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After decimating traditional malls, Amazon is coming full circle and looking at opening new physical locations "akin to department stores," said Sebastian Herrera at The Wall Street Journal. The e-commerce pioneer has been scouting locations in Ohio and California to launch large stores that will feature Amazon's private-label goods prominently. "The new retail spaces will be around 30,000 square feet, smaller than most department stores" but roughly the size of a typical Best Buy. The irony here isn't lost on anyone. Department stores have faded in part because of Amazon's success "taking market share from big-box operators." However, Amazon has slowly been making its physical-retail ambitions clear. It now has more than 20 physical bookstores and two dozen Amazon 4-star stores, selling "gadgets from electronics to kitchen products."
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Amazon is naturally worried about slowing online sales, said Tae Kim at Bloomberg. "Investors are feeling anxious" after the company projected this quarter's revenue growth will be "markedly lower than its prior quarters" as the pandemic-driven online sales boom fades. Adding retail locations make sense for "items that could benefit from more touch and feel," like clothes and furniture, but "Amazon's track record in this area has been poor." It has not disrupted the grocery business as predicted with its purchase of Whole Foods in 2017, and its experiments with bookstores and markets have not taken off.
Amazon can keep improving shipping, but ultimately it can't beat free instant pickup, said Amanda Mull at The Atlantic. "No matter how much you streamline product search or payments processing," there may be no "infinitely scalable, profitable fix" to the last-mile problem of getting everything to everybody's doorstep from a centralized facility. Taking returns on online purchases is also "so cost-inefficient that some retailers have just started refunding your money without taking the product." What solves these problems is stores, a notion that "was obvious for more than a century." Amazon helped kill many of them. But "physical stores may ultimately win out," because leaving with the thing you wanted immediately is "considerably faster than two-day delivery."
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