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Thursday, November 12, 2015

Amazon Has Four Walls But It Thinks Outside The Box



Amazon opened its very first brick-and-mortar store this month after a number of false starts and prior promises to never go beyond its digital borders. Is this a good thing?  Bad thing?

Few can be neutral when evaluating anything done by Amazon, the world’s largest online retailer.  Whether you love or hate Amazon, whatever the giant company does has ripple effects for consumers, employees, and competitors.

There’s something positive about seeing a new bookstore open. It’s one more space dedicated to selling books to eager readers.  I get a good feeling when I see new aisles of books the way I imagine church goers feel when a new church opens the doors to its pews.  In fact, the new bookstore opening nurtures my soul.

But it can’t be lost on us that the new store is run by the same company bent on putting its competition into a shredder.  Amazon is the most revered – and feared – and loathed – bookseller in the history of our nation. It has revolutionized the way books are sold, published, and consumed.  Just when you thought the march to a digital-only society was virtually complete, print came back, and along comes Amazon, expanding into the physical world.

Amazon could end up doing any number of things:

·         Never open another store
Doubtful. This company doesn’t do anything small or halfway.  I expect an aggressive opening of stores.  They likely could just buy an existing set of stores or take over former Borders stores that still sit vacant.

·         Sell other items beyond books
No doubt Amazon will sell Kindles and electronics with books, but maybe they’ll turn the bookstore more into a Walmart-type store.  They would do this to compete with other stores and to help them have a base from which to launch its same-day shipping/pick-up venture.

·         Be two stores in one
Perhaps Amazon will have 24-hour stores where, during the daylight 12 hours, they sell books – and for the other 12 hours they flip their shelves to sell everything but books.

·         Sell only books it publishes
Right now the new store is selling titles that have at least a 4-star rating, which is an interesting idea, but what if it only sold books from its own imprints or POD service, Create Space?

Amazon is now a stock that trades at over 900 times its earnings. Only a dozen stocks trade at more than. 100 times their earnings on NASDAQ, and none come near Amazon's ratio. The average stock trades at 14 times its earnings and most investors don't think a stick should trade at more than 20 times its earnings.

It’s too early to say what Amazon’s foray into physical stores will mean, but it likely won’t be insignificant.  They are a force in commercial America that has the power to make or break a company, an industry, or a book.  Shop with caution.

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Brian Feinblum’s views, opinions, and ideas expressed in this blog are his alone and not that of his employer. You can follow him on Twitter @theprexpert and email him at brianfeinblum@gmail.com. He feels more important when discussed in the third-person. This is copyrighted by BookMarketingBuzzBlog © 2015

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