Amazon.com, Inc. is bullish on building physical and grocery stores in the United States. According to documents viewed by Business Insider, the e-commerce giant sees a space for up to 2,000 of its grocery stores over the next decade in the U.S. market. The report also said that the online retailer is planning to open 20 brick-and-mortar grocery stores over the next two years. On Wednesday, the company announced that it has expanded its grocery delivery service to new cities including Chicago and Dallas.
Amazon Grocery Stores
The online retailer started its grocery business in 2007 when it launched Amazon Fresh in Seattle.
Amazon Fresh offers grocery items, and promises the delivery on the same day or the next day, depending on the time of the order and the availability of trucks. For Prime members, the company recently cut the AmazonFresh membership fee to $14.99/month.
Business Insider reported that Amazon wants to setup a 20 grocery stores by the end of 2018. The stores are expected to be opened in Seattle, Las Vegas, New York, Miami, and the Bay Area.
The report suggests that the e-commerce company wants to test different versions of stores in next two years under a pilot program. According to the report, of 20 grocery stores, 10 will be “click-and-collect” drive-up spots for customers to pick up their online orders. The other 10 will be traditional stores where cart-pushing shoppers can stroll the aisles, touching, smelling and inspecting produce and other goods for themselves, the report said.
AmazonFresh allows customers to order a wide range of items, including everything from fruits, vegetables, meat, seafood, baked goods, and dairy products to beauty products and household goods. Customers can place an order in the morning and have it delivered as early as that same evening, or order before going to bed and have the items on their doorstep in time for breakfast the next day.
Amazon Focusing on America’s $800 Billion Grocery Market
Amazon.com, Inc. is building grocery stores and pickup locations to compete with Wal-Mart, which has more than 5,000 stores in the U.S.
The online retailer is moving into the massive $800 billion grocery market. According to the report, it’s expensive to open and run physical grocery stores. The company is slowly expanding its grocery delivery service. So far this year, the company has launched the grocery delivery service in Northern Virginia, Boston, Baltimore, London, and expanded the service in New York, New Jersey, Connecticut, Massachusetts, Pennsylvania, Delaware, Maryland, New Hampshire, West Virginia and areas of Northern California including Oakland, Fresno, Santa Rosa, Stockton, and Walnut Creek.
The e-commerce behemoth is investing money on building pickup locations for groceries, and plans to setup small brick-and-mortar stores to sell milk, meats and other perishable items, according to two unnamed people familiar with the company’s plans.
If the 20-store pilot program is successful, the online retailer could consider opening as many as 2,000 “multi-function” stores across the country over the next 10 years, according to the Business Insider report.
The report notes that the total number of grocery stores has not been finalized and could change. “The documents refer to a proposed 200 store-per-year launch schedule, all supported by a new generation of distribution centers to replenish inventories,” Business Insider reported.
Online groceries account for about 2% of total grocery sales within the U.S., according to IBISWorld. Citing Morgan Stanley Research, the Wall Street Journal reported the online grocery market could more than double to over $42 billion this year.