Quote:
Originally Posted by DuckieTigger
It is a smart move on Amazon's end. Think about it. They used to compete with B&M. Now they increasingly have to compete with other online services. Since Amazon never stands still and constantly innovates it is pretty hard for those other online stores to compete. Online store that only sells digital goods (e.g. ebook store) can't really compete against an everything store that also sells some ebooks on the side (in the greater scheme for Amazon).
Amazon is evolving like everybody else. Except instead of starting with B&M and slowly venturing into online sales, they started online and slowly built a delivery system that is fast and profitable even shipping to customers. Others catching up with some similiar benefits only to be slapped in the face with Amazon being able to just-in-time keeping a B&M store fully stocked without requiring much floor space. Crazy maybe, but what can you do with real time sales in a B&M store that will automatically restock and optimize delivery routes for multiple stores. Walmart? Holy cow, they sell out of something and you ask when they get more in: oh, it should be coming in the wednesday truck. (Maybe, if you're lucky  ). |
It's leverage.
Well run businesses always leverage their capabilities to the max, especially if it can get them into new markets or entire new businesses. Look at how they leveraged their inhouse IT expertise to develop a hosting business thst has evolved beyong website hosting into a full computing platform with its own distinct APIs. No surprise then that their biggest and closest competitor is Microsoft, another leverage expert. Oracle is a lot smaller but they are leveraging their installed base in the corporate world to bootstrap themselves into a cloud player. In fact, just about the only mayor tech firms *not* looking to leverage themselves into the cloud era are Facebook (who, like Twitter, are really a communications company) and Apple who are so unwilling to let go of their hardware roots they'd rather get into the car business. (That should be interesting.)
So, as you say, a company that can make money moving goods to consumers in a single day can just as easily make money moving them to their own stores. They already have the warehouses and logistics system in place so they are merely replacing a website storefront for a B&M storefront and a *paid* consumer delivery for a store delivery, probably using their own pipeline.
The only question Amazon needs to answer is: "can they move enough books at online prices from those stores to cover the operating costs and have enough left over to justify the effort?"
That should be interesting because to get there they need to get the per book storefront "tax" to roughly the same level UPS (or USPS) charges Amazon to deliver the book to consumers. In effect, Amazon is saying they can run an entire B&M bookstore just off what it costs to ship books to consumers via UPS.
And if they do, the question then becomes: if Amazon can run a store that efficiently, why can't others?
(Obviously, they will be cheating by doing the book logistics themselves instead of paying Ingram or B&T their profit-included fee for the books and by cherry-picking sales by not wasting floor space for long on slow movers which they can return to their warehouses instead of returning them to the publisher.)
In other words, what other stores pay their suppliers to do, Amazon can do by themselves. Then they can theoretically use those savings to run the store.
That is a non-trivial challenge.
But *if* they can do that for books...
Everything store indeed, huh?