Amazon has been one of the most successful companies of the last two decades, driving one of the biggest bookstore chains in the United States (Borders) out of business, and taking away a huge share of the world’s largest book chain (Barnes & Noble). Amazon has thrived because of their online presence, becoming the largest online retailer in the United States, and one of the most dominant sources of entertainment in the world thanks to their streaming services, apps, books, and e-readers.
However, the company looks like they are heading out in a new, experimental direction, and it is one that is very reminiscent of the past. Amazon has experimented with opening a brick and mortar bookstore in the past, and now they are opening even more, as they seem to be revisiting that they had almost made obsolete just a few years ago.
In 2015, Amazon opened a bookstore in Seattle. It was seen as just an experiment, but apparently that bookstore had better than expected results. In 2017, Amazon will be opening their next brick and mortar bookstore, this one in Chicago. Skeptics point to the fact that brick and mortar bookstores are becoming obsolete, and the fact that another one is being opened by an online store is baffling to these critics. However, in the grand scheme of things, this is just another step forward for the company.
As a company, Amazon has seen tremendous growth in a relatively short period of time. Time after time, Amazon has crushed their earnings predictions, and they have been a consistent call option choice for those that trade binary options. Yes, the company drops in value once in a while, and put options can be valuable here and there, but for the most part a long term strategy of going with their ever-upward trend has been the right way to approach the company. There are thoughts that Amazon’s brick and mortar presence could be damaging to the company, but in the long term, they are approaching it correctly. Where Barnes & Noble and Borders overextended themselves, opening up hundreds of physical locations only to see their profitability plummet once the online revolution kicked into full effect at the end of the 20th century, Amazon was at the forefront of that. Companies like Amazon sprouted up all over the place before the dot-com burst, but Amazon was able to stay alive because of the fact that unlike many of their failed companions, Amazon actually was able to keep a material worth. They developed technology, such as the Kindle e-reader, that not only kept them ahead of the competition, but gave customers a reason to keep using their site. They grew, but they also provided value.
The lesson that we should take away from Amazon’s physical locations is the fact that the service is what’s valued with this company. Borders provided a service, but it was one that could easily be duplicated (as Amazon showed us), and because Amazon did it in a more convenient way, there’s no wonder that Borders is now a footnote in history. Amazon’s brick and mortar stores probably won’t have the same sheer upside as the website when it comes to a percentage of profitability, but thanks to the fact that their service is seemingly inimitable, there’s little reason to think that they will hurt the company. In fact, they are almost a novelty in today’s economy, and this alone might be what helps them stay going. And if the bookstores fail, the repercussions for the company will be minimal. These are relatively small investments for Amazon, and even a total loss here would only be a small setback for the online retailer.