Discount stores

Amazon explored opening home goods and discount electronics stores

In its search for additional growth after achieving dominance in many online retail categories, Amazon has built a major brick-and-mortar operation in recent years, starting with a chain of bookstores, which debuted in 2015 in an upscale Seattle. mall.

Amazon Go, a convenience store without cashier which uses cameras and other sensors to track what shoppers take off the shelf, opened to the public in 2018. Much like Amazon 4-Star, an electronics, household goods and toy bazaar that sells a potpourri popular and best-selling items. Amazon Fresh began opening stores last year and added new locations to a stable clip.

Amazon now operates 96 brick-and-mortar stores and seven pop-up malls under its own brand, according to its website. Whole Foods Market, acquired in 2017, has more than 500 grocery stores.

The stock of a potential outlet would likely be similar to that of a 4-star, emphasizing smaller items that don’t take up a lot of floor space, such as housewares, electronics , toys, baby products and kitchen items, the people said. The outlet probably wouldn’t stock clothes, they said, because carrying multiple sizes would consume too much square footage.

Opening a discount chain would mirror the decades-old approach of traditional retailers to offload slow-selling merchandise. Department stores have long sold these stocks for pennies on the dollar to retailers such as Ross Stores and TJX Cos. TJ Maxx and HomeGoods stores. Some chains have even launched their own discount stores, including Macy’s Backstage, which launched in 2015. These discounters have fared relatively well amid the online change fueled by Amazon, frequented as they are by thrifty shoppers who also appreciate a treasure hunt through an eclectic assortment. inexpensive branded items.

Amazon already sells discounted inventory online through a program called Amazon Outlet. Returned and used items are sold through a separate page called Amazon Warehouse. As the company has grown, its supplier managers have been encouraged to negotiate with suppliers for the right to return unsold Amazon inventory to them, current and former employees say.

“We would negotiate quite heavily,” said Faisal Masud, a former Amazon executive who helped launch Amazon’s warehouse deals program a decade ago and now runs tech startup Fabric. e-commerce. “If it doesn’t sell, it comes back. The goal is always to achieve the optimal return on inventory and asset recovery. But despite these efforts, the company still ends up with a lot of unsold products.

Amazon’s brick-and-mortar store team was inspired to explore real-world discount outlets in part by an employee-only sale held at a warehouse near the company’s Seattle headquarters in 2019, in which excess inventory was sold at reduced prices to free up space in a facility often used as a test bed for new programs. They also looked at flash sales and discount store concepts, including those from Best Buy and outdoor retailer Recreational Equipment, whose flagship store is a short walk from Amazon headquarters, one person said. .

—Bloomberg News