Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Wed Feb 4 2015 14:30:40

Amazon May Acquire the Cockroach of Retail

By: Ina Steiner

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Amazon may be interested in acquiring RadioShack locations after the retailer files for bankruptcy, according to Bloomberg.

RadioShack has been referred to as the "cockroach of retail" for its ability to survive in a tough environment. Former ad executive and current marketing consultant Will Burns said of the chain in this Forbes column from 2012, "Somehow, despite the odds stacked entirely against them, and despite much bigger, seemingly more relevant competitors like Circuit City, they continue to plug along with their high-margin plugs."

But RadioShack is now facing bankruptcy. Bloomberg isn't actually saying Amazon is interested in the RadioShack business - rather, it's interested in acquiring the RadioShack locations:

"Amazon has considered using the RadioShack stores as showcases for the Seattle-based company's hardware, as well as potential pickup and drop-off centers for online customers, said one of the people, who asked not to be named because the deliberations are private."


As of the beginning of 2014, RadioShack operated 4,297 U.S. company-operated stores under the RadioShack brand located in strip centers and major shopping malls, as well as individual storefronts, according to filings with the SEC.

However, RadioShack doesn't own its store locations, it leases them. From its filings with the SEC under "Lease Commitments":

We lease, rather than own, all of our retail facilities. Some of these leases are subject to renewal options and provide for the payment of taxes, insurance and maintenance. Our retail locations comprise the largest portion of our leased facilities. These locations are primarily in strip centers, major shopping malls and shopping centers owned by other companies. Some leases are based on a minimum rental plus a percentage of the store's sales in excess of a stipulated base figure (contingent rent). Certain leases contain escalation clauses. We also lease a distribution center in Mexico, our corporate headquarters, and automobiles.

Does it makes sense for Amazon to operate 4,000 retail locations, and if so, how should they use them? As showcases for its hardware; hubs for same-day delivery (and don't forget, drones are coming); locations for pick-up lockers or a pick-up and drop-off counters?

Back in September, Bob Peck of SunTrust wrote:

"We think Amazon should consider buying some of the locations in bankruptcy for several reasons: 1) No tax law issues; 2) Amazon is already focused on local; 3) Showcase Amazon products and services (launch new services); 4) Improve pickup and distribution; 5) Broader ecosystem lift."

Do you think Amazon will eventually open retail locations of any kind, and what would you advise them to do?

PS: Amazon has already shown interest in B&M stores, this week it announced the grand opening of Amazon@Purdue, its first-ever staffed customer order pickup and drop-off location on the campus of Purdue University.

"Purdue students now have a new convenient option for receiving textbooks and other college essentials, all with the same great prices they find every day on Amazon, as well as a hassle-free way to return textbook rentals and other orders. Additionally, Amazon Student and Amazon Prime members at Purdue get Free One-Day Shipping on textbooks shipped to the West Lafayette campus area and are also eligible for Free One-Day Pickup on over one million items when shipped to the new Amazon@Purdue location."




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by: sasikat9 This user has validated their user name.

Wed Feb 4 16:35:02 2015

I don't think Amazon will want the one near me as it is out in the boonies and 10 miles from the nearest gas station.

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This user has validated their user name. by: Ric

Wed Feb 4 17:55:44 2015

I can think of a few reasons Amazon might want to acquire Radio Shack.

The retail locations would serve multiple purposes - B & M retail for Amazon products, Pick up locations for Amazon buyers, maybe even an in person return location as a convenience and a method to reduce return postage expense.

The name Radio Shack may not have much value, but their supply chain of electronic parts and technology products would be ready made for Amazon to expand their retail business overnight.

Radio Shack might come at a bargain, but the tough question for Amazon will be - can they generate enough business in these retail locations to justify the expense of acquiring them and the rents due to continue them?

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This user has validated their user name. by: Ed Gadfly

Wed Feb 4 18:18:44 2015

Free batteries are a bad business tactic?

Hounding customers for phone numbers alienates them?

If RadioShack is a cockroach, I nominate eBay for dung beetle status.

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by: gizmo This user has validated their user name.

