Amazon Considered Opening Brick-and-Mortar Discount Stores

Before the Covid-19 pandemic hit, e-commerce giant Amazon considered opening discount stores to sell home goods and electronics, Bloomberg reported.

Reportedly, the idea for Amazon outlet stores was under discussion early 2020, but the focus shifted to day-to-day operations once the complexities of the pandemic began and Amazon’s Fresh grocery store chain grew.

Executive Summary

Amazon’s plans reflected one of the downfalls of e-commerce--warehouses full of unused or slow-selling inventory. The move also mirrors other department stores that clear unmoved stock, either to discount sellers like T.J. Maxx or through their own discount brands.

Amazon already operates a discount store virtually--Amazon Outlet through its Amazon Warehouse page, offering returned and used items. Amazon’s discount stores would likely carry smaller items that don’t take up too much space and exclude clothing, Bloomberg reported, citing an unnamed source close to the plans.

“It’s a way to be able to clean out warehouses, and get through inventory without having to destroy it,” the unnamed source told Bloomberg. “It is keeping with the value proposition of Amazon, keeping price at the forefront and allowing customers to get access to products at low cost.”

The online retailer has also been venturing into brick-and-mortar for several years, establishing bookstores, cashless convenience stores, grocery and more in select U.S. cities. In total, Amazon operates nearly 100 physical stores. It also owns Whole Foods, which has more than 500 grocery stores. 

The idea for the outlet store stemmed from an annual employee warehouse sale that aimed to clear out old stock for space to test new programs.

While the idea was out on the backburner during the Covid-19 pandemic, it’s unclear if Amazon has picked up the initiative in 2021.