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07/27/2015

Amazon on 'Right Track' with Drive-Through Retail Location

In its next move to make inroads into the grocery industry, e-commerce giant Amazon has unveiled plans to pilot a drive-through retail store in Sunnyvale, Calif., according to The Silicon Valley Business Journal.

Combining the click-and-collect model with a traditional brick-and-mortar shopping experience, the service will allow customers to place their order online and pick up their items at a designated location during a 15-minute to 2-hour time frame.

According to The Business Journal, the location will comprise an 11,600-square-foot warehouse featuring eight drive-through car stalls, as well as a small on-site store location at which shoppers can purchase items without first placing their orders online.

The effort represents an extension of the AmazonFresh platform, the company's delivery service that has operated in densely populated urban areas in recent years, and offers same- and next-day grocery delivery to residents' doors.

Amazon on 'The Right Track'

Amazon is on "the right track" with this new initiative, which will help the company mitigate much of the cost associated with delivery, according to Kelly Tackett, U.S. research director for Planet Retail.

"So much of the cost in online grocery is tied up in home delivery. It's why you are seeing retailers in the U.K., where online grocery is so much more advanced, trying to incentivize click-and-collect," Tackett told Progressive Grocer. "Amazon has an advantage in terms of the sophisticated picking facilities. A collection point alleviates the last mile pain points."

Bill Bishop, chief architect at Barrington, Ill.-based Brick Meets Click, agrees the pilot will likely be successful as consumers "have already demonstrated a willingness to click and collect," and Amazon will offer an additional avenue for them to do so.

Time will tell whether Amazon's new service will pose a significant threat to traditional supermarket operators. Forward-thinking retailers like Walmart and Kroger currently offer a click-and-collect service, and maintain the advantage of having thousands of stores to serve as collection points, according to Tackett.

For Bishop's part, however, a successful rollout for Amazon "will be able to offer a much lower cost click and collect option to consumers than retailers who are executing from their stores," he said.

At press time, Amazon did not respond to Progressive Grocer's request for comment.