Amazon.com explored opening discount retail stores selling a mix of home goods and electronics, a potentially significant expansion of the company’s growing portfolio of physical locations.
The outlets are reportedly holding unsold inventory in Amazon warehouses with deep discounts, according to two people familiar with the plans. The company has considered opening permanent stores, as well as pop-up locations in malls or parking lots, residents said. Plans were preliminary and under discussion last year, but the pandemic and the new Fresh grocery chain have forced many employees to focus on day-to-day operations.
“It’s a way to be able to clean the warehouses and go through the inventory without having to destroy it,” said one of the people, who was made aware of the plans but was not allowed to discuss them. âThis aligns with Amazon’s value proposition, keeping price front and center and allowing customers to access products at low cost. “
Amazon declined to comment.
In its quest for growth after achieving dominance in many online retail categories, Amazon has built a significant brick-and-mortar operation in recent years, starting with a chain of bookstores, which has made its debut in 2015 in an upscale neighborhood of Seattle. mall.
Amazon Go, a cashierless convenience store that uses cameras and other sensors to track what shoppers remove from shelves, opened to the public in 2018. As does Amazon 4-Star, an electronics, household goods bazaar and toys that sells high quality potpourri. valued and top selling items. Amazon Fresh started opening stores last year and adding new locations at a steady rate.
Amazon now operates 96 physical stores and seven pop-up stores 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 low-cost outlet would likely be similar to that of a 4-star, with an emphasis on smaller items that don’t take up a lot of floor space, such as household items, electronics, toys, baby products and kitchen items, the people said. The outlet likely wouldn’t stock clothing, they said, as transporting multiple sizes would consume too many square feet.
Opening a discount chain would mirror the decades-old approach of traditional retailers to getting rid of slow-selling merchandise. Department stores have a long history of selling this inventory for pennies on the dollar to retailers like Ross Stores Inc. and TJ Maxx and HomeGoods stores of TJX Cos. Inc .. Some chains have even launched their own discount stores, including Macy’s Backstage, which launched in 2015. These discounters have done relatively well amid the Amazon-fueled online transition frequented by frugal shoppers who are also profiting from a treasure hunt through an eclectic assortment. inexpensive branded items.
Amazon already sells discount inventory online through a program called Amazon Outlet. Returned and used items are sold on a separate page called Amazon Warehouse. As the business grew, its vendor managers were encouraged to negotiate with vendors for the right to return Amazon’s unsold inventory to them, according to current and former employees.
âWe would negotiate pretty heavily,â said Faisal Masud, a former Amazon director who helped launch Amazon’s warehouse deals program a decade ago, and now heads Fabric, a startup from e-commerce. âIf it doesn’t sell, it comes back. The goal is always to get 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 physical stores 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 where excess inventory was sold at a discount to free up space in a facility often used as a test bed for new programs.
They also looked at flash sale and discount store concepts, including those of Best Buy Co. and outdoor retailer Recreational Equipment Inc., whose flagship store is a short walk from Amazon headquarters, said one. no one.
Matt Day, Bloomberg News
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