Amazon.com, Inc. is betting big on physical stores. The company is opening bookstores, convenience stores and curbside pickup locations in the US. According to a report from Bloomberg News (via The Globe and Mail), the e-commerce behemoth is spending big money on building pickup locations for groceries, copying a strategy embraced by its chief brick-and-mortar rival, Wal-Mart Stores, Inc. . Amazon 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. Wal-Mart is working to bring the pickup service to nearly a quarter of its roughly 4,600 U.S. stores by the end of next year.
Amazon Grocery Business
Amazon started experimenting with the grocery business in 2007 when the online retailer launched AmazonFresh in the Seattle area. AmazonFresh is available in seven U.S. cities and London. The service 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 reduced the AmazonFresh membership fee to $14.99/month.
According to the reports, the e-commerce titan is planning to open the grocery stores exclusively for members of the company’s Fresh subscription service. The company is opening drive-in locations to bring online grocery orders to the car. According to the report, the online retailer is working on license-plate reading technology to speed wait times. Shoppers will be able to use their smartphones or screens at the shops to place their orders.
Citing unnamed people, The Wall Street Journal earlier reported that the e-commerce company is likely to open the convenience stores next year. It is looking for locations, according to the people familiar with the company’s plans. They expect the e-commerce giant to open its first drive-in grocery location in Seattle within few weeks. According to planning documents discovered by GeekWire, the company selected a location for new drive-up grocery location in Seattle.
Amazon Looking Direct Threat to Established Players
Amazon is bullish on the U.S. $800-billion grocery market. With grocery stores and pickup locations, the company is taking aim at grocery discounters as well as Wal-Mart, which is expanding its own pickup sites.
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.
“We know their best customers are willing to buy groceries online,” Cowen & Co. analyst John Blackledge was quoted as saying by Bloomberg. “The onus is on Amazon to deliver because the demand is there.”