Is RadioShack’s Trash Amazon’s Treasure?

Poor RadioShack is getting it from all sides. Trading was halted earlier this week, and as the stock price has slid from over $23 in 2010 to 59 cents now, business and technology journalists have been eulogizing the firm with great energy.  Some of them wax poetic about the good old days, when hobbyists like Steve and Steve  used to hang out there and buy the bits and pieces that they spun into giant new industries. But other people have been asking: why has it taken so long?  Who buys anything at RadioShack anymore?  We all know that the last decade has been a tough one for bricks-and-mortar electronics retailers.  Circut City closed its last store in 2009.  Why is RadioShack still here?

RadioShack is still here because it has been able to outperform competitors in one vital Value Dimension.  But the latest chapter in the story has an interesting twist. It looks like RadioShack’s killer is missing the one thing it needs to deliver the final blow – and that one thing could be RadioShack itself.

For a company to have any market share, it has to outperform competitors in some way, for at least some customers, at least some of the time.  (Technically, it needs positive Delta V in at least one Value Dimension – see Delta V and The Innovator’s Secret Formula if you want to dig into the details of how it works.) Over its 9-decade history, RadioShack has performed well in many different Value Dimensions.  But in recent years its primary differentiated advantage was ubiquity: with over 7.000 stores, you are never far from one.  So if you need a cable or unusual battery or another electronic accessory RIGHT NOW you can always get it at RadioShack.  For the last few years, this has been the one Value Dimension where RadioShack has had the lead.  It didn’t have the best prices (Amazon), it didn’t have the best selection (Amazon again), and it wasn’t a cool place to shop (Apple), but if you needed something right this minute you could probably get it at a RadioShack store nearby.

RadioShack’s lead in this dimension is eroding.  I now get free two-day shipping from Amazon on pretty much everything.  And one-day shipping is not that expensive.  And now I can get same-day delivery from Google Express.  RadioShack’s lead in it’s last Value Dimension is slipping away.

But the lead has not slipped to zero – yet.  Which made my ears perk up when I read this in the Wall Street Journal:


Amazon to Open First Brick-and-Mortar Site

The New York City Location to Handle Same-Day-Delivery Inventory, Product Returns


And this in the New York Times:


“…within the next 12 months Amazon will be opening hundreds of “dark” stores, which are places where people can pick up things, or make a “transformative acquisition” along the lines of Best Buy or Radio Shack.”


What? Amazon buying RadioShack?  So it can open “dark stores” to provide “same-day delivery?”

Sure it is just a rumor, but think about what it means.  RadioShack’s last advantage was being able to satisfy the I NEED IT RIGHT NOW customer.  Amazon has eroded that advantage by providing two-day and then one-day delivery.  If Amazon could offer same-day delivery, RadioShack’s last advantage would be gone.  But same-day delivery requires a local presence throughout the country.  Amazon does not have that.

But there is somebody who does have it, lots of it, and a market cap under $70 million. So what’s the cheapest, fastest way for Amazon to acquire the infrastructure it needs to offer same-day delivery?  Shake out some pocket change and pick up RadioShack.

 

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