Amazon Product Managers Prepare To Do The Unthinkable: Open A Store

by drjim on February 6, 2017

We buy from Amazon online, right?

We buy from Amazon online, right?
Image Credit: Luke Dorny

You would think that being a product manager who works for Amazon would be a pretty cushy job right? The company operates one of the largest online stores and they don’t seem to have to generate a profit and investors still seem to love their stock. However, all of this success may hid a key product management fact – Amazon product managers always have to be looking for ways to update their product development definition and grow the business. Right now what this seems to be leading to is the opening of retail stores. What’s up with this?

The Challenges Of Being An Amazon Product Manager

The world of bookstores is pretty crowded these days. You have Barns & Noble who has 640 stores, you have Books-A-Million who has 255 stores and then there are a lot of smaller independent book sellers out there also. Upon an initial look, you wouldn’t think that this was an attractive market to enter. However, Amazon got its start by being an online bookstore so there may be some legacy issues with regards to what is on everyone’s product manager resume going on here.

It’s important to realize that although most of us think of Amazon as being a big online store, they have dabbled in the physical retail world before. In malls across the country, Amazon has set up branded kiosks where they sell a limited line of devices, cases for those devices, and branded apparel. If Amazon ever thought of opening a line of physical stores, it’s not the kind of thing that would happen overnight. These things take time: you have to pick a location, negotiate a lease, hire staff, stock the store, etc.

Amazon has already entered the physical world of book selling. They have opened one physical bookstore in downtown Seattle in November of 2015. This physical store is located in an outdoor mall and in it, they sell books (of course) along with Amazon’s Kindle and Fire devices. The product managers determine what products to stock in the store by using data from the Amazon web site. There are roughly 5,000 books available in the store at any one time.

The Thinking Behind The Amazon Retail Stores

If you are a big company like Amazon and you are thinking about opening retail stores, then you have to be thinking about doing this in a big way. It turns out that they are. The word on the street is that the Amazon product managers are considering opening as many as 400 physical retail stores. Just how quickly this can be done will have to be seen. Barns & Noble and Books-A-Million took years to set up their network of stores.

If you are going to run a bookstore in a competitive market as exists today, you need to make sure that you offer things that your customers want. Amazon is attempting to do this by having their physical bookstore offer books at the same price that they sell it for online. This is often less than other bookstores. In these stores they showcase customer reviews of books and they have created sections that feature book selections from employees.

The creation of a physical store may be a clever move by the Amazon product managers. If they create a physical store in a densely populated area, then that store can serve as a mini warehouse for deliveries to people who live around the store. Something else that a line of physical stores could help Amazon with would be customer returns. It turns out that 38% of online purchases end up getting returned and having a physical store to take things back to could help make this process easier for Amazon customers.

What All Of This Means For You

Although you would think that being a product manager for Amazon would be a fairly comfortable job, it turns out that there is probably a great deal of pressure to live up to your product manager job description and keep finding new ways to move the company forward. There are starting to be stories circulating that there is a possibility that Amazon is considering opening up to 400 physical stores.

These stores would be competing with the likes of Barns & Noble and Books-A-Million. Amazon has already opened one store in Seattle. If they open more stores, then they are going to have to find ways to make their stores stand out in a crowded market. Low prices coupled with customer reviews and selections of books just might do the trick. The creation of a line of physical stores might offer some other opportunities for Amazon to use the stores as mini-warehouses or allow customers to return items there.

Moving from the virtual online world to the physical world sure seems to be a bit of a backwards move. However, Amazon has some very deep pockets and if their product managers have determined that if they are going to be able to continue to grow the business then they’ll have to create physical stores, then so be it. We’ll have to watch and see if there are any lessons that this transformation that they can teach us…

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: Do you think that the Amazon product managers should try to tie the physical stores into the online web site?

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What We’ll Be Talking About Next Time

Let’s talk about love, shall we? I fully understand that your job as a product manager probably takes up a lot of your time and you really don’t have a lot of time left over to think about such trivial things as love, but it’s all around us if you’d just take a moment to look. For that matter, love is a big business and nowhere is it bigger than the exploding world of creating a product development definition for online matchmaking sites. However, none of these sites seems to have come up with the perfect formula for getting the right people together. Perhaps we can use our product management skills to discover how to do this correctly?

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