Amazon convenience store?

SAN FRANCISCO — Amazon may be looking to open a series of convenience stores, in addition to possible drive-through grocery pickup sites, the Wall Street Journal reported. However, grocery experts say they believe it’s more a targeted marketing ploy than any broad move to become the next 7-Eleven.

The stores would sell a small number of perishable goods such as milk, meat and vegetables, with shoppers able to order non-perishable items such as cereal for same-day delivery rather than immediate pickup at the store, the report said.

That model ties in with reports that Amazon is planning as many as three drive-through grocery pickup sites, two in California and one in its hometown of Seattle. These sites would allow customers to order online, then drive by and get parking lot delivery of their groceries during a set window of time.

Amazon declined to comment. The stock (AMZN) was down slightly Tuesday.

Amazon wouldn't be the first large retailer to try to create their own type of convenience stores. Walmart tried Walmart To Go and Britain's Tesco with Fresh & Easy. In 2006 The Home Depot announced it would open 300 Fuel stores, but only a few actually appeared.

Food and grocery analyst Jim Prevor sees the rumored Amazon convenience stores as more a market research effort than a plan for a major roll out, much as Amazon has opened two brick-and-mortar bookstores, one in Seattle and one in San Diego, with more planned.

“There’s no particular advantage to Amazon to open physical stores. I suspect the lofty multiples they get on Wall Street would not be supported if they suddenly announced they were going to spend millions on brick-and-mortar stores,” Prevor said.

Amazon would effectively have to re-train Americans to shop in very different ways, though admittedly it’s already done that when it comes to buying non-food items online.

Traditional food retailers rely on impulse sales, with shoppers wandering the aisles, often coming out with far more than they planned. Splitting up ordering between fresh items like milk, bread and meat and pantry items like peanut butter or macaroni and cheese isn’t the usual American grocery shopping method.

“The question is, is there some material advantage that they have that would make people to feel it’s desirable to order things from them rather than other places such as their local grocery store?” said Prevor.

Tobacco and hot dogs

Perhaps an even larger question is whether what Amazon is reportedly planning would fit into the American conception of a convenience store at all.

These ubiquitous shops — there are 154,000 nationwide — account for about 34% of all retail sales in the United States, according to Nielsen.

One out of three stores in the country is a convenience store and they do 160 million transactions a day, said Jeff Lenard, spokesperson for the National Association of Convenience Stores in Alexandria, Va.

While extremely popular, those stores are not places where Americans go to buy the next few day’s worth of fruit, veggies, meat and milk.

The number one sales category in convenience stores is tobacco products, which account for about 35% of store revenue, said Lenard. Amazon does not sell tobacco.

Next comes ready-to-eat items, which account for about 20% of convenience store sales and then drinks, which are 15%.  A full 83% of items sold in convenience stores are consumed with an hour. While logistics is an arena Amazon is known for, prepared food hasn’t been, Lenard said.

“It’s not to say that they’re not inventing their own category,” he said, but any Amazon convenience store would likely be a very different animal from the way most Americans think of them today.


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