Amazon Unites Online and Physical Stores in Major Retail Shift

Amazon has been in two places for its retail business. One, is online, where it can handle huge varieties of products and warehousing and fulfillment for the third parties that are responsible for the majority of its box shipments. The other, opening some physical locations, the entire Whole Foods chain, and Amazon “locker” locations so consumers can pick up and return products.Now the retailer is trying to bring the two sides together more seamlessly, according to the Wall Street Journal.The Journal said that Amazon wants to create one-stop locations for shoppers to find a wide range of goods. It’s an attempt to be more competitive with the likes of Walmart, Target, and Kroger, which have used the approach for years now.Coresight Research told the paper that Amazon wants to expand its slice of the approximately $1.3 trillion in U.S. sales the grocery sector saw in 2023, according to Census Bureau figures.Amazon is behind the physical reach of its competitors. Whole Foods claims more than 500 locations across North America and the U.K. They typically range in size. There are 60 Amazon Fresh locations, according to Grocery Dive. Compare that to Walmart’s 5,205 stores in the U.S. and 1,963 for Target. Kroger has 2,722 grocery stores, under its name and other brands it has.Amazon is outclassed in reach and while it is the largest online retailer in the U.S., Some of these competitors have significant digital operations.In 2021, Slate thought it identified why Amazon bought Whole Foods — as a way to learn about the grocery industry and then use the knowledge to launch a bigger mainstream grocery brand. Amazon Fresh was supposed to be the stalking horse for expansion and Amazon was supposed to provide same-day grocery delivery across the company.Expanding delivery was certainly part of the plans, but a massive expansion didn’t happen. As of September 24, 2017, before the Amazon acquisition, Whole Foods had 470 stores in North America and the U.K. Not that large an expansion in seven years, although Amazon’s way of providing the number of stores does obfuscate details.According to the Journal, Amazon is starting to fulfill delivery orders for Whole Foods through 26 of its Amazon Fresh fulfillment centers, with plans to add more. A Whole Foods store in Plymouth Meeting, Pennsylvania reportedly is getting a micro fulfillment center that will let customers order Amazon Fresh-type products online while shopping at Whole Foods and then get the other products at checkout.Amazon has proven capable of moving in one direction to build distribution, like during the pandemic, and then back off and change directions when conditions demand. The company currently looks like it’s using Whole Foods and Amazon Fresh locations to act both as shopping location and last-mile inline distribution to extend the flexibility of its decentralized warehousing. Whether they continue will likely be a continuing experiment, depending on the shifting economics of CRE, the efficacy of the entire product management and delivery, and the tastes of customers.