What if there was an Amazon store in almost every U.S. neighborhood?
That scenario is probably years away, but late Monday, a report surfaced that Amazon may be interested in buying some RadioShack stores as the electronic store company enters bankruptcy. Today, Amazon also confirmed it is opening up a store at Purdue University that will be operated by staff.
In addition, this past holiday, the company opened up two pop-up kiosks in San Francisco and Sacramento malls, and in Manhattan, it is making one-hour deliveries from a downtown location.
All told, these moves show the Seattle-based retailer is preparing to lay down some significant roots offline.
What’s particularly noteworthy about the RadioShack rumors, however, is that even if only a portion of the stores were acquired, it would give the company an instant footprint in many of the country’s most densely populated neighborhoods and communities.
The deal, if it were to go through, would also give Amazon fairly small locations, lending enough space to accept returns and serve as a mini warehouse for same-day delivery of products. There could even be enough space to have a showroom, displaying its own Kindle and Fire products.
Tom Graff, the president of Ewing and Clark’s commercial division in Seattle, said the RadioShack locations would be perfect. “They are well-located to service the general community and they are dispersed throughout regions — and not just in retail cores, which they would need,” he said.
But Graff, who has no knowledge of Amazon’s plans, cautioned that the RadioShack locations would be a little too big for just a delivery and pick-up. They often are close to 2,000 square feet. “It’s a lot of rent for storage,” he said. “One would argue that they would have to retail out at these stores. It’s a bigger space.”
It’s also more expensive than what Amazon is used to paying for its warehouses. RadioShack rents can be three-to-four times higher than what a company would pay for storage in the same market, Graff said.
So far, Amazon has been slow to experiment with physical retail.
Amazon actually partnered with RadioShack back in 2012 for Amazon Lockers, the program that allows customers to order goods online at Amazon and then pick them up at locker units at the brick-and-mortar stores. But that deal ended after an 11-month experiment.
And, it’s unclear if it’s all that necessary. Does Amazon need physical stores to remain competitive?
Shareholders don’t seem entirely sold on the idea. Amazon is trading slightly lower for the first time today after crushing holiday quarter expectations last week, which sent shares skyrocketing.