Wed Feb 4 18:22:52 2015

I think they could do well with radio shack , bringing them full forward into ecommerce , & as stated , could have multi purpose uses for stores. Also bring the prices down to reality. Radio shack is pricy.
I got my electrical cleaner there , when I could find one still open. Amazon could give em wings.

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This user has validated their user name. by: Marie

Wed Feb 4 20:53:55 2015

@ Ed Gadfly

I think you missed the point of why they are called a "cockroach".  It isn't because it is an unwanted bug, but because it can survive against all odds.  Which is what Radio Shack did for YEARS beyond anything I thought they would ever be able to do.  That strength is what got them the nickname.  It is not an insult it is a compliment to the management of the company.

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by: TomH This user has validated their user name.

Wed Feb 4 21:30:59 2015

If they also allowed me to give them my FBA items direct at one of the stores, then I'm all for them buying Radio Shack. Other than that, I could not care less.

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by: I Must be Crazy This user has validated their user name.

Wed Feb 4 23:24:40 2015

I think this could be a huge step forward for Amazon. It could provide a level of differentiation that will take them well beyond all of their competitors. These locations could be used as dropoff and pickup points for any Amazon purchase. That would be great for both buyers and sellers. I could sell an item and dropoff at my location to be sent to my buyers' location. And all of it at minimal cost or free?? Amazon could have their items on display for the customer to view while there doing a pickup or drop off. There is no need to attract customers because they are already there! The idea could be a major win for them. I wonder how Ebay will respond if this were to actually happen. I am sure Ebay managers will follow (as they always do) with some pieced together alliance with a nationwide retailer. Although I do recall they had some sort outlet in the past that didn't work very well.

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by: Ebay Seller-Ebay Buyer This user has validated their user name.

Thu Feb 5 00:12:18 2015

Amazon should buy out ebay instead. Just get rid of listing fee and lightly bump final value fee and ebay will have it's best year in a dozen years. Ebay has copied a lot from Amazon except for dropping listing fees, which is why so many ebay sellers have quit ebay and joined Amazon and other sites

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by: SparklyEyes7 This user has validated their user name.

Thu Feb 5 00:24:42 2015

Oh darn!  There's a Radio Shack just down the street.  I may only buy things there a few times a year, but it saves me a trip to the burbs!

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by: BB2 This user has validated their user name.

Thu Feb 5 01:42:37 2015

@ Marie
@ Ed Gadfly

You are correct, Marie. Your attention to detail is rarely outdone. But, I gotta say Ed's comment made me laugh out loud, just the same. :)

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This user has validated their user name. by: Marie

Thu Feb 5 02:41:14 2015

@BB2

Yes, it made me laugh too.  I should have stated that too as it was my initial reaction.

And thank you for the compliment.  

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This user has validated their user name. by: Philip Cohen
Web Site

Thu Feb 5 03:21:07 2015

If anyone wants to read a bit of light comedy, presumably mostly direct from the eBay Dept of Spin, about eBay, read this new "TIME" article ...

"The Rise and Fall (and Rise and Fall) of eBay"

http://time.com/3695714/ebay-rise-and-fall/

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This user has validated their user name. by: Rexford

Thu Feb 5 06:59:12 2015

Philip, I'm actually disappointed with the article, but the US press never seems to report the full story or dig very deeply.

And yet another reporter trots in ChannelAdvisor for their two cents worth. (no bias towards enterprise there--insert sarcasm)

We all know who ruined this company.  The reporter mentions the "addition" that was eBay. What was that addiction pray tell?  Could it have been the draw to the unique items that one could find on eBay?  No wonder buyers have moved on.  They are bored. Guess who brought on enterprise retailers and made it a boring place to shop?

In my opinion, JD never grasped what made eBay special.  The reporter didn't seem to grasp it either.

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This user has validated their user name. by: Rexford

Thu Feb 5 07:00:20 2015

And I meant "the reporter mentions the "addiction" that was eBay.

