Amazon is reportedly pushing further into the physical realm with plans to build brick-and-mortar boutiques which will showcase the company’s e-readers, tablets and other products.
While talk of an Amazon retail store has been heard before (patent D593,208), the recent rumors have taken form from details in a report by the Good E-Reader tablet and e-reader news site. Citing unnamed sources, Good E-reader says that Amazon will be starting its brick-and-mortar foray with a retail store in Seattle, where the e-commerce giant has its headquarters. The company apparently contracted the design for the store through a shell company in order to avoid the prying eyes of competition. The Seattle store is supposed to materialize within a few months; before the 2012 holiday rush.
Amazon seems to understand the dissonance consumers may perceive in an e-commerce giant which forced brick-and-mortar companies to compete online, now competing in the physical realm. The Seattle store is intended to be a pilot project in order to test whether a retail chain would be profitable. Amazon plans on keeping the store boutique-sized, and will focus on “high margin and high-end items;” meaning the Kindle readers as well as the bestselling Kindle Fire tablet and complementary accessories. The company will also be selling a few select print books, and may possibly be creating a hub for customers to browse e-books on their readers in the boutique; perhaps going for the appeal of browsing within a book store chain, without the bulk that you get with a Barnes & Noble.
Why is Amazon getting physical?
The report questions why Amazon would decide to lay down roots by building retail stores and face new taxes, when the e-commerce giant has been at the forefront of the online taxation debate. US states have been trying to work around federal law, which currently says that online sellers with no physical presence in a state don’t have to worry about sales tax. California recently went after Amazon’s lack of “physical presence” by putting the obligation of sales tax on Amazon’s affiliates in the state–Amazon subsequently threatened to completely pull out of the state, and the legal tiff was dropped.
However, the legal battles may be too much of a strain on the company, and Amazon’s ferocity may be dwindling. The company came to Washington in December of last year in order to discuss the creation of a standard Internet sales tax. Perhaps higher on the decision-making agenda isn’t the taxes, which they may not be able to run from, but instead, the competition from Apple as well as Barnes & Noble.
Barnes & Noble may have used the Nook to deflect the bullet that killed its Borders Books competitor, but that move put the book retailer in a whole new competitive field. Barnes & Noble understands the looming competition it faces with Amazon as we’ve seen with the digital comics controversy as well as the recent refusal to stock physical copies of books from Amazon’s publishing platform.
While Amazon has built its business on carrying “every kind of random product you could imagine,” as eBooknewser points out, the company is consolidating much of its focus on digital media and the Kindles. Though Amazon disappointed Wall Street with its 2011 fourth quarter results, the company reported record Kindle sales over the holidays, with an estimated six million Kindle Fire tablets sold; which could make the Fire a serious iPad competitor.
With the Kindles becoming increasingly important to Amazon, the company may be shifting to stay competitive with Barnes & Noble and Apple. The Nook takes center stage when walking into B&N stores, with a display area and support that Amazon probably can’t match right now. Apple, of course, is famous for the success of its stores with Genius Bar support. Though, it’s interesting that Amazon is going for its own boutique on the first try, rather than mini-display attached to a larger box store like B&N or Apple’s mini-store deal with Target. What do you think? Would you hang out at an Amazon brick-and-mortar shop? Or would this be a throwback waste of effort on Amazon’s part?