Amazon's seventh college retail location underscores the online retail giant's desire for a more physical presence.

It probably doesn't look like any store you've ever visited. The brightly lit space includes no shelves, no standing inventory and no checkout. It's likely debatable the location is even a "store" at all.

Yet this 3,500-square-foot space, which hosted a grand opening Friday at the University of Pennsylvania in Philadelphia, serves as another example of Amazon's evolution, as the world's biggest e-commerce company starts building physical locations to draw itself even closer to its millions of customers.

"We see lots of opportunities with this model," Ripley MacDonald, director of Amazon's student programs, said in the store's media center, which includes couches, conference tables and TVs set up with game controllers so students can play "Tetris" on Amazon Prime Video. "We're very excited with the engagement, and we're continuing to invest in it."

Call it a feeder system for future Amazon customers. Colleges provide a densely populated group of educated, wealthier individuals, just the kinds of folks who are most likely to join Prime. Amazon already tries to pull them in by offering six-month free trials of Prime Student memberships, which are just $49 annually after that. Campus stores could fully convert them before they even graduate.

"They just want to hook you when you're 20," Michael Pachter, a Wedbush analyst, said.

Penn benefits because its mail processing operations have struggled to keep up with the growing piles of e-commerce boxes being delivered to the 25,000-student school. Amazon accounts for 40 percent of those boxes, said Marie Witt, vice president of Penn's business services.

"It's definitely been a strain on the system," she said Friday.

It serves as a pickup and drop-off hub for students, faculty and workers. They can order anything from textbooks to toothpaste on penn.amazon.com, then pick up more than 3 million eligible items the same day or the next morning from lockers at the location. That's faster than Amazon's typical two-day delivery window for its general Prime members, who pay $99 a year for unlimited free shipping and other perks. The space is staffed with Amazon employees, who can help with customer service issues, receive and package returns, and even show off new Amazon devices.

Amazon has opened seven campus stores since early 2015, and expects to have 13 total locations open by year's end. At Penn, Amazon is leasing its retail space, but it offers revenue sharing with other partnering schools, such as up to 2 percent of sales to the University of California, Davis.

The company also opened its first bookstore, Amazon Books, in Seattle last year, and there's been plenty of (mostly debunked) chatter that the company could open hundreds more. But for now, the campus stores are the bigger play for the company.

Booking more sales

Though you likely won't see a neighborhood Amazon store pop up, the company will require a bigger physical presence if it wants to keep up its huge growth, said Andy Wong, a partner at consultant Kurt Salmon Digital. In large swaths of the country, Best Buy can still get you a TV faster than Amazon. These stores could help change that.

The Amazon college stores could also put pressure on traditional retailers, which have been struggling with consumers' shift online. One chain that could especially feel the pain is Barnes & Noble Education, which runs a college bookstore just five minutes away from Barnes & Noble Education is still a much bigger player on campuses, operating 748 college bookstores nationwide.

"As the market for educational materials continues to undergo unprecedented change, BNED remains focused on delivering innovative, affordable educational content and tools that drive academic success," Max J. Roberts, Barnes & Noble Education's CEO, said in a statement.

Pick up and go

Penn undergrads Nayadis Couce, 20, and Greg Lewis, 21 -- both Prime members -- came to the opening to survey the new space and offer their opinions on Amazon. Couce exclaimed, "I love Amazon."

"I hate waiting," Lewis said. "With this, if I order it by a certain time, I can get it the same day, guaranteed. And I love that."

Since pulling in college students early seemed like a sensible idea, one is left to wonder if Amazon might try to go after even younger customers, perhaps opening stores at elementary schools.

"I don't know that I want to specifically speculate with what we do next," MacDonald said, but he added with a laugh that elementary schools aren't a high priority.

Source:
courtesy of CNET

by Ben Fox Rubin

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