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Wyoming Business Tips for Sept. 7-Sept. 13

August 29, 2014

A weekly look at Wyoming business questions from the Wyoming Small Business Development Center (WSBDC), part of WyomingEntrepreneur.Biz, a collection of business assistance programs at the University of Wyoming.

By Mike Lambert, Wyoming Entrepreneur Market Research Center manager

“I’ve heard on Wyoming Public Radio that Amazon is starting to move into ‘brick and mortar’ retail. Is this true, and what does it mean for a Main Street retailer?” Rosalie, Casper

It is true that Amazon appears to be moving slowly to position itself in traditional retail.

Although Amazon is a dominant force in online retail, experts say that traditional “brick and mortar” stores still account for between 85 to 95 percent of all purchases. For years, Amazon has been looking at ways to expand its market share, and it appears that working on Main Street may be the latest effort.

This doesn’t mean that you’ll be seeing Amazon stores cropping up next week in Casper. It appears that the Amazon strategy is to gain a foothold by working with small retailers. Their first salvo was announced in late August, with the launch of a new, inexpensive, in-store credit card reader.

Selling for $10 on amazon.com, this reader competes with companies like Square and offers an initial fee of 1.75 percent on transactions through Jan. 1, 2016. The device works with iPads, iPhones and newer Android phones. The $10 cost is offset by a credit toward the first $10 of processing fees. The real news is that the transaction fee at 1.75 percent is significantly lower than existing competition which runs around 2.75 percent. This can have a significant impact on a small retailer’s bottom line.

Jason Del Rey, of the website Re/code, indicated that Amazon’s next step might well be to work with small retailers to convince them to sell online via Amazon.com. With Amazon’s huge logistic presence and its ability to handle online orders, this could well be a good way for a small business to expand its online presence.

This appears to be a long-term strategy for Amazon. In order to deepen relationships with the country’s mom and pop shops, Amazon will likely expand into offering point-of-sale software, inventory tracking tools. In exchange, Amazon could rely on these stores as customer pickup locations and as hubs to support their same-day delivery plans. This might be profitable for local retailers, but it will require stores sharing inventory data with Amazon.

None of this is going to happen quickly and, for it to even move to the next stage, Amazon will have to first convince businesses to use their card readers and checkout software.

Del Rey, who follows Amazon, has interviewed former Amazon employees as well as industry leaders about this move.

“Broadly, they said the world’s largest online retailer aims to make it easy for a wider array of brick-and-mortar shops to sell on Amazon while giving Amazon shoppers another way to receive orders on the same day they are purchased. The move would extend Amazon’s reach far beyond the virtual checkout aisle to the real ones in your neighborhood,” Del Rey writes.

Only time will tell whether this move will be good for Wyoming business.

A blog version of this article and an opportunity to post comments are available at http://wyen.biz/blog1/.

The WSBDC is a partnership of the U.S. Small Business Administration, the Wyoming Business Council and the University of Wyoming. To ask a question, call 1-800-348-5194, email wsbdc@uwyo.edu or write 1000 E. University Ave., Dept. 3922, Laramie, WY, 82071-3922.


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