Reports indicate that Amazon is looking to purchase some of the liquidated Toys R Us stores in order to open checkout-less Amazon stores.
Toys R Us made a major mistake in the early 2000s. Instead of investing in its own ecommerce site to sell toys, it inked a 10-year deal with Amazon to become that site's exclusive toy seller.
The result was that customers became more and more comfortable with buying toys online and away from Toys R Us retail locations.
Now that Toys R Us is being forced to liquidate its American holdings, it is pretty poetic that Amazon -- the company largely responsibile for Toys R Us's downfall -- is considering purchasing some of the struggling toy seller's storefronts.
But don't start celebrating quite yet. Amazon isn't interested in saving the Toys R Us brand. The ecommerce giant just wants the retail space.
Amazon has already purchased Whole Foods, giving the company control of 440 grocery stores. Word is that they are looking through the list of Toys R Us locations to find a handful of properties to launch Amazon retail stores.
The company's vision is to sell some of the website's most popular items, including the AmazonBasics line of products, in brick-and-mortar stores. The company's vision is for these storefronts to be checkout-less. Individuals with Amazon Prime accounts would be able to walk into the store, pick the products they want, and walk out without having to deal with a register. Sensors would recognize the Amazon Prime account holder and charge the products to the credit card they have on file. While typical book stores are struggling to survive in the ecommerce age, Amazon has long sought to open up its own bookstores as well. Purchasing Toys R Us locations for cheap could allow the tech giant to devote at least some of the floor space to book sales.
The company has already tested the checkout-less store model with their smaller Amazon Go store in Seattle, Washington. Digital sensors recognize when products are taken off the shelf (or returned to the shelf) and automatically charge Amazon Prime shoppers for what they have in their carts or baskets. While these small convenience stores have mostly focused on on-the-go food, purchasing even a handful of Toy R Us's storefronts would allow the company to expand their concept even further.
Expanding to brick-and-mortar stores would also allow Amazon to save on shipping by offering cheaper and/or faster ship-to-store options. Even just a fraction of Amazon Prime customers choosing to pick up products in stores instead of shipping them directly to their homes would save the company millions of dollars.
Spokespersons from both Amazon and Toys R Us have declined to comment on the reports. While it is largely believed that Toys R Us will have to close all of its American storefronts, the company has so far only committed to liquidating around 700 stores. They haven't decided what to do yet with their most profitable 200 locations. Whether they are allowed to keep those stores open will largely depend on the restructuring deal that gets struck with the company's lenders.
If Toys R Us is able to keep its most profitable locations open, it could make it harder for Amazon to sweep in, as the store's retail locations up for sale would be less desirable.