Why is Amazon opening brick-and-mortar grocery stores? Because it wants to dominate groceries online.
Yes, Amazon is opening a string of physical groceries–or at least that’s the word from The Wall Street Journal, which cites multiple anonymous sources familiar with the matter. According to the paper, Amazon calls this Project Como, and the first store is planned for the company’s home city of Seattle, Washington.
Inside these stores, the WSJ says, you’ll be able to shop for meat, milk, produce, and other perishable goods–pay for them and put them right into your car. But via your smartphone or touch screens installed in the store, you’ll be able to order items with longer shelf lives, like peanut butter and cereal, for same-day delivery. If you like, you’ll also have the option of ordering the perishable stuff ahead of time via your phone–and picking it up a curbside. Amazon will even deploy equipment that will read your license plate when you drive, so you’ll wait as little as possible.
Amazon declined to comment on the story. But Project Como makes perfect sense for a company that intends on moving grocery shopping onto the Internet. That may seem counterintuitive. But this big irony characterizes just about all of Amazon grand ambitions. Amazon wants to dominate the length and breadth of e-commerce, and that means it built some serious infrastructure here in the real world. The company already operates enormous fulfillment centers across the globe. It has its own delivery trucks. It flies its own cargo planes. It’s building tiny drones that will take stuff directly to your doorstep. It runs a bookstore in Seattle. And now, naturally, it wants to open some grocery stores.
These stores are onramps to the company’s online grocery service, Amazon Fresh, which delivers stuff to your door. And they’re giant advertisements for Amazon Fresh. But they can also double as distribution centers. They additional outposts in the vast Amazonian distribution network that is slowly stretching across the planet. You need places that can move all the fresh eggs and milk from week to week, and they might as well double as stores. It’s the same logic that keeps your local grocery store open all night long as employees restock the place: if someone is there, they might as well stay open.
In fact, this is the key to turning online grocery delivery into a viable business. And it’s why a company like Fresh Direct will never be able to compete. It can’t match Project Como.