The recent and ongoing evolution of Amazon’s experiments with omnichannel retailing, as it moves out of cyberspace and into various physical spaces, offers remarkable insights into the state of retailing today. Testing out different structures, designs, and channels, Amazon is pushing the boundaries of what omnichannel means and how it can be established.
The early days of Amazon are familiar to virtually every consumer. As a young upstart, promising to ship books in response to orders placed online, Amazon was different from anything else in the market at the time. Although it took some years to grow, the convenience of getting books and some other entertainment media (e.g., compact discs) in the mail provided a foundation for its growth and emergence as a retailing juggernaut.
The expansion started with increased product lines, to the point that today consumers can find virtually anything they could desire through Amazon. Its website also grew in reach and sophistication, while it transformed into a platform that would enable various sellers to link up with millions of potential buyers. It added services. It introduced Amazon Prime. It created a mobile app. It started producing content for its streaming channel. In this sense, its expansion was vast and substantial, but it largely remained focused on electronic channels.
By around 2014 though, Amazon determined that it wanted to be in physical proximity to shoppers. Consumers had largely adopted online and mobile retail channels, but some of them still prefer brick-and-mortar stores, whether for all their purchases or for specific consumption situations in which they feel uncomfortable buying online. For example, U.S. consumers spend about $1 trillion on food and consumer products each year, but they make less than 5 percent of those purchases through digital channels. Amazon aims to be all things to all shoppers, which meant that it needed to find a means to access these buyers too.
It has played around with several options for doing so. In particular, over the past few years, it has opened 87 pop-up stores in the United States, in varied locations and sites, such as within Kohl’s stores, in separate storefronts in malls, and with kiosks in Whole Foods Stores. Some of these pop-ups have been around for years; others opened just a few months ago.
The pop-up experiment primarily aimed to gather and give information. That is, Amazon sought to obtain new and expanded data about how people interacted with its products, like Echo and Alexa-enabled devices, as well as which items they sought out from the pop-up stores. At the same time, the physical spaces enabled it to share information with consumers about new offerings, including services and products like its tablets.
It now appears that it is satisfied with the information gained and granted; Amazon recently announced that it would be closing all 87 pop-up stores, even those that it opened just a few months prior. The announcement suggests a revised approach to physical locations, as affirmed by Amazon’s other new developments.

For example, following its purchase of the Whole Foods grocery chain, it plans to continue stocking Amazon-branded products in the stores. But rather than a separate kiosk or section within the store, these products will be positioned more generally within the assortment available throughout the stores. At the same time, Amazon has hinted that it hopes to open more Whole Foods locations in coming years, suggesting that the offerings will remain widely available. Kohl’s similarly indicated that, though its agreement for Amazon stores-within-stores would come to a close, it planned to continue stocking the brand’s products.
At the same time, Amazon has signaled its plans to open a distinct grocery store chain, with stores located mainly in urban areas. The first targeted markets include Los Angeles, Washington, DC, and Chicago, and the stores reportedly will be smaller than conventional supermarkets but larger than convenience stores. In addition to finding the right sized spaces, Amazon reportedly is seeking leases that will not restrict what it can sell in the stores, implying that in addition to groceries and beauty products, it may attempt to stock health care or technology offerings. This Amazon-branded chain would offer lower price points than Whole Foods and likely would not maintain the same focus on organic and local items.
Beyond grocery, Amazon also is opening what it refers to as “4-star stores,” whose assortment plans are totally novel: They are defined by customer rankings on Amazon’s mobile and online channels, rather than any traditional market analyses. If something averages more than 4 stars in the customer reviews posted online, it is qualified to be stocked in these stores. Of course, it continues to experiment with cashierless stores too, in its line of AmazonGo storefronts.
All of these versions of physical locations have distinct space requirements, putting property managers on high alert. For example, mall operators have expressed interest in attracting Amazon stores, whether as anchors or as destinations within the mall, in an attempt to lure shoppers back to their campuses. Noting the similar effect of Apple stores, which draw an attractive customer segment, the varied expansion plans of Amazon stores are offering new hope to mall operators. Amazon already has rented vacant spaces in several malls to serve as fulfillment centers, but initiating retail operations would be even more profitable for mall owners. Furthermore, owners of existing, vacant grocery store locations reportedly are promising retrofitted and renovated spaces if Amazon would be willing to open a Whole Foods, an AmazonGo, or one of the new grocery stores in their properties.
Even as all these novel expansions come raining down, there’s still a sense of history to be found. Among its experiments with groceries, entertainment content, health-related products, and services, Amazon also is playing around with the idea of opening physical bookstores—the very retailing concept that it started to disrupt at the very beginning of its reign as the dominant actor in modern retailing.

Discussion Questions:

1. What type of a retailer is Amazon?
2. With which store formats is Amazon experimenting? Which are working, and which are not?
3. Where is Amazon locating its stores? Which do you believe are the best locations? Why?
4. Choose one of Amazon’s retail formats, and examine its assortment. Describe the store’s depth and breadth. What, if any, adjustments would you make to the assortment? Defend your answer.
5. Describe Amazon’s plan to start a new grocery store business. Perform a SWOT analysis for this new venture.

Source: Esther Fung, The Wall Street Journal, March 6, 2019. See also “Amazon to Close Pop-Up Stores, Focus on Opening More Books Stores,” Reuters, March 6, 2019; Esther Fung, “Amazon, Long Seen as a Threat to Malls, Is Now a Hot Tenant,” The Wall Street Journal, March 5, 2019; Heather Haddan and Esther Fung, “Grocers Brace for Another Blow from Amazon,” The Wall Street Journal, March 3, 2019; Esther Fung and Heather Haddan, “Amazon to Launch New Grocery Store Business,” The Wall Street Journal, March 1, 2019