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This user has validated their user name. by: Al G

Thu Feb 5 09:55:06 2015

Sorry, gotta laugh, when I saw ''Amazon@Purdue'' above I had visions of Oven Stuffer Roasters being dropped onto your deck by drones (sort of like WKRP's Thanksgiving stunt involving dropping turkeys from a helicopter.

That said,

The Time article was pretty much spot on (for the nowadays Time) in describing the rise of eCommerce and competition. Particularly accurate was the ''one of many shingles'' sellers hang out. That alone probably accounts for the flattening of the growth curve.

What was not mentioned was the miserable policies foisted on the sellers encouraging them to seek alternate venues, but the author tried to keep the article relatively upbeat.

The other hint of eBay's woes was a reference to dated web design. What the author did not mention is the woeful less than mediocre programming staff and management eBay seems to employ. Just another brick in the wall.

Well, that's my 10th grade book report for this week. Watch out for the snap quiz on Friday.....

Peace, love & Cherry Garcia.

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This user has validated their user name. by: Basset

Thu Feb 5 10:04:32 2015

''RadioShack has been referred to as the ''cockroach of retail'' for its ability to survive in a tough environment.''

So... the term might also apply to sellers on certain venues.


But then at some venues the environment is taking on the feng shui of a Roach Motel (remember those?)

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by: a_c_green This user has validated their user name.

Thu Feb 5 11:10:06 2015

I just want to see _someone_ do _anything_ necessary to keep Radio Shack up and running. I can think of no other place to go for obscure little electrical bits and pieces, especially things I need for vintage restoration work, but I also know that the income stream they get from me wouldn't keep their lights on for a day, so anything that helps to prop them up is fine by me.

I have to say also, though, that they'd always seemed a slightly odd organization. In previous decades they were notorious for not wanting to sell _anything_ without pestering you for your name and address for their mailing list. Their in-house brands such as ''Realistic'' sounded like some basement hobbyist's idea of an impressive title. Their weekly newspaper fliers included an actual editorial feature (''From the Chairman's Desk'' or some such title) filled with ludicrous arch-conservative pontificating about current political topics of the day. What the in-house corporate environment must have been like back then, I can only guess.

Our local branch also, to this day, seems to specialize in 100% employee turnover on a seemingly monthly basis; you never see the same salespeople twice in there.

Nevertheless, I need them for their parts, not their politics, and for that they've been doing fine; I just hope they continue to do so.

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by: Eric Saeger This user has validated their user name.

Thu Feb 5 11:31:55 2015

Logistically, buying up the Radio Shack locations might be another good step for Amazon toward total autonomy. The one down the street has probably 1000 square feet, which is probably too small in the great scheme, but I suppose they could use overstock trailers or somesuch.

regardless, they could start to have shipments centralized there and simply deliver the items with a few guys with vans for a ship fee or have customers pick them up.

Taking this to logical conclusions, I'm sure Alvin Toffler would see this as one more nail in the coffin of the USPS. Thing that concerns me is Amazon's potentially getting a monopolistic grip on items shipped through the mail.

Meanwhile, in San Jose, eBay is back working on their previously failed catalog.  Chuckle.

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by: Grandma_Fish This user has validated their user name.

Thu Feb 5 11:45:47 2015

I think it would be a great move for Amazon. A few of Amazon's projects have failed over the years, such as the infamous Fire Phone. But they've always moved on gracefully to the next project. I could see this one being successful. We no longer have a Radio Shack in our town. It closed a couple of  years ago, but I would certainly have utilized it as a pickup station for purchases and also to check out their showcase. There is another Radio Shack about 30 miles up the road from here and it'd be worth a drive to pick something up at my convenience rather than waiting for a UPS delivery.

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This user has validated their user name. by: iheartjacksparrow

Thu Feb 5 12:05:30 2015

If all the Radio Shack locations close, I wonder if the TRS-80 I still have will be worth something.

I hope, as one report stated, that Sprint would co-partner with Radio Shack to keep some of the stores open. A few times a year I need a part that only Radio Shack carries (at least as far as a B&M locally), and I'd hate to see them all close. I do remember back in the late 1970s when all the computer nerds (most of my friends) made Radio Shack their second home.  

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