It was recently announced that Amazon plans to start opening large brick-and-mortar retail stores that are akin to department stores. They won't be quite as big. Supposedly they will be around 30,000 square feet. But this is still a meaningful commitment to physical retailing. The first stores of this type are expected to be in California and Ohio.
On the one hand, this move probably appears counterintuitive. I mean, Amazon is a machine built around e-commerce (though it does already have other physical stores). But on the other hand, you could argue that they are simply following a retailing playbook that was developed over a century ago by companies like Montgomery Ward and Sears.
Both of these companies disrupted traditional retailing in the late 19th century through mail-order catalogues. Why pay for physical space when you can just mail people catalogues? (Your margin is my opportunity, right?)
But as we know, eventually these mail-order catalogue businesses turned into brick-and-mortar stores, and they then thrived this way for many years. If you consider e-commerce to just be the 21st century equivalent of the mail-order catalogue, then perhaps this next move by Amazon was always destined to happen.
So Amazon is buying Ring (they make video doorbells, among other things) for north of $1 billion. Supposedly, it is the second largest acquisition that Amazon has ever made – the first was Whole Foods.
If you consider that Amazon is also looking to enter the delivery business, it should be obvious that they want to control everything related to the home delivery process.
For one, it likely enhances Amazon Key and helps with the “porch pirate” problem. Apparently Amazon has had to restrict same-day delivery from some high crime neighborhoods because of this exact problem.
And there’s already speculation about what this could mean for grocery deliveries. Amazon needs to find a frictionless way to get your food orders into your refrigerator.
There are also many possible tie-ins to Alexa/Echo. It’s probably safe to assume that Jeff Bezos sees a lot more than just a doorbell with a camera in it.
Today it was announced that Amazon is planning to launch its “Prime Now” service in Vancouver and Toronto this November and January, respectively.
The pilot program will offer two-hour deliveries for members and, according to the Wall Street Journal, will be be heavily focused on groceries.
It’s worth noting that most of Whole Foods’ stores in Canada (now owned by Amazon) are in and around Vancouver and Toronto. And that Amazon has already started lowering prices to make those stores more competitive.
Right now a “Prime” membership in Canada costs CAD$79 per year. I’m not sure if the price will change at all for “Prime Now”, but let’s assume for the sake of argument that it won’t.
If this service was available to you today (or if you’re in a city that currently has it), would you (do you) use it? I would love to hear your thoughts in the comment section below.
Two common objections around online grocery shopping are that many people want to touch and feel the goods before they buy and that perishable deliveries are a challenging thing to coordinate.
I think I can work around those objections and would certainly try this today if it was available in Toronto. What about you?