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Technology Stocks : Amazon.com, Inc. (AMZN)
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From: Road Walker2/6/2012 11:25:02 AM
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Amazon Has Tried Everything to Make Shopping Easier. Except This.By DAVID STREITFELD
Doug Strickland/Chattanooga Times Free Press, via Associated PressSanjay Shah, left, general manager of Amazon’s new warehouse in Chattanooga, Tenn., at an opening ceremony on Thursday with the Tennessee governor, Bill Haslam.
Much of the discussion about Amazon is focused on its digital side, yet the company is relentlessly expanding into the physical.

It has announced five new United States warehouses since late December, all with more than a million square feet. It is testing out delivery lockers in New York and Seattle for those who cannot receive their goods at home. It has been experimenting with a grocery delivery service in Seattle for several years. It has expanded its Prime $79 annual shipping fee program, hoping members will order more of everything. In all sorts of ways Amazon is trying to remove the obstacles from home delivery. Does anyone remember how mail order once meant getting things a month later? Now Amazon thinks two days is too long.

One major reason the retailer seems to be giving up its hard-line position on charging customers sales taxes is that it wants to build its warehouses close to major population centers. If it does that, it cannot argue that it is exempt from collecting state taxes because it lacks a physical presence in a state. But the increased business from faster delivery might be a worthwhile trade-off to charging the tax.

Still, until we achieve the teleportation of objects, there is only one way to immediately get physical goods. It is called a store. For years, there has been speculation that Amazon will open its own outlets, presumably to sell Amazon-label products. The idea seems farfetched, but before 2001 so was the idea of Apple operating its own stores. “I give them two years before they’re turning out the lights on a very painful and expensive mistake,” a consultant told BusinessWeek about Apple’s plans in what has become one of the most celebrated bad guesses of the era.

So maybe that is where we’re going with Amazon. Instead of using everyone else’s store as a showroom for e-commerce, the retailer could control the process and operate its own showroom. “There wouldn’t have to be any inventory, you would simply play with the stuff, talk to a professional and swipe your Amazon Prime credit card (or Amazon phone) and have it at your house in the next 24 to 48 hours,” Jason Calacanis wrote in a recent blog post headlined: “Rumor: Amazon Retail Stores Coming.”

Amazon does not comment on rumors (or on much of anything, really.) But analysts do not think highly of the notion. The company wants to get closer to its customers to bridge the last mile of distribution, but not that close. “I don’t think the idea of Amazon getting more physical and adding more bricks would improve their return on invested capital,” said Brian Nowak of Nomura Securities.

Another problem: Apple, he noted, was focused on one category. Amazon ranges all over the map. Its stores might be pretty big.
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