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Amazon won't shake up your neighborhood store anytime soon

This year has been full of rumors that Amazon wants to open lots of new stores. The reality is likely different.

Ben Fox Rubin Former senior reporter
Ben Fox Rubin was a senior reporter for CNET News in Manhattan, reporting on Amazon, e-commerce and mobile payments. He previously worked as a reporter for The Wall Street Journal and got his start at newspapers in New York, Connecticut and Massachusetts.
Ben Fox Rubin
3 min read

On Monday, Amazon revealed a new 1,800-square-foot convenience store in Seattle called Amazon Go.

Soon after, the Wall Street Journal reported that the online retailer has plans to open not just one 7-Eleven-style store, but more than 2,000 grocery locations. That's four times the number of Trader Joe's markets, a scale that could radically change the way we shop.

Don't get too excited about this idea, though, because it ain't happening.

"Not even close," an Amazon spokeswoman said about the Journal's story.

Watch this: Amazon Go imagines the future of grocery stores

Rumors have swirled all year that Amazon is planning to invade the physical retail world with hundreds or even thousands of bookstores, pop-ups, supermarkets and bodegas. For a consumer, that would potentially mean a shopping experience in your neighborhood that's as quick and easy as it is on Amazon's website.

Not to burst your bubble, but there are plenty of reasons why the online retailer may not go in that direction. It may double down on drones, shipping infrastructure, cloud computing or something else entirely. (The Journal published a story on Amazon's denial.)

"The trillion-dollar question for Amazon is if the future for the company's growth is in retail or outside of retail," said Sucharita Mulpuru, Shoptalk's chief retail strategist. "I would argue that it's outside of retail."

Phase 1: Open Amazon stores 2: ? 3: Profit

Over the past year, Amazon has made baby steps into stores. It opened its first bookstore late last year and plans to have a total of five in 2017. It created 32 pop-up stores, where it sells Amazon e-readers, tablets and Echo smart speakers, and opened a series of college delivery stations. The company is reportedly working on drive-through grocery stores in Seattle, too.

While some have seen these projects as signs that Amazon is getting ready to go big in physical retail, you probably shouldn't hold your breath.


Amazon's pop-up store at the Queens Center mall in Elmhurst, New York. The store sells Amazon tablets, e-readers, Echo smart speakers and a few smart home gadgets.

Ben Fox Rubin/CNET

That's because stores take a lot of money and time to site, develop and staff. We're talking years, especially when considering 2,000 stores. For a company like Amazon, which has focused on e-commerce for 20 years, it would probably need lots of time -- again, years -- to learn what works and what doesn't work for its stores.

Also, the likelihood Amazon would pursue building a bunch of stores quickly is low, since a rapid store expansion is a bad idea, said Jeff Warren, vice president of Oracle's retail arm. Just ask Target Canada, which bombed.

"As you move into brick-and-mortar retail, to come out and say you're going to open 2,000 stores as step one -- that's not a good strategy," he said.

It's hard to blame people for getting excited about Amazon opening a lot of stores, especially after the company has aggressively moved to grow in other places, like on-demand television, cloud computing and, of course, e-commerce.

Opening physical locations could also give you the chance to touch and test Amazon devices and products before buying them, while also helping the company reach new customers who don't shop online. Also, opening grocery stores could allow Amazon to break into that $800 billion market, where it's still a tiny player.

Overall, more than 90 percent of US retail sales still come from stores. But does that mean Amazon will open a bunch of superstores to reach all those in-store shoppers?

"They can, but I think it's a big leap of faith," said Wedbush analyst Michael Pachter.

Your home is the store

With mall traffic in decline and many retailers closing stores, partly due to Amazon's growth online, having the company start opening lots of stores would be, well, ironic.


Amazon's Echo Dot was the best-selling item on Amazon on Thanksgiving, Black Friday and Cyber Monday.

Tyler Lizenby/CNET

The thing is that Amazon has already signaled that it may be going in a totally different direction with its next e-commerce play.

While it dabbles in stores, the company has sold an estimated 5 million Echo smart speakers, which you can use to buy items off Amazon by just asking. It's also created over 200 different Dash buttons, which people can click to reorder Trojan condoms, Tide detergent or Doritos.

Additionally, it's expanded free same-day deliveries and its two-hour delivery service, called Prime Now, to get more of its Prime members that need stuff right now to buy with Amazon. And it's been expanding AmazonFresh, its grocery delivery service.

With all those efforts to keep us from leaving home, it's a wonder they opened any stores at all.