Online retailer Amazon Inc. is rumored to be taking its first steps into the real world according to various news outlets, which are reporting Amazon could open a retail location in Seattle before the end of year.
Amazon has yet to confirm or deny the reports.
The Seattle store would be a way for Amazon to test the profitability of retail locations. Many customers like to try products before purchasing them, and this formula has worked well for Amazon’s competitor, Apple Inc., which has 361 retail locations with staff who can answer customers’ questions and explain services. Another advantage for customers is not having to pay for shipping or wait for a product to arrive.
Amazon has been hurt by the high cost of manufacturing its e-book reader, called the Kindle Fire. During fourth quarter 2011, net income fell by 57%, and sales were $1 billion short of estimates. Financial analysts forecast Amazon will have at least two more underperforming quarters.
Reliance on third-party sellers has also hurt Amazon.
According to the blog Good E-Reader, the Amazon store could carry Kindles and accessories as well as Amazon exclusives and other high-end products. Kindles are already sold at Best Buy, Target and Staples.
The stores would not be as large as big box retailers.
This is not the first time the media has reported Amazon’s plans to open a store. In 2009, a newspaper reported Amazon was in the market for retail properties, but it turned out only to be a rumor.
Although the 2009 reports of Amazon opening a store proved to be false, this week’s reports may not be. Barnes & Nobel, Books-a-Million, and Indigo Books and Music are all refusing to sell books published by Amazon in their retail locations.
The book publishers claim Amazon undermines the publishing industry by signing exclusivity agreements with authors, agents and publishers. These agreements have prohibited other retailers from offering certain e-Books to customers.
Key Statistics - World Book Market (source: MarketLine)
- The global book market is predicted to be valued at close to $108 billion in 2014. This represents an increase of nearly 9.5% since 2009.
- Nearly 50% of the global book market value is in Europe.
- The majority of the market’s value, or 62%, is derived from bookstores – everything from independent bookstores to large chain stores as well as internet retailers.