Commentary: These are the type of stores Amazon should open
It makes no sense for Amazon.com to open the type of physical bookstores it helped obliterate, not when the online giant already has the physical infrastructure in place to support a large scale rollout of another type of store in one of retail’s hottest sectors.
The notion that Amazon.com wants to open hundreds of physical books stores has been fueled by several recent developments. A physical book store did open last fall in Seattle amid great fanfare because of the symbolism. Other recent physical moves have seen Amazon.com open pick-up locations on college campuses to more effectively fulfill online orders.
However, what really put the retail industry in a tizzy was a comment about Amazon.com by General Growth Properties CEO Sandeep Mathrani during the company’s fourth quarter conference call.
Responding to an analyst question about holiday traffic, Mathrani offered a wide-ranging response and made a passing reference to his “understanding” that Amazon.com has a goal of opening 300 to 400 book stores. A day later, a statement by General Growth sought to clarify things by noting the statement, “was not intended to represent Amazon’s plans.”
Who knows what Amazon.com’s plans are, really, other than founder and CEO Jeff Bezos? While it could make sense to operate some flagship properties in high profile locations to elevate the brand and keep the world buzzing about Amazon, the impact on sales would be negligible, and therefore of questionable value, unless the “stores” were to fulfill an mission more expansion than the typical Barnes & Noble.
The more immediate opportunity is for Amazon.com to capitalize on the red hot off-price, closeout, liquidation space with Amazon.com Outlets. These stores already exist in a sense because Amazon.com offers “Warehouse Deals” which are discounted prices on open box products, like-new returned goods or pre-owned products. Huge quantities of these goods sit locked away in Amazon’s expansive network of more than 100 U.S. fulfillment centers, many of which are located in close proximity to major population centers.
Turning a portion of these facilities into Amazon.com Outlet stores accessible to the public would be hugely popular and beneficial to Amazon.com’s bottom line. Americans' love discovering a deal and what better way to do so than taking a road trip to the actual Amazon.com warehouse. A portion of the facility would be set aside to present merchandise in a no-frills manner and encourage the type of treasure hunting that makes the Costco, Dollar Tree and T.J. Maxx store experience popular. Sure, there would be some operational and staffing issues to work out, but nothing an enterprising company like Amazon.com couldn’t figure out.
The Amazon.com Outlet could also serve as a way to enhance the value of the Prime membership and encourage others to sign up since access to the Outlet would be restricted to Prime members.
Another benefit would be avoiding the shipping costs Amazon.com incurs to transport its Warehouse Deals and other returned merchandise to customers. It would essentially shift the supply chain costs to consumers who would be thrilled to have the opportunity to visit a fulfillment center and realize additional savings by carting their purchases home.
Amazon.com doesn’t need to open outlet centers any more than it needs to open more physical book stores to grow and gain more share.
Game Stop talks about its newest initiative
GameStop Corp. has entered into a partnership that will expand the retailer from selling video games to video-game publishing, the Dallas Business Journal reported. “As we’ve said many times before, GameStop will continue to invest in new and exciting innovation and strategic opportunities that will grow our video game business and deliver better and better entertainment experiences for our customers,” Mark Stanley, GameStop VP of strategic initiatives, said in the report. [Dallas Business Journal]
Publix expands specialty pharmacy in new deal
Publix and AmerisourceBergen on Thursday announced a long-term agreement encompassing the distribution of branded, generic and over-the-counter health and pharmaceutical products. The agreement also enables Publix’s network of more than 980 pharmacy locations across the southeast to expand patient access to specialty medications.
“Publix continues to push the boundaries of how our pharmacy business operates in order to improve the experience and health outcomes we create for our customers,” stated Fred Ottolino, Publix VP pharmacy. “With AmerisourceBergen we’ve found a partner who shares our passion for patient care and who has the knowledge and capability we need to execute our strategies.”
The agreement, which includes direct delivery to all Publix pharmacies as well as warehouse and central fill facilities, extends beyond traditional distribution and includes access to AmerisourceBergen’s Cubixx inventory management solution. This radio frequency identification-enabled technology will be used by Publix to facilitate the dispensing of a range of specialty medications in their community pharmacies.
Publix will also benefit from technological solutions designed to support overall inventory efficiency and will have access to consultative services from AmerisourceBergen as they continue to evolve their specialty pharmacy services.
“Innovative pharmacy leaders are simplifying and improving the patient experience of getting needed medications,” said Steven Collis, president and CEO AmerisourceBergen. “Publix is doing just that and we are thrilled to have the solutions and expertise in place to support their mission and to help them unlock additional value in their pharmacy operation.”