become the talk of the town, Big Stories where you're inevitably the villain. And in an increasingly regulated age, corporate behemoths make easy targets for political vendettas instigated by competitors.

And it's harder to forge a connection with a customer when you're just a website or, at best, a gadget made in China. Compare this with the Apple Store or, for that matter, Starbucks in its glory days. Having a high street shop means people can bask in an ambiance that they then associate with your brands.

Bookstores are perfect, the sort of places where people like to spend a lot of time and associate with pleasant feelings in a way they don't with a website or an app.

All those Amazon touches only serve to strengthen the connection between the company and that pleasant feeling. Selections of books based on user reviews, or on picks by Amazon staff, remind people that Amazon isn't just a corporate behemoth, it has a friendly side, like letting users comment on books, and is staffed by mostly-probably-not-oppressed human beings. Even displaying books on their covers and not their spines says, "When we arranged the store, we thought of delighting you, not of what was most convenient for our inventory needs. And we put the same care in what happens when you push that one-click purchase button."

It's marketing. Probably costly marketing. Possibly very clever marketing. Time will tell.

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