Amazon's Next Big Move: Big-Box Retail?

For decades, Amazon (NASDAQ: AMZN) has been dominating online retail. Its e-commerce marketplace has become one of the most popular go-to options for consumers due not only to its convenience, but to the speed of its delivery. It has wreaked havoc on conventional brick-and-mortar stores and their once-stable business models.

But Amazon has shown an appetite for businesses beyond just its online marketplace. It acquired Whole Foods in 2017 in an effort to get into the grocery business. Now, it's looking at a much more direct path to retail: launching a massive storefront.

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Amazon is planning to build its first massive supermarket in the Chicago suburb of Orland Park. At 225,000 square feet, the store would be larger than your average Costco or Walmart locations, which average around 150,000 square feet. Even the larger Walmart Supercenters are around 179,000 square feet.

The new store would offer groceries and many household goods, giving Amazon a new way to reach shoppers, and if it expands the concept, it potentially could take more market share away from its key rivals. Development of the Orland Park site is still in its early stages, but the superstore concept is something that investors will likely be keeping an eye on.

Numerous growth opportunities

Getting deeper into brick-and-mortal retail may seem like a perplexing choice for Amazon, given how efficiently its e-commerce operations are run, and how relatively inefficient and costly brick-and-mortar storefronts can be. But the company has deep pockets and plenty of resources to tap into, so it can take a slow and measured approach with its strategy. Many retail companies have struggled in the past due to overexpansion, but that doesn't mean Amazon will follow in their footsteps.

One thing this new plan does illustrate is the company's relentless pursuit of growth opportunities, and just how plentiful they are for it. Amazon has become one of the most valuable companies in the world by relying mainly on its online business and its cloud infrastructure unit. Launching a new physical retail operation may be risky, but Amazon could make it work, and do so in a way that enhances its e-commerce operations.

With growth opportunities in artificial intelligence, cloud computing, its online marketplace, and now potentially big-box retail, Amazon continues to show that it can be a no-brainer buy, and a stock to hang on to for the long run. Plus, trading today at around 34 times earnings, the stock is a much cheaper buy than it has been in the past.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, and Walmart. The Motley Fool has a disclosure policy.