Amazon.com Inc announced on Wednesday that it will close all 68 of its bookshops, pop-ups, and shops selling toys and home products in the United States and the United Kingdom, putting an end to some of the company's longest-running retail initiatives.
The development, first reported by Reuters, is a game changer for a company that began as an online bookshop and helped push established competitors such as Borders to bankruptcy. In the future, Amazon plans to concentrate on its grocery markets and a department store model.
Amazon has experimented with a variety of retail concepts since opening its first bookstore in Seattle in 2015, including convenience stores without cashiers, supermarkets, and a "4-star" style in which it sells toys, household items, and other goods with high user ratings.
Amazon wanted to reach out to more customers and bring its online experience to the real world. Its storefronts would display what people were reading, including reviews they posted on Amazon's website, based on Amazon's massive data mine.
However, the company's advances were insufficient to stop the march toward online commerce that Amazon had sparked.
Its "physical stores" revenue, which accounted for only 3% of Amazon's $137 billion in sales last quarter, owing mostly to customer spending at its Whole Foods subsidiary, has frequently lagged behind growth in the retailer's other divisions.
Wedbush Securities analyst Michael Pachter believes Amazon was correct to avoid the niche market of brick-and-mortar book buyers, arguing that it would be as awful a match as electric vehicle maker Tesla Inc installing petrol stations.
Pachter believes Amazon's new CEO, Andy Jassy, took this decision when reviewing the retailer's diverse operations since taking the helm in July. "They're learning that retail is difficult," he said.
Cameron Janes, Amazon's vice president of physical retail, left the business in November after 14 years, according to a LinkedIn post.
He did not immediately respond to a request for comment from REI, where he is now the chief commercial officer.
On various dates, Amazon will close its 4-star, pop-up, and bookshop sites and warn customers via signage.
Workers would be given severance pay or assistance in finding work at any of the company's local locations, including the more than dozen Amazon Fresh grocery stores that the business has announced.
Amazon's brick-and-mortar locations, despite being a small fraction of its overall retail business, generated billions of dollars for the company. The company's physical retail segment earned $4.7 billion in the fourth quarter last year.
