Amazon Wants to Disrupt the Bodega
As part of its push into brick-and-mortar shops, the online retailer plans to start opening its own convenience stores.
First it was books. Then Amazon started selling music, gadgets, household items, and ultimately just about anything you could imagine purchasing at a store. The incredible expansion of its retail offerings ate up businesses by offering customers something that people value above all else (even, it turns out, value itself): convenience.
Now, as if to underscore the point, Amazon is coming for the convenience store.
Having crushed the business of selling books through brick-and-mortar stores only to resuscitate it through its own company-branded stores, Amazon has set out to disrupt bodegas, as part of a much larger attempt to eat the business of selling you things to eat.
You can already buy plenty of tasty food items on Amazon.com, of course. But it’s a much more limited selection than you can find in grocery stores, particularly lacking perishable items. And as the Wall Street Journal points out, people who subscribe to Amazon Prime spend about $2,500 a year with the company—a bit less than half of the $5,500 that each American household spends annually on grocery stores visits.
That’s a gargantuan market—something not lost on the nation’s biggest food retailer, Walmart, which the Journal estimates will sell $140 billion worth of groceries in 2016. Amazon wants a piece.
The grocery business is a low-margin business that’s packed with competitors—Walmart, for example, is getting set to let people order online and pick items up at the curb. Amazon has been experimenting with grocery delivery through its Fresh service for several years now. Citing anonymous sources inside the company, the Journal piece says that Amazon is going to introduce some combination of drive-through grocery pickup at its new stores and same-day delivery of items direct to people’s houses.
But Amazon probably isn’t looking to get rich by just selling people apples. Its plans for alimentary domination are a way to get people into its stores, record their buying habits, and keep them coming back for food and more profitable items. If it works—and, it’s worth bearing in mind, various same-day delivery services have been tried before—it will be a very convenient arrangement.