Amazon to open retail stores in the U.K.?
Amazon started out as an online retailer of books in 1995. But while books have remained at the core of its business, it has also diversified into many other areas, now selling CDs, video games, electronic equipment, household appliances, clothes, sporting equipment, and much more besides. So could it be time for this online retailer to go offline and open retail stores?
That is, at least, the rumor of what Amazon is eyeing in the U.K. The Sunday Times reports that the Web giant is currently searching for bricks-and-mortar stores in Britain in order to support and grow its online business. The dotcom era was once imagined to be a threat to the high street but now could be about to save it.
Certainly, Amazon has had a direct effect on many British retailers. Woolworths went bust at the end of last year (although strangely is making a comeback as an online retailer), and Borders has now gone into administration. Both retail chains sold items that Amazon also sells, but they couldn’t compete on price, even when postage costs were factored in. With Amazon.co.uk now offering free postage on any item, no matter how small, the squeezing of other retailers looks set to continue.
Both Borders and Woolworths occupied some of the biggest retail space in towns and cities across the U.K. so now would seem a good time for Amazon to make a move into the high street.
The idea would be to set up click-and-collect stores across the country. This entails people browsing stock and ordering online before then going to pick up the item at the nearest retail outlet of the store they’re buying from. Argos, Tesco, John Lewis, and others already provide such a service, with Argos claiming 18 percent of its online sales being conducted this way.
A source told the newspaper:
When Amazon was just selling books and CDs that fitted easily through the letterbox it was fine to be a web-only business, but now it has branched out into everything from children’s bikes to electricals it believes it could boost sales by having stores that offer a collection point for shoppers. It will probably be an Argos-style operation.
This could only possibly work if Amazon were to open several stores around the country in very quick succession, otherwise people would have to travel miles just to pick up an item they’ve bought online. Argos makes the system work because they have a store on almost every major high street.
Even then, it would seem a strange move for an online retailer to move some of its business into a retail setting. Surely the point of being an online retailer – and the reason Amazon is doing so well – is that low overheads means low prices. Buying bricks-and-mortar space and employing staff in them would surely cut into revenue.
If this does happen and proves to be both desired by consumers and good for business then I’d presume other countries would follow, including possibly the United States.
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