Amazon is planning a line of tiny grocery stores

Grocery delivery is the holy grail of online shopping. Everyone is chasing it—startups like Instacart, traditional retailers like Walmart, and of course e-commerce giant Amazon—but so far no winner has emerged.

Amazon has worked on its grocery delivery service, Amazon Fresh, since 2007. Fresh is a competitor to services like Peapod and FreshDirect, which allow customers to place their orders online and have them dropped off at home. Until recently, Amazon Fresh cost $299 a year, but last week it was rebranded as a $15-a-month add-on to Amazon Prime.

Turns out that was only the beginning of the changes in store for Amazon Fresh. Today the Wall Street Journal reports that Amazon is planning a line of tiny grocery shops for Fresh customers, internally dubbed “Project Como.” From the Journal:

The Seattle company aims to build small brick-and-mortar stores that would sell produce, milk, meats and other perishable items that customers can take home, these people say. Primarily using their mobile phones or, possibly, touch screens around the store, customers could also order peanut butter, cereal and other goods with longer shelf lives for same-day delivery.

A spokeswoman for Amazon said in an email that the company doesn’t comment “on rumors or speculation.”

According to the Journal, Amazon will also build designated drive-in pick-up spots for consumers who want to place grocery orders online and have them brought to the car, a move rumored earlier this summer. The online retailer would be following in the footsteps of Walmart, which offers free, same-day curbside grocery pick-up at around 400 locations in the US. The system takes advantage of Walmart’s extensive network of nearly 4,000 US stores, which are already equipped with freezers, fridges, and other things needed to store and distribute fresh food.

“Walmart has built probably the world’s best fresh supply chain,” Ravi Jariwala, a company spokesman, told Quartz in August.

Online retailers believe that grocery sales are important because everyone needs to buy food. In 2015, the average US consumer went to the grocery store 1.5 times a week. That might not be frequent enough to sustain an entire business (see: Instacart), but it can be a powerful driver of sales for more general businesses. Before was purchased for $3.3 billion in August by Walmart, the e-commerce startup said customers who bought groceries were doing so 2.4 times per month, compared to the average customer who made only 1.5 purchases a month.

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