Welcome To The Amazon Department Store?
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With news reports discussing the possibility that Amazon might buy JC Penney, it is important to try to understand the rationale behind a possible merger.
While some have speculated that Amazon is planning to venture into the world of retail brick and mortar, its difficult to accept this rationale in light of the recent announcement of poor financial results by Macy's.
On the other hand, Amazon might be excited about opening up its own department stores since there is a possibility of Macy's demise.
Another theory is that Amazon will utilize JC Penney's stores as warehouses. Orders could reach customers that much faster if Amazon had even more warehouses throughout the country.
Amazon could even be considering making a run against Walmart, Target, and Kohl's.
Amazon already has the buying power, supplier connections, and sales data, to effectively compete with any brick and mortar retailer. The only thing that Amazon is missing is the brick and mortar locations.
Before you dismiss the idea of Amazon entering the retail fray, keep in mind that the majority of retail sales still take place offline.
Perhaps Amazon is going to set up wholesale warehouses. These wholesale warehouses can be modeled after Costco or BJ's.
Remember, there is no assurance that Amazon is actually planning on buying JC Penney, and even if there was an intention to do so, a purchase might not even go through.