Amazon To Setup Convenience Stores And Curbside Pickup Locations To Bolster Grocery Sales

Amazon is already the largest and most popular one-stop online shopping destination, but why stop there? The mega e-commerce site is turning its attention to the brick-and-mortar category with plans to open convenience stores where it will grocery items such as produce, milk, meat, and other perishables, along with curbsite pickup locations.

Anonymous sources with inside information on Amazon's plans tell The Wall Street Journal that shoppers will use their smartphones and perhaps strategically placed touchscreen kiosks located around the stores to order the groceries they want. The sources also say that customers could order peanut butter, cereal, and other items with longer shelf lives and have them delivered on the same day.

Amazon Fresh
Image Source: Flickr (Andrew Nash)

This is a new venture for Amazon, though not completely out of its wheelhouse. In select locations, Amazon already taps neighborhood shops and restaurants through its Fresh subscription program for same-day delivery of food items, a service that now costs $15 per month. But opening grocery stores of its own is a bigger deal, one that's intended to appeal to customers who prefer to pick out their perishable items in person.

Grocery shopping is a big business. Around a 20 percent of consumer spending is on groceries, though online shopping only accounts for a sliver of that—around 2 percent in the U.S. By expanding into groceries, Amazon could become a major force and eventually challenge Wal-Mart as the top food and beverage retailer in the U.S. As it stands, Wal-Mart is the only one with a double-digit share of the grocery market, accounting for 17.3 percent, or nearly $140 billion. Kroger is the next highest at 8.9 percent.

Amazon has done exceptionally well online, though it's been focusing increasingly on brick-and-mortar opportunities. It opened its first bookstore in Seattle last year with plans to roll out more, and now it's looking to open convenience stores. We'll have to wait and see what effect this has on mom-and-pop locations, many of which have already closed up shop in favor of big box retailers.