Amazon and Real Estate are in a Relationship

When most people think about Amazon, they think online shopping, also considered, by most, the movement away from Real Estate.

Well, not so fast.

Amazon is working to build a real estate empire, albeit different from traditional empires. One might ask why would the most successful e-commerce site decide to go “old school” and dive into real estate?

The better question is: Who better than Amazon to know the need for physical real estate?

Amazon found vast success in the online world and along the way realized the limitations. This is important. There exist limitations in both spaces; brick and mortar and e-commerce. So, the name of Amazon’s game? Convenience.

Step 1:

Purchase Whole Foods. Surface level, it seems like a decent investment purchasing a grocery store competitor, to Amazon Fresh, with 431 stores and a loyal following. But think deeper, these stores were highly sought-after stores. At the time of purchase, Whole Foods was the leader in organic groceries nationwide, but more important is their locations.

The stores are located in upscale, higher income areas. You know the type of customers that are interested in paying a little more for groceries, or maybe even, paying a little more for faster delivery? Yes, I am referring to the opportunity for Amazon to capitalize on Whole Foods’ locations as distribution nodes.

Step 2a:

Insert Amazon Lockers. These are more convenient versions of your local post office. Essentially, they are storage lockers for shipments and they exist in many Whole Foods, Seven Eleven Convenient Stores and other commercial space nationwide. They serve as a node for one-day or same-day delivery.

Step 2b:

Amazon Hub is Amazon’s new partnership with multifamily operators. Like Amazon Lockers, it allows for more convenient delivery to apartment facilities.

In both Amazon Lockers and Amazon Hub, Amazon is capitalizing on prime real estate that they don’t even own.

Step 3:

What is the “last mile” to consumers? At this day and age, one could argue that it is the consumers’ living room. Amazon has developed two new strategies on invading your home space: 

1. An innovative security company, Ring, that they purchased with the hopes of solving the delivery problem by utilizing cameras to provide secure package drop-offs. 
2. Amazon Echo, “Hey, Alexa…”, is Amazon’s voice activated speaker system, which allows individuals to ask about the weather, play music, discover recipes and even order things online. The growing sector of Voice First Technology is allowing companies to play a major roll, front and center on the coffee table.

Ultimately, Amazon’s real estate footprint is growing in industrial, commercial, multifamily and even residential space.

It will be interesting to see how consumer preferences continue to evolve. However, as developers, we are betting that the more invaded spaces become, the greater the desire will be for community space and real personal interaction.