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Is Amazon Going to Open 400 Brick-and-Mortar Bookstores?

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Honestly, we don't know (no one does actually)!

Amazon.com Inc.AMZN , as usual, has decided not to comment on the rumors about the opening of 300 to 400 physical bookstores.

How the Rumors Arose

There is no smoke without fire. The rumors started doing the rounds when General Growth Properties GGP CEO Sandeep Mathrani, during an earnings conference call on Tuesday said, "You've got Amazon opening bricks-and-mortar bookstores, and their goal is to open, as I understand, 300 to 400 bookstores."

Per USA today, this set off the rumor mills online, with over 90 stories and blog posts being uploaded within hours of the call.

However, 24 hours later, a statement was posted on General Growth Properties' website which said: "General Growth Properties Chief Executive Officer Mathrani has indicated that a statement he made concerning Amazon during GGP's conference call held on February 2, 2016, was not intended to represent Amazon's plans."

Irony of Fate

"Amazon put brick-and-mortar bookstores out of business. Now they're opening bookstores. I don't think Amazon knows how Amazon works."

- L. A. Daddy (@LADaddy) Feb 3, 2016

Honestly, we believe that it's quite paradoxical that the online retailer held responsible for putting the American brick-and-mortar bookstores out of business might actually be toying with the idea of entering the space.

The Bookstore Experience+ Low Price = A Readers' Paradise?

"Amazon Books, The physical bookstore", Amazon's first physical bookstore that opened in Seattle in November, looks notably different from most book retailers.

If we consider this store as a sample of what these 300-400 stores could look like (if the rumors are to be believed), then the idea might make a little more sense.

Amazon's Seattle store carries thousands of books selected on the basis of the website's customer ratings, pre-orders, sales and prominence on Goodreads.

In fact, the store selects some inventory per the curators' review.

On the homepage of its physical store, Amazon says, "To give you more information as you browse, our books are face-out, and under each one is a review card with the Amazon.com customer rating and a review. You can read the opinions and assessments of Amazon.com's book-loving customers to help you find great books."

The prices at the bookstore are the same as the prices online. So buyers do not have to decide whether to buy from the store or online. Also, the strategy puts pressure on the other large bookstores, thus making it that much more difficult for the competition.

The low prices offered by Amazon have increased the competition for retailers like Barnes & Noble BKS , and other physical book stores. Barnes & Noble's Nook segment, which was an attempt to take on Amazon's Kindle, failed to gain any meaningful traction.

Now, only time will tell if the rumors are true.

Amazon currently carries a Zacks Rank #3 (Hold).

Investors may also consider Mercadolibre, Inc. MELI , as it sports Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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