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Amazon, one of the key players in global e-commerce, has officially recognized the failure of its attempt to gain a foothold in the format of its own physical retail network. The company has announced the complete closure of Amazon-branded stores, effectively ending its experiment with entering traditional offline retail.
On Wednesday, Amazon published a statement on its corporate blog confirming the termination of both Amazon Fresh grocery stores and Amazon Go automated outlets without cash registers. This decision was the final point in a series of attempts to create a competitive physical format.
The company noted that, despite some positive signals in the grocery store segment, it failed to create a truly unique customer experience with a business model that can scale without losing efficiency. The economic component was the key barrier to further development of the chain.
Amazon made its first step into physical retail back in 2015 by opening its own bookstore. Subsequently, the company launched various offline concepts, including the Amazon 4-Star store, which sold popular products from the online platform, experimental outlets selling electronics, toys, and even a short-term clothing store. None of these formats managed to gain a foothold in the market.
Now, the last assets of this business are being closed. In total, Amazon is shutting down 58 Amazon Fresh stores and 14 Amazon Go outlets that remained in the company’s ownership.
According to Bloomberg, most of the stores are expected to close by this Sunday. The closure will affect thousands of hourly workers, as well as about 10 corporate employees. The company said that it is trying to offer affected employees alternative positions within Amazon’s structure, particularly in the operational and logistics network.
Despite the closure of its own-brand physical stores, Amazon emphasizes that it is not abandoning its product strategy in general. In the same publication, the company emphasized the scale of its food business. According to its data, Amazon is one of the three largest grocery sellers in the United States. The company reported that annual gross sales in this segment exceed $150 billion, and the number of food buyers reaches more than 150 million per year.
Instead of developing stores under its own brand, Amazon is relying on the Whole Foods Market chain, which it acquired in 2017. The company plans to open more than 100 new Whole Foods stores in the coming years. A separate focus is on scaling up the compact Whole Foods Market Daily Shop format.
Daily Shop is focused on quick shopping and everyday needs. The assortment of such stores includes ready-to-eat meals, coffee and basic essentials. The chain currently has 5 such outlets.
Amazon also announced that some of the premises previously used for Amazon Fresh and Amazon Go will be converted into Whole Foods stores. At the same time, the company plans to expand its same-day delivery service for perishable products to more cities and towns later this year.
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