5 Reasons Amazon Should Buy RadioShack

By Lee Jackson Published Sep 17, 9:55AM EDT

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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.

About the Author Lee Jackson →

Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad and diverse career, which included a stint as the creative services director at the NBC affiliate in Austin, Texas, gives him unique insight into the financial industry and world.

Lee Jackson's journey in the financial industry spans over 30 years, with nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career was marked by his presence on the sell side during pivotal Wall Street events, from the dot.com rise and bubble to the Long Term Capital Management debacle, 9/11, and the Great Recession of 2008. This is a testament to his resilience and adaptability in the face of market volatility.

Lee Jackson’s practical financial industry experience, acquired from a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing on various platforms. This unique combination allows him to shed light on the intricacies and workings of Wall Street in a way that only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.

Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.