In the last two years, Amazon has opened 11 physical bookstores while purchasing Whole Foods's 400 retail locations, and last week, it announced a partnership that will allow returns to be delivered to selected Kohl's physical locations.
Why is Amazon doing this? If history rhymes, as one philosopher posited, then maybe the best thing to do isstudy the history of Sears, which startedas a mail-order business and evolved into retail.
It started with mail. After the Civil War several innovations (such as railroads and parcel delivery) made it possible to deliver items directly to people. Thus was born the catalog,which consumers could browse at leisure at home and then order what they wanted and have it delivered.
The greatest catalog of them all belonged to Sears. There were other catalogs, but none as big as Sears, which, like Amazon today, marketing itself as the place where you could purchase almost anything and have it delivered.
Between 1895 and 1905 Sears revenue grew from $750,000 to $38 million, a factor of 50. By comparison, Amazon has only grown tenfold in the last ten years.
Then Sears moved into brick-and-mortar retail, opening its first stores in existing mail-order warehouses, and then expanding from there, mostly to the suburbs where land was cheap.
At the start of 1925, there were no Sears stores in the United States. By 1929, there were 300. Like Amazon, then Sears began expanding into adjacent businesses, such as car insurance under the Allstate brand. The shift from selling products to selling services is analogous to the creation of Amazon Web Services.
Sears, like Amazon, fueled its growth through efficiency and low prices.
So how does Sears's past predict Amazon's future?
First, the Sears brick-and-mortar business did not diminish its mail-order sales. Just the opposite. Both expanded, and it is probably a safe bet to expect Amazon's e-commerce business will only be helped by a brick-and-mortar presence.
Second, its gargantuan size will make it a target.
Third, will it be able to evolve when technology and the economy change? Sears could not make the transition to the digital age? Will Amazon be able to adapt to whatever comes next?