Amazon.com Inc. plans to open a store in the middle of New York City, according to people familiar with the plans, the first brick-and-mortar outlet in its 20-year history and an experiment to provide the type of face-to-face experience found at traditional retailers.

The site, set to open in time for the holiday-shopping season on the same busy street as Macy’s Inc.’s flagship store, would mark an attempt by Amazon to connect with customers in the physical world. Amazon has built its business on competitive pricing and fast shipping. Until now, though, it couldn’t compete with the immediacy of a traditional store.

Amazon’s space at 7 West 34th St., across from the Empire State Building in Midtown, would function as a mini warehouse, with limited inventory for same-day delivery within New York, product returns and exchanges, and pickups of online orders. The Manhattan location is meant primarily to be a place for customers to pick up orders they’ve made online, but will also serve as a distribution center for couriers and likely one day will feature Amazon devices like Kindle e-readers, Fire smartphones and Fire TV set-top boxes, according to people familiar with the company’s thinking.

Opening a physical location is “about marketing the Amazon brand,” said Matt Nemer, a Wells Fargo analyst. “Same-day delivery, ordering online and picking up in store are ideas that are really catching on. Amazon needs to be at the center of that.”

Operating stores also carries risks. Until now, Amazon largely has avoided some costs associated with retailing, including leases, paying employees and managing inventory in hundreds of stores. Those expenses could imperil the company’s already thin profit margins.

Some details about the New York site couldn’t be learned immediately, including the size, length of the lease or amount of inventory that would be housed there. People familiar with the matter cautioned that Amazon’s plans could change, and that the store is an experiment and could be deemed unsuccessful.

If it is successful, however, the New York location could presage a rollout to other U.S. cities, according to the people familiar with the company’s thinking.
(Wall Street Journal)