In the early days of Amazon.com, the confrontation between the e-commerce pioneer and Barnes & Noble was first reduced to a confrontation between online pure players and physical retail, then, after the launch of Barnesandnoble.com, pure online games against “bricks and clicks”. Fast forward a few decades and Amazon had become what Bloomberg technology editor Brad Stone had popularized as “the store of everything” as Barnes & Noble became one of many category leaders in the retail to struggle mightily.
But Amazon has never dogmatically opposed opening a physical store. In 2015, it entered brick-and-mortar retail with the same category that started it all for the online retailer. Rather than filling substantial floor space with physical volumes, the company pursued an organized collection and allowed customers to have books sent to them from its website instead of leaving with the paper product. Amazon tried another version of the curation model with the 4-star store selling an eclectic selection of products that had all been rated four stars on its website (which, if you’ve spent a lot of time shopping on Amazon.com, you know that this is not the case winnow the selection a lot).
At first glance, it seems odd that the company is closing these stores as the threat of COVID-19 continues to recede and the prospect of consumers returning to retail looks its brightest in years. Among many retailers that have succumbed to lockdowns, another Big Tech retail foray, the Microsoft Store, has not survived. However, a lot has changed in Amazon’s retail world since its beginnings in physical retail. On the one hand, the battle with Barnes & Noble over books has been replaced by one with Walmart over just about everything, but especially the $765 billion U.S. grocery market, which has led to the purchase of Whole Foods by Amazon in 2017.
While Whole Foods’ 500 stores may not offer a ubiquitous retail presence, at least compared to Walmart’s 4,700+, Amazon has also dipped into the convenience space with Amazon Go. of this category, 7-Eleven, has more than 9,500 stores. But more than an attempt to compete aggressively with the Slurpees provider, a partner in Amazon’s Locker program, Go was the test bed for Amazon’s Just Walk Out cashierless technology, which the company brought to his latest Whole Foods in Seattle and should appear next in a Whole Foods store in Los Angeles, with others surely on the roadmap. (7-Eleven also experimented with a less technological approach to cashierless checkouts.)
A New York Times article called Seattle’s recent implementation “the complete amazonification of Whole Foods,” but it’s not. As I wrote after the company’s Alexa developers online event last year, Amazon considered how Alexa in the car could be used to automatically notify a retailer like Whole Foods to prepare a curbside drop street and even direct employees (or robots) to the appropriate parking space to load the order. Maybe in a decade or so your car will make the trip without you taking care of a few other errands on your behalf.
For now, with Whole Foods adopting Just Walk Out, it remains to be seen whether the smaller Amazon Go and Amazon Fresh stores will eventually follow the path of Amazon’s other small retail stores. With efforts that include Amazon Locker, its return network of UPS and Kohl’s stores, its own electrified fleet and Flex delivery network, and a future that anticipates both ground and robotic air delivery (the latter still a distant dream ), it is no longer an imperative for the company to build a large geographic footprint.
However, there are at least three reasons why they may stick around for a while. First, these outposts should prove more useful in encouraging consumers to onboard Just Walk Out technology than its first stores did; their focus on perishables is more complementary to Amazon’s online business and generates more frequent transactions than books and products sold in 4-star stores. Second, they could come in handy if Amazon looks to expand its recently launched pharmacy service to customers more comfortable with the idea of picking up medicine in person. And third, they allow Amazon to wedge touchpoints into urban areas that are far too small to accommodate a Walmart.