Please ensure Javascript is enabled for purposes of website accessibility

Amazon Prepares to Launch (Another) Grocery Store Chain

By Daniel B. Kline - Feb 14, 2020 at 11:31AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The e-commerce giant is trying something different that's ... sort of ordinary.

Amazon (AMZN 4.11%) owns Whole Foods, so it might seem a bit odd that it's planning to open a second grocery chain. It makes more sense, however, when you consider how much data the online retailer has that it can't use at those upscale stores.

The company may know, for example, exactly which soda and candy brands are most popular in a certain market. That information can't benefit Whole Foods, because the chain does not sell most national brands.

With a chain of traditional grocery stores, Amazon could better capitalize on its ability to sell consumers what it knows they want.

An Amazon Prime tractor trailer.

Amazon's grocery stores will also provide additional hubs for its shipping infrastructure. Image source: Amazon.

The company has been tight-lipped about its plans, but it has been working on a prototype location in Los Angeles. That store, which is about 33,000 square feet, looks fairly conventional, according to Bloomberg, which got a sneak peek at some photos and construction plans. 

It has traditional aisles, an area for selling ready-made foods, and it does not use wireless payment technology like Amazon's Go convenience stores. It does have digital price tags for inventory tracking and a prominent window for pickups and returns.

Whole Foods serves a niche audience, but Amazon wants to go after all consumers. A more traditional chain of grocery stores will give it a brick-and-mortar platform to sell more products to more people, and is unlikely to take much revenue away from its natural and organic food chain.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$2,307.37 (4.11%) $91.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
338%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.