A Look At Amazon’s Brick-And-Mortar Plans

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While Amazon (NASDAQ:AMZN) is gradually moving into the brick-and-mortar retail space with stores for groceries and books, reports now suggest that the e-commerce giant may be looking to set up stores for furniture and appliances as well. The company plans to use advanced technology in these stores to make them stand out in comparison with regular furniture or hardware stores. For instance, the company may look to use augmented or virtual reality to allow consumers to visualize how furniture would look in their homes before making a purchase. While Amazon is the undisputed leader in e-commerce, the company appears to looking to set up physical stores for products which consumers prefer to buy in stores. It is currently testing its grocery store “AmazonGo,” where consumers can pick up grocery items and leave the store without a check-out process – which will be taken care of by the app built for this experience. This is being touted as a revolutionary concept in grocery shopping, as Amazon is allowing consumers to pick out their own fresh produce while avoiding long check-out lines.

Amazon appears to be pioneering a similar concept for furniture. Many consumers prefer to buy furniture in person since they can see and feel the product. By using technology to aid in this decision, Amazon can build a competitive edge over other furniture retail players. The company is also looking to build electronics stores which will focus on Amazon’s devices such as its smart home speaker, Echo, which will allow consumers to test the product before buying. It appears that Amazon wants to gain greater control over these demos to market its products better, and a physical electronics store could solve this.

Amazon’s e-commerce model has been extraordinarily successful, but now the company is looking for further ways to boost the business. A network of physical stores would require greater capital expenditures and operational costs, but the company could integrate these stores with its online presence and also use these stores as “warehouses” to improve delivery efficiency. According to Chinese e-commerce giant Alibaba, the future of retail will be an integrated online and offline experience, and pure e-commerce companies could find it difficult to compete in this environment (though Amazon is certainly an outlier). An offline presence will be helpful for growth, as consumers prefer a more personal experience for many products. We believe Amazon is working towards this goal and is slowly looking to expand its physical presence in areas where e-commerce has limited growth potential. This strategy should drive growth for the company going forward as it looks to integrate online and offline channels and offer a more holistic consumer experience.

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