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Amazon Is Following the Sears Playbook—But Can it Avoid Making the Same Mistakes?

September 25, 2017, 5:04 PM UTC

Amazon, born online, has recently made a big move into physical retail with its acquisition of the Whole Foods grocery chain. That transition from sending products through the mail to brick-and-mortar replays the path of the 20th century’s defining retail giant: Sears.

The parallels between Amazon and Sears go much deeper, though, as Atlantic senior editor Derek Thompson explores in a comprehensive new rundown of Sears’ past—and Amazon’s possible future. Here are the two giants biggest similarities.

Mail Was the Internet

Believe it or not, in the late 19th century, the good old U.S. mail was still something of an innovation. The spread of telegraphs, railroads, and pre-paid postage made communication and delivery cheaper than ever before. That opened the door for the Sear’s Catalog, the of its day. Sears was founded in Chicago in 1893—almost exactly 100 years before Amazon was founded in Seattle, in 1994.

From Stamps to Bricks

Sears, like Amazon, started by focusing on a single product category. Amazon’s was books, while Sears had its roots in the watch business. Sears steadily expanded into more product categories, and built a huge network of warehouses to distribute goods. Sound familiar?

Then, thirty years later, Sears did something that at the time might have seemed audacious—it started building physical stores. Amazon is ahead of the clock on that one: it first started building physical locations in 2015, only 22 years after its founding.

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The Big Data of Yesteryear

When Sears started building stores, it relied on what today’s business lingo would call “Big Data,” but back in the early 20th century, that meant the U.S. Census. Sears built stores where the census predicted growth, primarily in the South, Southwest, and Western United States. Amazon’s use of data might seem very different—it uses web browsing habits to predict what shoppers want, regardless of where they live. But the basic business principle is the same.

Days of Future Past

Sears became dominant by making many of the same moves that are helping Amazon grow. But then Sears stumbled, and these days it’s a bleak shadow of its former self. Can Amazon, twenty or fifty or a hundred years from now, avoid following the same path? It’s a huge question, but there are two clear points.

Perhaps surprisingly, one of Sears’ biggest mistakes was letting its stores get shabby. Amazon, after buying Whole Foods, has slashed prices there, but if history is a guide, it should be extremely cautious about downgrading the shopping experience.

Sears’ other, more ironic mistake was failing to anticipate that the internet would rejuvenate the mail-order paradigm that Sears itself pioneered. It’s nearly impossible to know what retail will look like as little as 20 years from now. But it’s clear that Amazon, even as it expands into tried-and-true storefront models, can’t afford to overlook what’s coming next. So far, though, the company’s openness to seemingly crazy ideas bodes well.