• Amazon Unveils First Delivery-Only Brick-and-Mortar Location

    Amazon's Whole Foods Unveils First Delivery-Only Brick-and-Mortar Location

    New Grocery Store in New York City to Only Fulfill Online Orders

    Grocer Whole Foods, an Amazon subsidiary, is testing an online-based, delivery-only model in New York's Brooklyn borough. (Whole Foods)
    Grocer Whole Foods, an Amazon subsidiary, is testing an online-based, delivery-only model in New York's Brooklyn borough. (Whole Foods)

    E-commerce retailer Amazon has debuted a brick-and-mortar store that serves as the first online, delivery-only outpost for its Whole Foods market chain, a new effort in the company's multi-prong quest to dominate in the grocery sector.

    The store, which began operating Tuesday in Brooklyn, New York, is open only to employees who fulfill and transport digital orders, according to a blog post by Amazon.

    The delivery-only store concept, known in the grocery business as a "dark" store, comes as the Seattle company aims to extend its grocery reach and meet growing demand for delivery services, an issue that has become even more urgent during the coronavirus pandemic that has driven much of the buying public online for essential goods.

    "Grocery delivery continues to be one of the fastest-growing businesses at Amazon," Amazon officials wrote in the blog post. "In fact, online grocery sales tripled year over year in the second quarter this year."

    These so-called dark stores remain a relatively new phenomenon in retail real estate. Nevertheless, their growing presence have earned them a position in the Oxford dictionary, which defines them as "a large retail facility that resembles a conventional supermarket or other store but is not open to the public, housing goods used to fulfill orders placed online."

    Whole Foods' new dark location at 167 41st St. looks like a consumer-facing store, with shopping carts and aisle layouts and assortments that seem fairly standard, though it is pared down and utilitarian. Amazon photos of the site resemble a typical location for German grocer Aldi, which is known for its low-cost, industrial-style layout.

    The Brooklyn store has been in the works for over a year, Amazon said. It sits in the thick of Industry City, a 6 million-square-foot complex with 16 historic manufacturing buildings that have been converted into space for Brooklyn's creative business class, such as technology companies, designers, artisanal and craft goods companies.

    The store is just one of many fronts in Amazon's bid to become America's supreme grocer.

    Just a week ago, the company opened in Los Angeles its first "Amazon Fresh" store, a new but traditional, bricks-and-mortar grocery concept.

    Amazon also said it hopes to expand on yet another grocery brand, its cashierless Amazon Go stores, where consumers can walk in, pick out the groceries they want and walk out without having to wait in a checkout line. The stores are equipped with sophisticated sensors and monitoring systems that detect which goods have been chosen, and charge them to the associated customer account.

    The Whole Foods dark store, along with its conventional grocery store concept in California, and Amazon Go all are intended to alleviate the structural inefficiencies that Amazon's previous business model faced when venturing into food and perishables years ago.

    The company's fulfillment and delivery network was structured around hard and soft goods like books and clothing, which could be dealt with briskly enough through a system of large industrial properties on the outskirts of town.

    Introducing produce or frozen foods into such a system, and getting it to the consumer within two hours, posed a logistical challenge for the company, executives have said.

    Amazon's 2017 acquisition of Whole Foods, an Austin, Texas-based organic-focused grocery company, addressed some of the problems. The company could retool the retail stores as mini-fulfillment centers, but shoehorning online trade into a traditional grocery format has drawbacks as well. Analysts have noted that staff's attentions can be divided between online and real life.

    This tension was belied by Amazon's comments about the new Brooklyn store.

    "This store will be fully staffed by Whole Foods Market Team Members who are 100% dedicated to facilitating grocery delivery — enabling them to quickly receive, shop, and prepare orders for delivery to more customers than ever before," Amazon executives wrote in the statement.