Could Amazon's 'Click & Collect' Be a Convenience Killer?

“We are seeing emergence of next generation of the food distribution system," expert says

Amazon grocery

SEATTLE -- Amazon.com is developing a new drive-up grocery store concept in Silicon Valley that will allow consumers to order grocery items online, then schedule a pickup at a dedicated facility, industry sources familiar with the company's plans told The Silicon Valley Business Journal.

If confirmed, the "click & collect" project could signal a new distribution strategy for Amazon, the world’s biggest online retailer, while adding an additional threat to a grocery and convenience-store industry, said the report.

Wal-Mart Stores Inc. began testing a similar concept, Walmart Pickup - Grocery, a same-day pickup concept, in September 2014 at a gas station-like site in Bentonville, Ark.

“We are seeing the emergence of the next generation of the food distribution system,” Bill Bishop, chief architect at Brick Meets Click, a retail and e-commerce consultancy, told the newspaper.

Amazon’s first location appears to be Sunnyvale, Calif., where a real-estate developer has submitted plans for a new 11,600-square-foot building and grocery pickup area. Amazon itself is not named in planning documents, but sources familiar with Amazon’s concept told the paper that Amazon is the likely tenant.

Amazon didn’t return a message, and the third-party developer, Oppidan Investment Co., declined to talk about the project. City officials likewise said they were not able to confirm a tenant's identity.

The sources told the Business Journal that the planned rollout could encompass multiple sites.

For Amazon, a standalone drive-up store would signal a new phase in the company’s evolving grocery ambitions, the report said. AmazonFresh, Amazon’s same- and next-day grocery delivery service, has been expanding into major metropolitan areas in recent years. A physical pickup spot could help solve the “last-mile” problem of getting perishable goods to consumers by having consumers come to Amazon.

The click & collect model could also part of Amazon’s larger obsession with getting products into the hands of consumers on their own terms, whenever and wherever they want them, Nicole Santosuosso, an analyst with Kantar Retail, told the paper.

“Amazon’s entire value proposition is based on this idea of immediacy, and getting items to the shopper as quickly as possible,” said Santosuosso. “I could see something like this being tied into that overall value proposition.”

Why groceries?
The grocery push, which has gained steam in recent years, would help achieve Amazon’s goal of meeting all of consumers’ shopping needs, whether it’s diapers or bananas. “Their play is for the grocery basket,” Santosuosso said. “It’s important to look at it more broadly. They’re trying to win that consumables trip.”

Amazon has already been experimenting with physical pickup spots, such as the Amazon Locker program where goods can be delivered to an unmanned drop-box at retail partners like 7-Eleven. But the grocery concept would mark a ratcheting up of these efforts and a major new investment, the report said.

Click here to view the full Silicon Valley Business Journal report and to view an official rendering of the facility.