Amazon opens discount stores to clear inventory, a "two-line" favorable layout

Amazon Discount Store was originally planned to be launched last year , but was postponed due to the outbreak and the launch of Amazon's grocery store chain Aamazon Fresh.

The discount stores will sell inventory from Amazon warehouses at a steep discount. Amazon is reportedly considering opening permanent discount stores as well as pop-up stores in malls and parking lots.

Amazon's discount stores are likely to be similar to Amazon 4-Star, focusing on merchandise that doesn't take up a lot of floor space, such as home goods, electronics, toys, baby products and kitchen items, according to a person briefed on the plans. Clothing that comes in multiple sizes is not an option.

Why did Amazon open a discount store? Discount sales are a way for traditional retailers to deal with slow-moving goods. Some department stores have long sold their inventory to retailers such as Ross Stores, TIX Cos, and HomeGoods at extremely low prices. Some chain stores also open their own discount stores, such as Backstage, which was established by Macy's in 2015.

"This is a way to clear out warehouses without destroying inventory," said a person familiar with the matter. He also believes that the idea of ​​discount stores fits with Amazon's value proposition, which is to keep prices competitive and allow consumers to get products at lower prices.

According to Faisal Masud, a former Amazon employee, Amazon warehouses are full of unsold goods and returns. Amazon has been encouraging its supply managers to talk to suppliers and ship unsold inventory back to them. Even so, there is still a lot of overstock in the warehouse.

To address inventory issues, Amazon has opened an online section called Amazon Outlet to sell discounted inventory, and a separate page called Amazon Warehouse to sell returned and used goods.

After taking the lead in many areas of online retail, Amazon has built a sizable physical store business in the past few years in order to seek further growth. The first physical bookstore chain was opened in an upscale shopping mall in Seattle in 2015.

In 2018 , the unmanned convenience store Amazon Go opened to the public. In the same year, Amazon 4-Star physical stores were launched, mainly selling high-scoring and popular electronic products, household items and toys. Last year, Amazon's grocery chain Amazon Fresh also opened an offline entity and has been steadily adding new stores.

According to Amazon's official website, Amazon currently owns 96 physical stores and 7 shopping malls. Whole Foods Market, which it acquired in 2017, also has more than 500 chain stores.

According to eMarketer, expanding the scale of physical stores will accelerate Amazon's curbside pickup business. Curbside pickup means consumers order goods online and then pick them up at offline physical stores. This business has become very popular in North America during the epidemic, and many department stores and supermarkets have opened related services.

As physical stores expand, curbside pickup will become more convenient for consumers, which will boost Amazon's e-commerce business and solve some of the shipping delay problems.

Amazon