Amazon.com Inc. is reportedly preparing to open a storefront in Midtown Manhattan as part of the Seattle-based online retailer’s plan to expand into local same-day package delivery service. Though the company has experimented with temporary "pop-up" retail outlets in the past, this brick-and-mortar storefront would offer more customer engagement and could prove permanent if Amazon.com Inc. considers it a success.
A company spokesperson said Thursday that no announcements have been made “about a location in Manhattan,” but the Wall Street Journal cites contacts familiar with the project saying that 7 W. 34th St. has been selected.
The property, across the street from the Empire State Building, is a nine-story, pre-war, 450,000-square-foot building with two commercial storefronts at street level. The building’s website lists 10 commercial showroom tenants. It was once a department store and has rear loading docks that would be ideal for loading and unloading delivery vans.
Amazon has been trying for years to figure out how to speed up deliveries that are currently handled by warehouse centers scattered across the country. It recently installed storage lockers in convenience stores and parking garages to handle deliveries and returns for customers to pick up or drop off packages at their convenience.
Setting up retail storefronts would be a departure from the Amazon strategy of avoiding the costs of leasing retail properties and hiring staff to handle face-to-face encounters with customers. The company has a long track record of reporting razor-thin profits, and regular losses, as it continually invests in expanding services and picking up much of the cost of package deliveries, so a heavy expansion into commercial leases and retail staff poses a considerable risk for its bottom line.
Amazon.com reported a $126 million loss on $19.34 billion in net sales in the quarter ended June 30. It spent roughly $1.07 for every dollar it made in sales in its second quarter. Amazon.com’s stock price closed down 2.27 percent to $315.37 on Thursday. The price is down nearly 21 percent since the start of the year as it faces stiff competition in its cloud services and higher shipping costs since the start of the year.