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OM in the News: Amazon–From Warehouse to Retail Bookstore

November 4, 2015

amzon bookstoreBookstore owners often think of Amazon.com as the enemy. Now it’s becoming one of them. Yesterday morning the online retail giant opened its first-ever brick-and-mortar retail store in its 20-year life, in Seattle, reports The Seattle Times (Nov. 3, 2015). The store, called Amazon Books, looks a lot like mall bookstores. Its shelves are stocked with over 5,000 titles, best-sellers as well as Amazon.com customer favorites.

There is some irony in Amazon’s opening a physical store. For years, it could undercut physical retailers on price because it didn’t have brick-and-mortar locations. But those stores offered something Amazon couldn’t: the instant gratification of owning an item the second it was purchased, as well as the personal touch of a knowledgeable sales clerk.

Amazon is betting that the troves of data it generates from shopping patterns on its website will give it advantages in its retail location that other bookstores can’t match. It will use data to pick titles that will most appeal to shoppers. And that could also solve the business problem that has long plagued other bookstores: unsold books that gather dust on shelves and get sent back to publishers. More than most book retailers, Amazon has deep insight into customer buying habits and can stock its store with titles most likely to move. It will stock best-sellers, but will also include books that get the highest ratings from its customers, including little-known titles. One other way the store, with 5,500 square feet of retail space and 2,000 square feet of storage, is distinct from traditional bookstores: Every book will face out, rather than be stacked tightly with only their spines showing. That leaves far less space for books. And while the store will showcase some of Amazon’s gadgets, such as its Kindle e-readers and Fire devices, it will be first and foremost a bookstore.

Classroom discussion questions:

  1. What is Amazon’s strategy in opening this (and future) retail stores?
  2. Discuss the capacity issues and compare Amazon to a large competing bookstore chain.
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