This blog post is a response to Rosenblum’s blog post
The business model that is keeping Amazon.com in business is keeping them from being profitable. According to the Wall Street Journal, Amazon.com is reportedly opening a retail store in New York City in hopes to increase their profits. It’s hard to believe, but if you think about it, Amazon is barely profitable. With it’s low cost items and delivery, their revenue comes from Amazon Prime membership and a fraction of every item sold. This is a very important issue because although Amazon accounts large portion of America’s online transactions, they must rely on retail stores in order to become profitable. I find it puzzling to comprehend what Amazon will use this physical location for besides pickup because it is impossible to provide nearly as much variety as they do online in person. The amount of inventory Amazon.com would need to have in their physical location would go against the business plan of Dell. Rosenblum suggested that Amazon can now play the role of the logistic providers in Manhattan, keeping the money they would have otherwise placed in Fedex or UPS’s pocket. Thus they can supply cheaper and quicker same day deliveries. The amount of Sears retail locations closing gives Amazon a selection of cream of the crop locations that can be extremely advantageous to their operations. It is comforting to see that even the King of the Online Marketplace must resort to the most conventional way of “long-term and sustainable profitability” through physical locations and a digital presence because it shows that human-to-human interactions still got a couple more years to go.
Amazon’s options to be profitable are limited. Perhaps this will be the future of Amazon.com: a dual presence in physical and online retail.