Despite its phenomenal success, Amazon is at a crossroads. Why? It plans to move further away from its online business model. And open hundreds of physical stores. Does this make sense.
Opening Hundreds of Stores: Amazon at a Crossroads
When it acquired Whole Foods, Amazon’s goal was to facilitate local food and other deliveries. An efficient, cost-effective supply chain was the result. Store sales were a bonus.
The new store openings dig deeper into brick-and-mortar retailing. With its attendants risks and costs. Do YOU think this is a good decision by Amazon?
The news: Amazon is reportedly planning to open department-store-like retail locations, per the Wall Street Journal. The plans are not finalized yet but signal the ecommerce giant’s intentions to further disrupt retail.
The competitive set: In terms of number of stores, other mass merchants and big-box retailers have a serious advantage. Walmart has 4,740 U.S. stores. In addition, its warehouse chain Sam’s Club has 499. Also in the US, Target stores number to 1,914,. While Kohl’s has more than 1,100.
What’s interesting: The square footage of Amazon’s stores will be only a third the size of average department stores — 30,000 square feet, as opposed to the traditional 100,000 square feet.
What we don’t know yet: Which brands will be offered. But it’s almost certain that Amazon’s private-label brands will be featured in some way. Whether any of Amazon’s in-store technology will make it into the shopping experience, like Amazon Go’s cashierless checkout. This is likely, however, given that Walmart was trialing fully cashierless stores in June 2020, per Pymnts.
To learn what analysts think, click the image.