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4-Star & Amazon's Physical Retail Push

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Amazon (AMZN - Free Report) announced the launch of yet another new physical retail store Wednesday called “Amazon 4-star.” The store is set to open Thursday in New York City’s trendy SoHo neighborhood and marks the continuation of a push from the e-commerce power to expand its brick-and-mortar footprint.  

4-star

Amazon will sell products from its website that are rated 4 stars or above, out of a 5-star ranking system, at its new 4-star store. The e-commerce powerhouse is essentially set to roll out a physical version of its online platform, featuring only the most popular items. “Amazon 4-star’s selection is a direct reflection of our customers—what they’re buying and what they’re loving,” the company wrote in a blog post Wednesday.

“We started with some of the most popular categories on Amazon.com including devices, consumer electronics, kitchen, home, toys, books, and games, and chose only the products that customers have rated 4 stars and above, or are top sellers, or are new and trending.”

 

Amazon’s new 4-Star location will feature sections such as “Most-Wished-For” as well as “Trending Around NYC” and “Amazon Exclusives.” The company called out products such as a Lodge 3.5 Inch Cast Iron Mini, the card game Codenames, and, of course, a ton of Amazon devices.

The e-commerce and cloud computing company will offer its Prime members their normal discounts on specified products, while also listing the standard price in an effort to attract more people to its widely popular subscription service. Amazon’s 4-star store helps to emphasize its brick-and-mortar push that ramped up with its Whole Foods purchase last June.

Physical Retail

Amazon’s jump into brick-and-mortar retail seems to run counter to the narrative that has circled for the last few years: the e-commerce firm’s online platform and fast delivery is going to destroy traditional retail as we know it from Walmart (WMT - Free Report) to Target (TGT - Free Report) . However, since Amazon bought Whole Foods for almost $14 billion, it has ventured deeper into traditional retail.

Amazon opened its first bookstore in November 2015. The company now has over 15 Amazon Books locations throughout the U.S., from California to New York, and plans to open more locations soon.  

The e-commerce giant also has an array of temporary, pop-up stores throughout the country that sell different Amazon products. Furthermore, Jeff Bezos’ firm now boasts four cashierless convenience store, Amazon-Go locations—three in Seattle and its new spot in Chicago.

Amazon reported physical stores sales of $4.31 billion last quarter, up slightly from $4.26 billion in Q1. The second quarter marked only the fourth time Amazon reported such revenues. Clearly, physical stores only accounted for a small amount, just about 8%, of AMZN’s total Q2 revenues. But investors should continue to pay close attention to Amazon’s brick-and-mortar push.

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