Why Amazon buying RadioShack stores is a brilliant move.

Bloomberg today is reporting that Amazon is possibly in talks to purchase a number of RadioShack retail stores as part of their long-rumored expansion into retail.

(Bloomberg) — Amazon.com Inc., aiming to bolster its brick-and-mortar operations, has discussed acquiring some RadioShack Corp. locations after the electronics chain files for bankruptcy, two people with knowledge of the matter said.
Amazon has considered using the RadioShack stores as showcases for the Seattle-based company’s hardware, as well as potential pickup and drop-off centers for online customers, said one of the people, who asked not to be named because the deliberations are private.
— http://www.bloomberg.com/news/articles/2015-02-03/amazon-said-to-mull-buying-radioshack-stores-in-retail-expansion

Amazon has been moving more and more into the electronics world first with its Kindle, then its range of Kindle Fire Tablets, and its Kindle Fire Phone which, while a failure, was an important step (one that will almost certainly be iterated upon).  Even now they are doing early shipping of their in-home digital assistant Amazon Echo, which is one of the more interesting pieces of tech we've seen this year.  

All of these products could very much benefit from a small local store where one could try them out, ask questions, and get support a la Apple's Genius Bar.   This makes a heck of a lot more sense to me than Sprint's purchase of some of these stores.   In fact, it seems like a brilliant business move, as long as they don't buy too many.

Not only that, but many people are overlooking Amazon's AmazonBasics brand.   They sell a ton of super inexpensive branded products like HDMI cables, lightning cables, bluetooth speakers, laptop bags, camera bags, batteries, car chargers.  Heck, they even have AmazonBasics branded clothes-hangers!  

Imagine being able to go into a physical store to go into to pick up an HDMI cable. or batteries, or an iPhone charger, and not being charged  an arm and a leg for it like Best Buy (or Radio Shack for that matter) does.   Just having a few of those things on hand in-store would be enough to deal a pretty significant blow to Best Buy, which at this point probably makes most of its sales on two things:  Items people don't usually have shipped (TVs, appliances), and impulse purchase items (phone cases, hdmi cables, flash drives, etc) that they mark up tremendously (think $50 HDMI cables).

Even the locations are very compatible.   Radioshack stores tend to be small and located in just about the perfect place for an Amazon store.    Small stores mean low-rent,  which hopefully means Amazon will be able to absorb that cost in the way they do so well.

Though, I'm sure they are going to want to raise some capital to keep these possible stores afloat.  It's a good thing they have a super easy way to do it.   How, you ask? Make the stores an Amazon Pickup location.   Of course, that's obvious.  Even better would be to make the store a SAME DAY pickup location.  Let's say I order a few books from Amazon in the morning, and at checkout it gives me the option to pick them up later that day from my local Amazon store for an additional $10.00.   If this is a book I really want, or need.  You know I'm going to pick that option.   They could even give their Prime members a discount, and make it $5 instead.

We already know that Amazon is using information about your shopping cart, your wishlists, as well as your browsing activity to start shipping items that they think you might purchase to warehouses close to you so that they can get them to you faster.   What if this method was used in their retail stores as well.   They could start pre-shipping items that they think you might want to a regional warehouse that feeds a number of local stores.   With a small fleet of trucks per warehouse, they could easily provide that same day pickup at the store.

A lot of people are writing this Amazon Retail business off as a bad idea.   Though I have a feeling a lot of those people said the same thing about Apple when they decided to get into retail.   Me?  I think this could be one of the most important retail plays of the decade.  I'm curious to see what they do.

 

Posted on February 4, 2015 and filed under Technology.