Amazon Product Managers Have Grocery Store Dreams

Amazon product managers are increasing their offline presence using grocery stores
Amazon product managers are increasing their offline presence using grocery stores
Image Credit: Thomas Hawk

The product managers at Amazon have a big problem on their hands. The company, which is already huge, wants to keep on growing. What this means for the product managers is that they always have to be looking for new businesses that Amazon can expand into. They think that they may have come up with one that could, over time, make a substantial contribution to the company’s bottom line: a new line of grocery stores.

Amazon Gets Into The Grocery Business

So what are the Amazon product managers thinking about doing? It appears as though they are planning on opening a new chain of U.S. grocery stores. The initial stores will be located in Los Angeles, Chicago, and Philadelphia. The first stores are targeted to be located in dense suburban locations. The bigger plan is for Amazon to open dozens of grocery stores in cities across the U.S. Amazon’s product managers are motivated to do this because they want to find more ways to reach consumers.

What’s interesting about the grocery stores that Amazon is planning on opening is that they appear to be located outside of urban cores. Their goal is to cater to middle-income consumers. It appears as though in addition to prepared foods, they will also stock such mainstream groceries as cookies and soda. What’s interesting about this plan for new grocery stores is that Amazon is already operating a line of stores called “Amazon Go”. There are 16 of these stores where customers can grab ready-to-eat food in addition to making grocery purchases. What makes these stores unique is that customer are able to make their purchases without having to use a checkout line.

Over time Amazon has been opening more and more bricks and mortar stores. In addition to the Amazon Go stores, they also have four “Amazon 4-Star” stores that stock produces that are rated at 4 stars and above on the Amazon web site. Amazon also operates 18 Amazon book stores. Right now Amazon is not making that much money from these “real” stores in comparison to how much they are pulling in from their online operations. Sales from physical stores is at US$4.3B. This amount increased by 1% from the previous year while online sales grew by 16% from the previous year.

How Amazon Is Going To Be Successful In The Grocery Business

The locations that Amazon is selecting for its new line of grocery stores appear to be easily accessible by a large number of customers. In Los Angeles the location will be in a strip center. As proof that the Amazon product managers are moving forward with their plans, contractors have already been granted local building permits. The buildings that are going to be turned into Amazon grocery stores used to be Toys R Us locations. Nearby there is a Citibank, Office Depot, and a Sharky’s Woodfired Grill.

The building permits that have been pulled reveal something about the type of grocery store that Amazon is planning on building. There appear to be plans to install an espresso machine and kitchen equipment. Based on the amount of kitchen equipment that will be installed, it is becoming clear that the grocery store will be offering prepared foods. The grocery store is planned to occupy 35,000 square feet.

The Amazon product managers have great plans for their new line of grocery stores. They are currently looking for store space in the New York metropolitan area, New Jersey, and even Connecticut. It appears as though the locations that Amazon is looking at are primarily located in strip centers and open-air shopping malls. Each one of these stores would appear to require roughly 20,000 – 40,000 square. feet. The Amazon product managers are very clear that they are not trying to compete with their own upscale grocery store chain Whole Foods. The difference is that Whole Foods does not sell products with artificial flavors, preservatives and sweeteners. The new chain will have no problems selling such products.

What All Of This Means For You

Amazon’s product managers are always under a great deal of pressure. They have to find ways that their already very large company can continue to grow. They believe that they may have come up with a new way to make this happen. What they are planning on doing is opening a new line of grocery stores.

The Amazon product managers will initially open their new grocery stores in three major cities. The stores will be located outside of urban cores and will appeal to middle-income shoppers. The new chain will offer prepared food in addition to traditional groceries. This will not be Amazon’s first venture into bricks and mortar stores. However, this part of Amazon’s operation still contributes only a small part of their profits. The locations that Amazon is choosing for their new stores show that they want them to be accessible. The building permits that have been pulled reveal that Amazon is planning on offering espresso and prepared food.

The amount of pressure that must be on the Amazon product managers to be successful is incredible. Since the company is already involved in the food business through their Whole Foods and Amazon Go operations, deciding to open a new line of grocery stores seems like a very natural thing to do. Their plan to roll out their new stores slowly starting with three major cities first seems like a reasonable way to go about doing this. The key is going to be how they go about dealing with the competition that exists in the grocery business. We’re going to have to see if that Amazon magic can be applied to the world of groceries.

– Dr. Jim Anderson Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: What do you think that the Amazon product managers can do to make their grocery stores stand out from all of the other grocery stores that are out there?

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