The economics of Amazon investing in brick and mortar retail shops is complex, and largely dependent on the nature of the investment. Generally speaking, Amazon is looking to use brick-and-mortar retail stores to expand their existing online business. In this case, they are able to capitalize on the consumer benefits of physical retail, while utilizing the scalability and cost efficiency of their online model.
Fundamentally, this investment is an attempt to capture a larger market share in physical retail. Amazon can use their existing online model to provide customers with access to a vast selection of products, and can then use physical retail stores to emphasize the convenience of buying and picking up products in person. Furthermore, Amazon can use the physical presence of their stores to build brand recognition and loyalty, as well as increase their presence in the local retail environment.
From an economic standpoint, Amazon's investment would likely increase their profitability by leveraging their already established marketplace. This could include increased revenue from additional sales, increased market share, and an improved customer experience. Additionally, Amazon could use their physical stores to improve the convenience of ordering products and reduce shipping costs, as well as to attract additional customers through discounts and in-store promotions.
Overall, Amazon's investment in brick and mortar retail stores represents a shift from an online-only model to a hybrid online/offline model. This investment could provide Amazon with a larger share of the retail market, while also providing the company with access to the benefits of the physical retail environment.
