Amazon ($AMZN) just announced its Counter program today, allowing customers to pick up their orders at select retailers. Its first partner for this service is Rite Aid ($RAD), which will roll out the service in 100 stores to start and expand to 1,500 by the end of 2019.
The benefits to this, in theory, are that someone picking up an Amazon package at the Counter location might buy something else from the retail provider. Or as Jocelyn Konrad, Executive Vice President, Pharmacy and Retail Operations of Rite Aid, put it, “we believe our partnership with Amazon, that includes Locker, creates a stronger in-store experience for existing customers and new customers that come in to pick up their packages.”
Those 1,500 locations would only represent less than half of all Rite Aids in the nation. However, with that partnership, as well as Amazon's return policy with Kohl's ($KSS) — which starts in July — and existing brick-and-mortar locations with Whole Foods and Lockers, Amazon is quietly trojan horsing the entire country with retail presence.
Should Amazon roll out Counter service to all Rite Aids and continue to expand their offerings in Kohl's, it will have more retail outlets than Walmart.
Excluding locker locations, Amazon has either ownership of, or partners with a company that has, 5,357 locations from coast to coast.
Rite Aid is mainly positioned in the Northeast, blanketing cities such as New York, Virginia Beach, and Philadelphia with locations. It extends out as far as Michigan and Kentucky, some stores sprinkled in Texas cities and in Grand Junction, Colorado, then has a wall of west coast stores.
Kohl's, meanwhile, is spread across all 50 states, with a number of locations in less population-dense states like North Dakota and Montana.
Essentially, Rite Aid represents an expansion into shipping products quicker in cities, while Kohl's is spread out to accommodate returns in states whose residents tend to physically shop rather than order online.
This is on top of Amazon becoming its own largest shipper: Axios reported that Amazon's own shipping and logistics network delivered more packages in 2019 than the United States Postal Service.
Meanwhile, Amazon hasn't rolled out its Counter service to all Rite Aid stores. That would represent a retail presence increase of over 3,500 locations, most of which are in coastal city markets like New York and Seattle.
But the infrastructure is now in place for Amazon to compete with the biggest big box retailers: Target ($TGT) and Walmart ($WMT) on their own battlefield: brick and mortar. While Amazon doesn't have the retail square footage of Walmart yet, Counter points to a future in which it would surpass both Target and Walmart on that metric.
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