Amazon.com, Inc. (NASDAQ:AMZN) has made bold moves in the past few years to increase its presence in the brick-and-mortar retail world, for reasons that may have a lot to do with its online businesses.
As Business Insider reports, it’s probably not the physical stores themselves that Amazon is hoping will drive sales growth:
[T]he online giant is increasingly moving into the physical world, opening spaces in malls, shopping districts, and even local strip malls. It’s a move that signals the company’s ambitions are larger than e-commerce.
One reason that may be, an anonymous source told CNBC, is that Amazon is seeing online sales go up in areas that have physical stores. Brick-and-mortar stores increase customer awareness of the brand, and it’s extra fuel for the Amazon engine.
In other words, Amazon just wants to get out there in front of people. Its acquisition of Whole Foods, returns deal with Kohl’s, company-owned bookstores, Amazon lockers, AmazonFresh pickup, popup stores, and AmazonGo test site are all designed to keep people engaged with its brand. The more people interact with Amazon and its services, the more likely they are to buy more from the e-commerce giant.
It’s been said many times than its Netflix competitor, Amazon Video, is simply a carrot to get more Prime users. In that sense, Amazon can run the streaming video service without too much regard to its bottom line.
The same case could be made for all of Amazon’s brick-and-mortar expansions. As long as the moves continue to drive more users to its core online shopping platform, there’s no reason not to continue to push further into the physical world.
Amazon.com, Inc. shares were trading at $936.68 per share on Monday afternoon, down $18.42 (-1.93%). Year-to-date, AMZN has gained 24.91%, versus a 12.70% rise in the benchmark S&P 500 index during the same period.
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