Amazon Is Planning to Open Brick-and-Mortar Grocery Stores

By Tan, Zhai Yun | The Christian Science Monitor, October 12, 2016 | Go to article overview

Amazon Is Planning to Open Brick-and-Mortar Grocery Stores


Tan, Zhai Yun, The Christian Science Monitor


Amazon is often seen as the disruptor, the company that drove retail sales online and sent brick-and-mortar stores scrambling to innovate. But now there are reports that the e-commerce giant is venturing into the traditional market of grocery shopping - and doing it the old way, by opening physical stores.

According to The Wall Street Journal, Amazon plans to open convenience stores that sell perishable goods such as milk and produce and drive-in pickups for customers who placed their orders online. The company is even developing license-plate reading technology to speed up grocery pickups.

Amazon's project will bring it head to head in competition with Wal-Mart, which is also in the midst of driving up its online sales and offering drive-by pickups for online orders. Competition for grocery sales can be crucial since restocking home refrigerators creates a perpetual market for groceries, and more consumers may be choosing to do so online.

Despite the similarities in its online strategies, the two competitors have one crucial difference: Wal-Mart, which already has a strong physical presence, is embracing digital shopping to catch up with the times, while Amazon, with its online dominance, is recognizing the values of physical stores.

Their strategies may be specific to the food and beverage industry: customers have traditionally been wary of letting others pick their meat and milk, but, at the same time, seek convenience in grocery shopping - such as a speedy pickup on the way home from work.

The ideal situation may be having both online and in-store options, although as people become more comfortable with online purchases, the tide may turn in favor of Amazon's online strategy.

"The U.S. food and beverage grocery market has reached a tipping point, in our view," Cowen and Co. analyst John Blackledge said in an industry report this year, according to CNBC. Mr. Blackledge estimated that as consumers become more comfortable with purchasing groceries online, Amazon may become the seventh-largest food and beverage retailer by 2021.

Amazon's project, known internally as Project Como, is not its first venture in the food and beverage market. Amazon Fresh, a service that delivers fresh groceries for an annual fee, was launched and expanded to several cities in 2013. …

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