Amazon has been under fire lately from President Donald Trump, who has accused the online retail giant of hurting the U.S. Postal Service by paying less for shipping costs than the average customer.
But Amazon soon might not need the Postal Service. Amazon has other delivery options, industry experts say — some of which involve Austin-based Whole Foods Market, the 470-plus store grocery chain Amazon bought last year.
Real estate firm Regency Centers Corp. has been working with Whole Foods to convert some of the grocer’s parking spaces at stores into loading areas for Amazon delivery workers, according to a report by Bloomberg News. Amazon has also installed shipping lockers throughout Whole Foods stores that allow customers the option to pick up packages they ordered from Amazon’s website.
That could just be the start of things, said Jim Hertel, senior vice president of analytics at retail consultancy Inmar Willard Bishop Analytics.
“With all the stores, you could have possibilities,” Hertel said. “One is for customers to drive to stores and pick stuff up, and the second is for (Whole Foods) to use a staging area in stores for a mini or local distribution center. A staging area could be in the back of stores and not require too much of space.”
While Amazon is more likely to use Whole Foods stores for grocery delivery space than for its regular package orders, Hertel said Amazon’s purchase of the grocer has given it another asset to its delivery operations, which have included its own delivery trucks and building drones for future possible deliveries.
Amazon’s success has partly come through its 75-plus distribution centers spread across North America, which have allowed the retailer to be closer to its customers and save money on shipping costs. If Amazon were to do that with Whole Foods stores while still operating the stores as grocery-buying facilities, Hertel said, it could save more money and rely less on third-party delivery services.
In addition to the lockers at Whole Foods, Amazon has begun to put its online touch on stores in other ways. In February, Amazon announced two-hour delivery of Whole Foods products, and the company has integrated Whole Foods groceries on its website while selling Amazon products at stores.
To expand the potential uses for Whole Foods, Hertel said, Amazon should look to build its new stores on the larger end of the spectrum. Whole Foods stores have typically averaged about 38,000 square feet, though the grocer has built stores in the 70,000-square-foot range. Its four newest stores are all planned to be 40,000 square feet or larger, with a 72,000-square-foot facility planned in Honolulu.
“By re-configuring (store) space, if the sales you generate from the reconfigured space were greater than the sales beforehand in that space, then at the end … there is probably a payback proposition,” Hertel said. “Amazon has the potential for creating more options for themselves.”