A century ago, a retail giant that shipped millions of products by mail moved swiftly into the brick-and-mortar business, changing it forever. Is that happening again? “The history of Sears predicts nearly everything Amazon is doing,” writes The Atlantic (Sept. 25, 2107).
In the last 2 years, Amazon has opened 11 physical bookstores. It just bought Whole Foods and its 400 grocery locations, and announced a partnership with Kohl’s to allow returns at the physical retailer’s stores. The company’s corporate strategy adheres to a familiar playbook—that of Sears. Sears might seem like a zombie today, but it’s easy to forget how transformative the company was 100 years ago. To understand Amazon’s evolution, strategy, and future, can we look to Sears?
Mail was an internet before the internet. After the Civil War, the telegraph, rail, and parcel delivery made it possible to shop at home and have items delivered to your door. Americans browsed catalogues for jewelry, food, and books. Merchants sent the parcels by rail. Then Sears made the successful transition to a brick-and-mortar giant. Like Amazon among its online rivals, Sears was not the country’s first mail-order retailer, but it became the largest. Like Amazon, it started with a single product category—watches, rather than books. Like Amazon, the company grew to include a range of products, including guns, gramophones, cars, and groceries.
By building a large base of fiercely loyal consumers, Sears was able to buy more cheaply from manufacturers. It managed its deluge of orders with massive warehouses. But the company’s brick-and-mortar transformation was astonishing. At the start of 1925, there were no Sears stores. By 1929, there were 300. Like Amazon today, the company used its position to enter adjacent businesses. To supplement its huge auto-parts business, Sears started selling car insurance under the Allstate brand. Perhaps the shift from selling products to services is analogous to the creation of Amazon Web Services—or Amazon’s TV shows. The growth of both companies was the result of a focus on operations efficiency, low prices, and an eye on the future of U.S. demographics.
Classroom discussion questions:
- What did Sears do right that Amazon can learn from?
- What has Sears done wrong that Amazon should avoid?
