What Amazon Could Do With RadioShack Stores

Amazon may be interested in creating its own brick-and-mortar chain.

By
SUSANNA KIM
February 3, 2015, 3:06 PM ET
6 min read

— -- After facing enduring criticism that Amazon wrecked the traditional brick-and-mortar retail model, the Internet retail giant may be interested in creating its own version of it.

Amazon.com Inc. is reportedly in talks with RadioShack, based in Fort Worth, Texas, to acquire some of the beleaguered retailer's store locations, but that could be a risky endeavor, analysts say.

Amazon is considering using an unspecified number of RadioShack stores to showcase some of the company's hardware and as a potential pick-up and drop-off center for online customers, Bloomberg reported, citing two unnamed people familiar with the matter.

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Amazon and RadioShack did not immediately respond to a request for comment from ABC News. A spokeswoman for RadioShack declined to comment to Bloomberg while Amazon did not respond to Bloomberg.

RadioShack, heading to bankruptcy court, has more than 4,000 U.S. locations and is reportedly moving toward a deal to sell some properties and close the remainder. Sprint may be one of the potential buyers, Bloomberg reported. A spokeswoman for Sprint declined to comment to ABC News.

Here are some things Amazon could do with RadioShack's stores and the risks involved:

1. Showcase Amazon Electronics

The Seattle-based company's interest in brick-and-mortar locations has been reported for years, according Morningstar senior analyst RJ Hottovy. But the company could face plenty of headwinds if it chooses to set down some roots outside of its e-commerce business, Hottovy told ABC News.

One of the reported functions of a store would be to showcase hardware, including the Amazon Kindle and Fire phone.

"I'd be more skeptical about what they're trying to do in this area," Hottovy said. "It's too far from their core e-commerce business."

The hardware is "ancillary" to its business and pushing hardware is already a competitive field, he said.

"I think the market will react negatively," Hottovy said.

2. Pickup Center

Hottovy said he could support store locations if they support fulfillment and same-delivery in high-traffic urban areas to potentially reduce their costs.

This is similar to what the company has implemented in urban areas such as New York City, where it also offers limited two-hour delivery called Amazon Prime Now, and locker pick-up at 7-Eleven convenience stores.

An Amazon store in an urban center would be similar in concept to its first staffed campus pickup and drop-off center that was announced this week and began operations, Hottovy said. The location, called Amazon@Purdue, at Purdue University in West Lafayette, Indiana, offers free one-day shipping on over one million items, including textbooks.

In addition to the staffed operation at Purdue, there are also kiosks that offer an automated service:

  • When a Purdue student's order arrives, the student receives an email or text notification.
  • The student will click on the link provided in the email or text to generate a barcode.
  • After arriving at Amazon@Purdue the student will scan the barcode and pick up the order at one of the self-service lockers or speak to an employee at the pickup desk.

    • 3. Drop-Off Center

    For added convenience, Amazon's Purdue location at its Krach Leadership Center also allows customers to return textbook rentals and other orders.

    A second location will open this spring in the Purdue Memorial Union building, Amazon said in its statement about the partnership.

    Amazon has similar arrangements with the University of California, Davis and the University of Massachusetts Amherst.