Amazon Has Been Silently Building a Grocery Chain

SEATTLE, WASHINGTON/USA - March 31, 2017: Amazon Fresh Grocery Pickup Just Opened For Beta Participant Testing in the Ballard Neighborhood of Seattle.
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The pandemic has wreaked financial havoc on many businesses, but Amazon has found new ways to grow — including opening 11 grocery stores since September 2020, The Seattle Times reported.

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Amazon, which was poised to open several Amazon Fresh grocery stores early last year, turned many of its storefronts into online order fulfillment centers to meet increasing delivery needs as the coronavirus pandemic unfolded.

According to Bloomberg, Amazon plans to open 28 more across the country, though the company has only officially confirmed five of these future stores.

Amazon began selling groceries in July 2006, but the company is only now expanding into physical retail settings. Its Amazon Fresh grocery stores are designed to offer commonly (according to Amazon’s online shopping algorithms) purchased foods and targets both low-income shoppers who might frequent Walmart or Aldi food stores and wealthier buyers who shop at Trader Joe’s or Whole Foods, according to the Times.

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The internet-based enterprise purchased Whole Foods back in 2017, and it’s offering the upscale grocery store’s 365 line inside of its Amazon Fresh locations, according to the Times. When comparing frequent grocery purchases, Amazon Fresh beat out an Albertson store by 20% and was on par with Walmart and Aldi, the Times reported.

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Plans to expand beyond the United States are also well under way, with the first Amazon Fresh store outside of the U.S. having opened in early March. The cashierless store utilizes scales, shelf sensors and cameras to track customers’ items, tallying them all into a digital receipt, according to a CNBC report. Once the customer leaves the store, this digital record is then linked to their Amazon accounts.

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This is the same technology used in the Amazon Go stores opened a few years prior, CNBC noted. Amazon Fresh stores in the U.S. do not currently utilize this same cashierless technology, although the Times reported it’s being tested in an Illinois store. U.S. stores do offer digital price tags and Dash shopping carts that tally up to two grocery bags’ worth of small items as you shop. Using Dash lanes, customers can check out quickly, without waiting in long lines.

Bloomberg has estimated Amazon will need to open at least 500 brick-and-mortar stores to make a notable difference in the industry, although an anonymous former senior employee has said, “Fresh stores are more of an all-in strategy for Amazon. A very strategic, long-term play.”

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About the Author

Courtney Johnston is an Indianapolis-based freelance writer with an emphasis on finance and small business. Her work has appeared on The Motley Fool, Investopedia, Fundera, JoyWallet, The Chicago Tribune, and Benzinga. She's passionate about personal finance and loves talking about money at www.courtneywrites.com.

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