Amazon opened its first Amazon Go store in its hometown of Seattle in 2016.
Going from just four locations to 3,000 in a few years would constitute a massive jump and make Amazon a leading convenience store operator, rivaling 7-Eleven, Walgreens and CVS. While opening brick-and-mortar stores seems counter-intuitive to Amazon's e-tailer DNA, we shouldn't forget that companies such as Walmart are still raking in the profits and, in that case, are valued at three times as much as Amazon. The stores could also help Amazon become a bigger player in the pharmacy business because it agreed to buy PillPack, an online drugstore, in June.
Amazon Go sells an array of prepared food alongside grab-and-go convenience-store grocery staples. Amazon has committed to opening stores in NY and San Francisco.
The person familiar with Go's development during its early stages said the sensor technology and other hardware installed in the first store in Seattle cost between $2 million and $3 million, and that the company was hoping to reduce costs for future stores. But it has pushed back on past reports that executives had given the green light to a major expansion of Go.
Amazon wants to have at least 10 stores open by the end of this year, then 50 in 2019, then possibly a rapid expansion to about 3,000 by 2021, Bloomberg reported, citing people with knowledge of the matter. Amazon also routinely loses money expanding internationally. Additionally, opening multiple stores in the same metro area could help minimize costs since they could in theory share a centralized food production facility.
The US now has 155,000 convenience stores, with 122,500 of them combined with gas stations, according to industry group NACS. Los Angeles and NY have already been rumoured as cities to host Amazon Go stores. Shoppers rate location and a lack of lines as the most important factors when shopping for convenience, he said. "The key to success will be convenient locations".