/Inside Amazons secret project to build 1000s of suburban Go stores

Inside Amazons secret project to build 1000s of suburban Go stores

  • Amazon held talks with BP in 2020 about potentially selling gas at its cashier-less Go stores.
  • It was one of many options discussed for the launch of new suburban Go stores, announced Tuesday.
  • Amazon also considered a new “Just Drive Off” curbside-pickup service for these stores.

Amazon has considered selling gas at thousands of cashier-less Go stores, part of a broader effort to go after the suburban convenience-store market, Insider has learned.

One of the ideas discussed in 2020 was to partner with the oil company BP, according to an internal document obtained by Insider. At the time, BP reached out to Amazon to gauge interest in a partnership in which the Amazon Go cashier-less stores would open with gas pumps run by BP. 

Amazon thought the partnership would save money and give customers another reason to come to its Go stores. But the company ultimately concluded it would lose control of the gas portion of the business and risk associating itself with a giant energy incumbent, contradicting its commitment to reducing reliance on fossil fuels, the document said.

The partnership idea with BP was one of many options Amazon considered before the Tuesday announcement of its first Go store in the suburbs, the document shows. Other ideas for the new suburban Go stores, internally code-named “Bowser,” included:

  • Potentially launching 10,000 Amazon-branded gas stations without BP’s help
  • An estimated 2,000 to 6,000 other “Bowser” cashier-less suburban Go stores
  • A forecast of $18 billion in revenue from 6,000 Bowser stores, excluding gas, or $3 million per store
  • A new “Just Drive Off” curbside-pickup service
  • A Walgreens-style retail pharmacy
  • Selling hot foods, fresh-prepared salads/sandwiches, Starbucks coffee, and assortment of dinner meal solutions.
  • Offering lottery tickets, ATMs, and PillPack medications

The document offers a rare look into the behind-the-scenes discussions that take place at Amazon as the e-commerce leader looks to double down on its physical store ambitions. Besides the new suburban Go store announced this week, Amazon disclosed plans for a new apparel store called Amazon Style last week. That’s on top of the growing array of Fresh grocery stores, bookstores, and 4-star stores, as well as the hundreds of Whole Foods locations owned by Amazon.

Amazon first revealed its Go stores, a new concept that eliminates cashiers, about five years ago. Since then, the company has launched different types of Go stores, including smaller-format convenience stores in urban locations and larger Fresh grocery stores. On Tuesday, Amazon unveiled the latest iteration of the Go store in the suburbs, though details were scant.

“We are convinced that to achieve national scale with Amazon Go, we need a model that works in the suburbs,” the internal Amazon document stated. “We don’t think we need fuel … but we believe that having fuel will help a lot.” Representatives for Amazon didn’t respond to a request for comment. BP declined to comment.

Amazon Go suburban stores



Amazon


10,000 fuel stores

Amazon’s physical stores team spent “a lot of time debating” the merits of selling gas at its suburban Go stores, the document said. The team concluded that fuel can offer a number of advantages, such as customers making Go stores part of their regular routine and providing additional revenue channels, like pump ads. It also considered Prime member discounts for gas.

By adding gas pumps, Amazon projected there’s a market for up to 10,000 suburban Go stores, which would translate to roughly 10% of all gas stations in the US, according to the document. At that scale, the company estimated that the new gas stations would make $1.3 billion a year in profit. 

The team recommended starting small, with five to 15 stores in 2021 and 2022 to learn and iterate before scaling. For reference, it said 80% of the roughly 150,000 convenience stores in the US sold gas. It also noted fuel is “largely undifferentiated,” meaning customers choose gas stations based on factors like proximity and cost, not brand affiliation. 

Amazon physical stores VP Dilip Kumar

Amazon physical stores VP Dilip Kumar.

AP Photo/Ted S. Warren


One major concern that came up was how selling gas would conflict with Amazon’s commitment to its climate pledge. To defuse those concerns, the physical stores team suggested reinvesting all of the profits from fuel sales into “climate-positive initiatives,” like purchasing more electric delivery trucks and investing directly in clean-fuel technologies.

“We acknowledge that selling fuel makes it harder to achieve our climate pledge,” the document said. “But we also believe that in the same way Amazon continues to provide cloud computing tools to the oil and gas exploration industry to support positive change, that by entering the retail fuel industry we can drive change there as well.”

Amazon is still internally discussing the viability of launching gas stations of its own, but it’s not convinced about the return on investment, according to a person familiar with the matter. The idea was also presented to Amazon retail CEO Dave Clark, who wasn’t very supportive, another person familiar with the situation said. Both people asked not to be identified discussing internal deliberations. 

‘Just Drive Off’

Another new component of the suburban Go store Amazon discussed was a curbside-pickup service called “Just Drive Off.”

With JDO, customers could either preorder or order on site, and have their items delivered to their car in under five minutes, the document said. It also considered a new “favorites” feature that would enable one-click ordering, and license-plate readers that would enable quicker customer identification.

The team said curbside pickup could become as common as in-store shopping, noting that other retailers like McDonald’s, WaWa, and QuikTrip had started experimenting with it as well. “Vehicular pickup (i.e. curbside or drive thru) is table stakes for a suburban concept to work as customers depend on these services to speed up their trip,” the document stated.

Amazon also considered going beyond key grocery staples and hot-food items for the suburban Go stores, according to the document. The company floated the idea of selling a selection of wines, craft and domestic beer, and sundry items. It also discussed offering ATMs, lottery tickets, and medications from its PillPack division.

Prior to settling on the current format for the new suburban Go store, Amazon reviewed other options. Those included a traditional retail pharmacy, similar to Walgreens, and a warehouse liquor store, akin to Total Wine. 

“While each of these ideas have some appeal, we believe that the modern-day ‘multimission’ convenience store with elevated food offers the best option for Amazon Go currently,” the document said.

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