Amazon Reportedly Intends to Open 3,000 Go Stores by 2021

Online retail giant Amazon.com Inc. is reportedly planning its most aggressive move in the brick-and-mortar sector as the US e-commerce firm is considering establishing as much as 3,000 Amazon Go cashier-less convenience stores in the next few years.

Sources familiar with the matter stated that Amazon is pondering over opening 10 locations by the end of 2018, around 50 in key metro areas like San Francisco and New York in 2019, and then 3,000 by 2021 which would make Amazon Go among the largest chains in the US.

Amazon Go, which is widely viewed as a concept that can change the brick-and-mortar retail, is currently operating in 3 locations in Seattle, where Amazon is headquartered, and on Monday opened its doors in Chicago, marking as the first Go store to operate outside the company’s home state and city.

The automated grocery stores offer no lines, no, checkouts, and no registers, meaning customers can simply scan their Amazon Go app as they enter the stores and just shop, and checkout without having to interact a human employee or kiosk.

A spokeswoman for Amazon declined to comment.

News about Amazon’s potential plans for its Go store left shares of grocery and retail rivals Walmart Inc., Target Corp., and Kroger Co. in the negative.

Amazon Spending Concerns

While the plan could be Amazon’s most aggressive move since its acquisition of US supermarket chain Whole Foods Market Inc. in 2016, the Seattle-based firm will still have to take into account the huge cost associated with setting up each location.

A person with knowledge of the expenses said the first Amazon Go in downtown Seattle needed more than $1 million in hardware alone. Narrowing the focus to prepare food-to-go would help cut the upfront cost of opening each store, as it would require fewer cameras and sensors.

Compared with groceries, ready-to-go foods have also bigger profit margins which would reduce the time it takes for the stores to meet profitability.

In addition, opening several locations in proximity, like what Amazon is doing in Seattle, could help lessen its spending by concentrating food production in one kitchen serving many stores.

Data from an industry firm showed the US is currently home to 155,000 convenience stores, with 122,500 of them combined with gas stations. Purchases at convenience stores totaled $233 billion in 2016 with cigarettes and other tobacco products being the most sold items.

Amazon’s push into retail is seen as a threat to convenience stores and fast-food chains across the US selling goods for customers in a rush.

The firm’s target locations make it less of a threat to suburban gas station-convenience store combos, but it poses a larger threat to quick-service eateries located in big cities as well as fast-casual restaurants.

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