Amazon has experimented with brick-and-mortar retail in a variety of ways, but it appears the e-commerce giant elected to pull back on a potential experiment that would have offered discounted home goods and electronics in a new store concept.
A Bloomberg report said that these stores would have carried unsold inventory that sat in Amazon’s warehouses, according to two people familiar with the plans. The stock within the outlet would have likely been similar to the Amazon’s 4-star stores, which prioritize popular, smaller items such as Amazon devices, home goods, toys, electronics and kitchen items reviewed by customers with four stars or above.
The stores probably would not stock clothing, because carrying multiple sizes would consume too much square footage, the report said.
Amazon has considered opening permanent stores to sell these items, as well as pop-up locations in malls or parking lots, the report said. The plans were preliminary and under discussion last year, but the pandemic and the growth of the Amazon Fresh grocery chain forced many employees to instead focus on day-to-day operations. Amazon recently opened its 12th Fresh store in Long Beach, Calif.
In response to the Bloomberg report, an Amazon spokesperson told Sourcing Journal, “We don’t comment on rumors or speculation.”
The inspiration reportedly came from an employees-only sale held at a warehouse near Amazon’s Seattle headquarters in 2019, in which excess inventory was sold at discounts to clear space. The facility was often used as a test bed for new programs, according to Bloomberg.
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Amazon presently operates 96 stores and seven kiosks across its various labels, which include Amazon Books, Amazon 4-star, Amazon Fresh, Amazon Pop Up, Amazon Go and Amazon Go Grocery. Of course, the company also owns the approximately 500 Whole Foods Market locations across the U.S., Canada and the U.K.
But an outlet concept would have given Amazon a way to offer a “treasure hunt” shopping experience and further position to compete against off-price players like TJX (namely its HomeGoods banner) and Ross Stores.
The report didn’t give any insight on the technology powering the store. Amazon typically integrates Alexa into its brick-and-mortar grocery experiences to help customers manage their shopping lists and better navigate the aisles. Shoppers can access their Alexa shopping list through the Amazon app or on the Amazon Dash Cart, while Amazon Echo Show devices throughout stores are available to ask Alexa for help locating items.
The Amazon Dash Cart is an innovation designed to let customers skip the checkout line and use a QR code in the Amazon app before exiting through a designated Dash Cart lane. The cart uses a combination of computer vision algorithms and sensor fusion to identify which items have been put in the cart.
The idea of selling unused inventory in new stores has been explored by numerous apparel sellers, with department stores such as Nordstrom and Macy’s literally creating their own off-price channels. Dick’s Sporting Goods cemented their commitment to selling unsold inventory after the first wave of the pandemic with the launch of the clearance-based Dick’s Sporting Goods Warehouse Sale and Overtime by Dick’s store concepts in summer 2020. Originally conceived as six-month popup shops, the Warehouse Sale locations offer deep discounts on customer-favorite footwear and apparel brands, offering markdowns of 70 percent off or more on “hundreds of items.”
Even U.K.-based luxury department store Harrods got in the mix last summer as well, launching a temporary concept store within a two-story, 80,000-square-foot space in Westfield London to get rid of excess stock it was unable to sell while the outbreak closed stores. This was the first outlet store for the high-end retailer.
Amazon already sells discounted inventory online through one of its lesser known programs called Amazon Outlet. Returned and used items are sold through a separate page dubbed Amazon Warehouse. As the company has grown, vendor managers have been encouraged to bargain with suppliers to earn the right to return Amazon’s unsold inventory to them, the Bloomberg report said.