Back in December 2017, Amazon.com shut down online wine sales due to legal restrictions. Of course, the retail behemoth is never one to back down from a good market opportunity. Via San Jose Mercury News, Amazon.com has applied for a license to open a liquor store in its San Francisco warehouse.
At only 200 square feet, Amazon’s new wine store will have little space to display bottles. We expect that it will be closer to a kiosk storefront, where customers can purchase (and perhaps digitally browse) wine that’s in the warehouse. Whatever the final layout, one thing is certain: store operations will rely on technology and innovation.
The store will be open from 8 A.M. to 4 P.M. — earlier than your average liquor retailer. This may potentially give Amazon an edge over its competitors. It gives customers looking to buy wine early in the day a new option that isn’t simply their local grocery store (which is generally the only other wine retailer open early). Amazon will also offer wine delivery, which will continue after the store is closed, from 8 A.M. until midnight.
So if Amazon couldn’t sell alcohol before, what changed? Tied house laws prohibit retailers from accepting payment from suppliers for advertising alcoholic beverages. Amazon takes a cut from sellers for listing their goods online, which counts as advertising. If Amazon didn’t take a cut from listing wine brands online, it wouldn’t make any money. Unless it also served as the fulfillment center and warehouse for said wines! With the expected liquor warehouse model, Amazon could charge suppliers for housing and delivering their wine. This neatly skirts the tied house rule and, as always, allows Amazon to continue expanding its empire.
If the model works, Amazon will surely want to expand the concept to other states. We’ll continue to provide more details on Amazon’s wine sales endeavors as they come.
Photo credit: Amazon.com