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Tuesday, September 18, 2012

Amazon next offering, retail store perhaps?

Many have argued that it would be in
Amazon.com, Inc. (NASDAQ:AMZN)‘s best interest to step into the brick and mortar
game with a storefront offering.

While old fashioned brick and mortar retail may be in its death throes, there is no denying the fact that consumers prefer to test a device out before they commit to purchasing it — even if they ultimately purchase it online. This phenomenon, which has come to be known as “showrooming” has been cited as a key factor in the decline of Best Buy Co., Inc. (NYSE:BBY).

Though it may not be anytime soon, Best Buy and other stores like it could soon go the way of Circuit City – that is to say, out of business.

Should this occur, Amazon could suffer. While it continues to innovate with its Kindle lineup of hardware, consumers may shy away in favor of devices that have matching stores to showcase them.
Apple Inc. (NASDAQ:AAPL) has its own wildly successful line of Apple stores, while Microsoft Corporation (NASDAQ:MSFT) is working to follow suit.

Even if it isn’t going away, Best Buy could take steps to actively ward against showrooming — something they have promised to do — or simply refuse to sell Amazon’s Kindle lineup altogether, something Target Corporation(NYSE:TGT) has already done.

This has lead some to believe that Best Buy, with its depressed shares, is a takeover candidate for Amazon.

Yet, if Amazon wants a showroom it ought to look elsewhere. Perhaps GameStop Corp. (NYSE:GME)? The video game retailer would be an intriguing Amazon acquisition for a few reasons.

First, Gamestop stores would offer a more strategic advantage compared to Best Buy. The majority of Best Buy’s stores are mammoth, warehouse style buildings. If Amazon wants locations to show off its Kindles and other devices (ala Apple) it simply wouldn’t have a need for that much real estate. Gamestop stores are smaller and more numerous.

Second, Gamestop brings the obvious gaming moniker and a level of video game retailer expertise — a market Amazon may soon be looking to enter in earnest. After conquering digital books, Amazon has switched to movies, bolstering its Amazon Prime streaming video offerings with numerous deals

1 comment:

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