The rumor has been drifting around for a few days and yesterday Reuters confirmed it:
Amazon is said to be preparing to open a good 'ol brick-n-mortar storefront. Reports have varied and this may have to do with the rumored nature of the stories. According to the Reuters piece, the idea is to have an Apple-like storefront where people can go in to handle and 'experience' the various proprietary gizmos that Amazon makes and sells. Other versions have it that the storefronts will be to showcase the books that they will be publishing themselves. Other versions have it that the stores will be places to showcase both books and electronic doohickies.
Many things come to mind.
First of all, the entire idea of Amazon was that it would be a system by which people could and would order books from Amazon, Amazon would then order them from a supplier and have them sent directly to the customer. The great genius was supposed to be that this would be a 'warehouse-less' bookstore. No physical inventory, no physical warehouse, no pickers or packers or boxes, tape and packing peanuts. It would be immensley profitable becasue it wouldn't be weighed down by pedestrian things like rent, utility bills and payroll.
That didn't work. Pretty quickly, they were building warehouses.
Now, the store-not-chained-to-a-storefront is going to open a store, here in Seattle, as a test. In theory, anyway. There will be rent and utilities and payroll.
One wonders if they do sell their books in this pleasure palace, will they be discounted at the same rate as the books are on-line? If they are, they'll have to sell a hellovalotta books to pay those bills. They regularly discount the on-line books 40%, selling them at nearly half the cover price. That means they'll have to sell two books to every one at full price to make the same amount of money. If they don't match the discounts offered on-line in order - well, what's the point of going into buy one of the books?
It is already well documented that the Kindle is sold at such a low price that Amazon loses money on the sale of each reader. They're willing to do that to rope buyers in on buying content. No one else can sell the Kindle versions of content. Whatever money they lose in selling a Kindle, they are assured of making it up from you later. It would make sense that they would have a uniform price on their books - on-line or in-store being identical. There is nothing to say yet if they will be making any money on the sale of printed books or if they'll be selling them at a loss as well. Impossible to say what it costs them to print a book and what they do or do not make on the sale of one, even at 40% off cover. Certainly, if they're selling the e-book versions at a lower price than the printed book, you have to assume that they're not making that much on the sale of a physical book - if they're willing to undercut themselves by selling the e-version more cheaply, they can't be that worried about not selling many printed books, right?
But then with a physical bookstore, they may not care about making a profit. If they're openly willing to lose money on selling you a Kindle, they may equally be willing to lose money on a physical space just as an experiment. Why not - it's a tax write-off, isn't it?
But to a company sitting on a reported pile of $9 billion, why not just buy the building outright and do away with the issue of rent. While we're at it - just buy the block, or the city?
Oh, wait...
Incidentally, you can buy a Reuters app for your Kindle... just $9.99 at Amazon.com.
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