Amazon is considering to increase its margins through newly planned brick and mortar stores
According to Venture Beat, the online retailer has finally started to consider its profit margins in the coming times. The first launched its first ever physical book store last year. Usually, the US tech firm makes waves but this time it is completely silent. Sources suggest that this silence could result in something gold in the coming times. It was reported last week that Amazon is set to open 300 to 400 brick and mortar stores in the United States.
The CEO of General Growth Properties, Sandeep Mathrani, also stated during the earnings call of Amazon that the firm is ready to open hundreds of physical stores. Furthermore, the focus of these brick and mortar stores would not be limited to books only it could go beyond them as well. Mr. Mathrani later changed his statement however Amazon did not respond to the comments. This suggests that the firm indeed has big plans in sight in the near future.
Amazon opened its first ever physical book store last fall and it is believed that the online retailer must have seen good outcome from its test store in Seattle. This can be one of the reasons of as to why the company is determined and increasing its bet on building hundreds of brick and mortar stores. The irony is that Amazon entered this market as an e-book service provider in order to put the traditional physical book stores such as Barnes & Noble out of business.
Barnes & Noble, which is still the largest US book store chain, cannot compete against the offerings of Amazon. It is believed that extra discounts for the buyers and dealing in bulk has benefitted the US e-commerce behemoth. Analysts say that if the firm really opens as many stores in the foreseeable future then it will get more easier to get access to the content in bulk.
Nearly half of the American online shoppers prefer Amazon as their first destination for shopping hence it would not be jumping into this sector for no reason. The company already faced massive losses with its Fire Phone product line but it has now recovered all of it and the journey has been smooth in the past quarters.
Amazon missed to meet expectations if the fourth quarter of its 2015 fiscal year which resulted in 10 percent decline in its stock. Even then it remains the clear market leader in terms of market share and revenues when compared to its domestic competitors such as Wal-Mart and EBay etc.
The new store openings might surprise other companies as well as analysts as the industry leaders in brick and mortar section including Macy’s, Wal-Mart, and others are constantly closing down numerous stores every now and then. This move is a gamble but considering the market status and position of Amazon as of this moment, it is a risk worth taking.
Previously, the reigning monarch of American online shopping did not care about its profit margins but with expanding into numerous physical stores, it is considering to increase its margins through this.