Amazon gets physical to boost online sales

Online retailer Amazon plans to build five new warehouses in three states to cut delivery times, in the hope of boosting sales. Here, Employees of Amazon.de, the German branch of Amazon.com, sort books into parcels ready to be sent to the clients.

David Brancaccio: There are bricks and mortar and there is the online retailer Amazon. Now, masons are hard at work building actual warehouses for Amazon in Virginia, Tennessee and South Carolina. It's about faster delivery that also may allow Amazon customers to go pickup their stuff. Sally Herships has more.

Sally Herships: I don't want to sound creepy, but Amazon wants to get closer to you.

Ben Schachter: The closer they can get to their consumers with their goods, the more efficient it is for them in terms of lowering their own costs to ship those goods.

Ben Schachter is an Internet analyst with Macquarie. He says Amazon's move could also make customers happier. They'll get their packagers faster. And even a day quicker could mean the difference between Amazon getting business or a shopper going somewhere else.

Retail consultant Burt Flickinger.

Burt Flickinger: It can give Amazon an extra two to three to four days worth of business which can be worth billions of dollars.

But when Amazon builds in the physical world instead of online, states often try to tax its sales. That's why the company closed a warehouse in Texas. Now, Amazon appears to be betting that the benefits of more business will outweigh the costs of any future tax.

In New York, I'm Sally Herships for Marketplace.

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Sally Herships is a regular contributor to Marketplace.
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Faster don't cut it for me with Amazon, price does! and getting closer to me would mean that the tax saving would go away everytime "my item" is available at my local distribution center.

It's like when I buy online at Walmart, Best Buy or Toys R'Us to mention a few that offer "buy-online-pick-up-at-store" services. They work great, for the most part, but only if you need something right away. Otherwise, you don't save anything. Except maybe the annoying sales representatives posted at those stores by their employers (refering to, for example, DirecTV at Best Buy stores)...

Expansion is good! but in this way, Amazon will have to improve their price policies and get even lower in order to really prefer to use them as I do today.

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