Retail

5 Reasons Amazon Should Buy RadioShack

As the clock winds down on RadioShack Corp. (NYSE: RSH), ever more of the Wall Street firms that we cover are weighing in, not only on what the end result may look like, but options for other companies to take advantage of the demise of the once ubiquitous electronics retailer. On Tuesday we covered how Best Buy Co. Inc. (NYSE: BBY) could benefit from a sales increases if RadioShack goes out of business.

In an even bigger leap of possible scenarios, Robert Peck an analyst and CFA at SunTrust Robinson Humphrey says that Amazon.com Inc. (NASDAQ: AMZN) should either buy RadioShack or at least participate in any potential reorganization of the company. While at first glance the proposal seems farfetched, on closer review the thesis makes good sense.

Here are the five reasons that Amazon should consider buying some RadioShack stores, according to the team at SunTrust.

1) There are no current tax laws that would prevent such a move. Amazon avoided local exposure in the past due to tax laws that have now changed and are not a factor.

ALSO READ: What Will Happen to RadioShack’s 5,000 Stores If It Goes Bankrupt?

2) Amazon has already turned the corporate focus to a more local presence. The Amazon Fresh grocery delivery service is an example of this foray into the local.

3) They can showcase new products and services. Customers could come in and see the products, rather than view them only online. Amazon could use the footprint of smaller stores to actually display Kindles and the new Amazon Fire phone offering. This would give customers the chance to actually view and test out devices. It also would give the employees the chance to educate potential customers on Amazon products and services, much as the employees in Apple Stores do.

4) Improved pickup and distribution could be a huge reason to do this. The SunTrust analyst is right on when he points out that RadioShack turned Amazon stores could combine to do customer pick-ups and be local outlets for courier product storage and deliveries. They also could become a loading zone for the Amazon drone delivery initiative, if it takes off big.

5) The local positioning could set up Amazon to dramatically increase third-party sales. Third party sellers may be more inclined to increase inventory with Amazon if they felt that products being available on a local basis would be more attractive to potential customers. It could increase third-party sales, make the customer experience better and contribute to Amazon’s margins.

ALSO READ: Jefferies Has 5 Big Internet Stocks to Buy for the Rest of 2014

The SunTrust analyst is the first to admit having no direct knowledge whether Amazon is considering any sort of RadioShack opportunity before, during or after the possible end of the company. However, Peck makes an excellent final point. Nobody in their right mind could have ever imagined an Apple Store 13 years ago, so an Amazon retail store is not that farfetched when you think about it.

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