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Chronicles

The story behind the story

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Amazon in the Process of Launching a Retail Store

Amazon sources close to the situation have told us that the company is planning on rolling out a retail store in Seattle within the next few months.  This project is a test to gauge the market and see if a chain of stores would be profitable.

Good E-Reader Michael Kozlowski

Context & Ripple Effects

The report lands amid an unusually aggressive stretch for Amazon: the company's Kindle Fire has been selling more than one million units per week since launch per its own December announcement, it has pushed hard into Android tablets, and it is building its first fulfillment center in India. A physical store would extend a playbook Amazon already uses elsewhere — its free EC2 micro-instances are explicitly credited with winning cloud converts through try-before-you-buy.

Though sourced only as a rumor, the story traveled unusually far for a single outlet's report, with pickups at Fortune, PC World, GigaOM, BGR, ReadWriteWeb, msnbc.com, Screenwerk and Examiner all on or about February 6, 2012 — evidence that the mere prospect of Amazon going offline was treated as strategically significant.

First-order effects

  • Amazon gains a direct read on offline demand for its devices — above all the Kindle Fire, whose weekly million-plus unit pace it announced in late December 2011 — instead of relying on third-party retail floors.
  • Seattle shoppers get an Amazon-owned venue to handle the hardware before buying, replicating the try-before-you-buy conversion tactic the company already runs on EC2.

Second-order effects

  • If the Seattle test reads as profitable, the decision on a chain follows directly from the article's stated framing, forcing device rivals competing against the Fire's price point to defend their own shelf space and demo experience.
  • A store channel gives Amazon first-party merchandising control over accessories and content bundles sold alongside the Fire, shifting mix away from pure online attach rates.

Third-order effects

  • Should the pattern hold, the structural question becomes whether e-commerce scale plus selective physical presence beats store-first retail on cost — a test other online-only players would face pressure to copy.
  • Amazon's parallel moves in this window — tablets, India fulfillment, cloud trials — point toward a company treating channels as interchangeable infrastructure rather than choosing one.

The trend: Pure-play e-commerce leaders are beginning to treat physical retail as a measurable experiment rather than a contradiction, with single-city tests deciding whether chains follow.