Amazon is firing on all cylinders to grow its retail presence

Key Points
  • Amazon announced a partnership with Kohl's on Tuesday that would let its customers return their purchases through certain Kohl's U.S. locations.
  • That's just one example of Amazon's physical expansion efforts in recent years.
  • Amazon is aggressively expanding into the physical retail space because it directly impacts its online sales, according to a person familiar with the matter
Kohl's opens its doors to Amazon's returns
Kohl's opens its doors to Amazon's returns

Amazon expanded its partnership with Kohl's on Tuesday with the launch of a new service that lets customers return their purchases through select Kohl's stores in the U.S.

The partnership is the latest in Amazon's retail expansion efforts. The e-commerce company has been aggressively growing its physical presence in recent years, which now spans hundreds of Whole Foods stores to its own grocery pick-up spots and over 40 miniature pop-up stores located in the middle of shopping malls.

Here's a full list of Amazon's growing physical footprint:

  • Whole Foods: With the acquisition of Whole Foods, Amazon now owns over 400 grocery stores nationwide.
  • Bookstores: Amazon has opened 11 bookstores since 2015 and is scheduled to open two more soon.
  • Amazon Go: Still in beta, Amazon Go is a completely cashier-less store that makes check-out free shopping possible.
  • Pop-up stores: There are currently over 40 Amazon pop-up stores across the country, mainly designed to showcase its hardware products.
  • Kohl's: Through its partnership with Kohl's, Amazon sells some of its hardware in-store and lets its online purchases make returns through select Kohl's shops.
  • AmazonFresh pick-up spots: Amazon has only opened two locations in the Seattle area, but the pick-up spots could cause more people to try its Fresh service.
  • Lockers: Amazon has pick-up lockers in thousands of retail stores, including select Whole Foods stores.
  • College pick-ups spots: Dozens of schools have set up on-campus pick-up spots for Amazon deliveries.
  • Trucks: Amazon runs a "Treasure Truck" in six U.S. cities that sell certain items at a discount.

So why is Amazon so focused on growing its physical presence?

One person familiar with the matter previously told CNBC that Amazon is seeing an uptick in online sales in the regions where it already has a physical outpost. While sales from each bookstore or pop-up store may not be incremental, they are fueling more purchases on the website. In fact, Amazon already sold about $500,000 worth of Whole Foods branded products online in the first week of making them available, according to Bloomberg.

But perhaps the bigger reason is to collect as much purchase data as possible and make better offers to its core Prime users. According to James Thomson, a former Amazon employee who now runs Buy Box Experts, Amazon's expansion into physical retail space will help gather more relevant data and learn more about specific shopping behavior.

"As Amazon becomes relevant in more overall purchase decisions, it will be able to combine all of the search and purchase behavior to develop even more refined offerings and shopping experiences for Amazon customers," he said.

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