Amazon Leak Suggests Pandemic Killed Off Discount Store Plans

Amazon was exploring the possibility of opening a discount outlet, according to a new report, but the idea was reportedly squashed by the pandemic. Sources behind the leak claim the physical discount stores could have been a way for Amazon to sell its leftover unsold inventory at 'steep' discounts, including electronics and home goods.

The information comes from sources speaking with Bloomberg, which claims that Amazon got the idea for physical discount outlet stores partly due to a discounted excess inventory sale that opened to company employees in Seattle. The idea behind such a business move is simple.

Amazon operates a huge number of warehouses full of inventory — and some of that inventory simply doesn't sell. Some unsold inventory is shipped back to the supplier, but many items remain and take up space. Physical discount stores would give Amazon additional retail locations for offloading and selling that inventory, the incentive for consumers being the significantly lower prices.

Amazon reportedly looked into different ideas for its potential discount stores, including pop-up destinations and permanent locations. However, the sources claim the idea was still preliminary when the pandemic hit, which forced workers to instead focus on daily operations as demand for Amazon's service skyrocketed. The addition of dealing with Fresh stores reportedly added to the burden.

Whether Amazon will resume the plan in the future is unclear. Amazon already has a number of physical retail stores, including pop-up destinations, like Amazon 4-Star and Amazon Go. As well, the company acquired Whole Foods in 2017, taking on its more than 500 grocery stores.