Monday, September 15, 2014

Should Amazon Buy Radio Shack

What business isn't Amazon into these days, from web retailer of a vast array of merchandise to streaming video platform to digital hardware maker.  And thanks to the web, their reach is limitless; wherever there is delivery, there is Amazon.  And Amazon scares many other retailers because they do it without the added costs of brick and mortar, rent, property taxes, utilities, that add to the costs of merchandise and causes retail prices to rise. 

But Amazon also knows that customers like to touch and test and taste before they price compare and buy and why not do it in an Amazon store.  So speculation comes that Radio Shack, close to bankruptcy, but nationwide with retail locations, might be an opportune acquisition to rebrand as an Amazon store.  According to Marketwatch, "it would enhance Seattle-based Amazon’s already robust focus on local, showcase more Amazon products and services, such as the Fire smartphone and Kindle, and enhance pickup and distribution, making for a more seamless transition between clicks and bricks."

While  the idea is sound, it raises the costs that have previously allowed Amazon to price its product lower than brick and mortar.  And is RadioShack the right choice?  Most of their stores have a small footprint making it difficult to display a lot of merchandise.  Would another larger retailer with bigger stores make more sense?  Could Barnes & Noble or Best Buy be a better target?  If the strategy is to enter the brick and mortar business, then Amazon should keep its options open.