In 2017, Amazon opened two Fresh Pickup locations in the Seattle area, testing the idea that customers would order groceries online and then pick them up at a central location where employees would bring them to their cars. One was in the SoDo neighborhood, in the parking lot of Starbucks’ global headquarters, and one was in Ballard, and in retrospect, they presaged a shopping experience that became common during the pandemic.
However, the company never expanded the concept beyond those two locations – even during the pandemic – and now it has closed the last one, in the Starbucks parking lot. The Ballad location was closed a year ago.
“Like any retailer, we periodically assess our portfolio and make optimization decisions around how we operate,” spokesperson Jessica Martin said in explaining the decision.
The Seattle Times writes that “in the grocery sphere, Amazon still operates more than 40 Fresh grocery stores around the country, including five in Seattle. It runs Go convenience stores in Seattle, Chicago, San Francisco and New York. Amazon also owns Whole Foods, which it purchased in 2017 for $13.7 billion.
“In the second quarter of 2023, Amazon’s physical stores sales grew 7% compared to the same quarter a year earlier, the company said.
“But in the years since it launched Fresh Pickup, Amazon has significantly scaled back its brick-and-mortar presence. It shuttered all of its bookstores, 4-star shops and pop-ups, and Amazon Style stores, the company’s first experiment in in-person fashion.
“Amazon also paused expansion of its grocery stores last year as it worked to find the right store format that resonated with customers and ‘where we like the economics,’ according to CEO Andy Jassy. As part of that reevaluation, Amazon closed some stores and backed out of other leases … Amazon has refreshed and redesigned some Fresh grocery stores in Chicago and Los Angeles.”
KC’s View:
It always surprised me that Amazon never expanded the concept, especially when Covid-related realities would seem to have made it more relevant. That might’ve been because supply chain issues made it hard to operate those locations, or maybe it was just because the company’s brick and mortar strategies were too scattered.
I’ve generally taken the position as Amazon reassesses its physical grocery business that it is learning every step of the way, and that eventually it would come up with the killer concept that would make all the pain worthwhile; I’ve also argued that the company is one great (experienced, dynamic food industry) executive away from putting all the pieces into place.
But now I’m beginning to wonder whether Amazon is ever going to convert its education into a coherent, progressive, transcendent format. Which makes me wonder if top management at some point is going to decide that the juice isn’t worth the squeeze, and get out of the fresh and bricks-and-mortar grocery businesses. That doesn’t mean selling Whole Foods (though that could happen). But it would mean deciding that it can have a lot bigger impact on the bottom line simply by selling groceries online, and really marketing both Prime and Subscribe & Save as the engines powering those sales.
Amazon’s pain tolerance levels don’t appear to be what they used to be. At some point, pulling the plug may be seen as the best available option.
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