Amazon is teaming up with national drugstore Rite Aid as part of a new package pickup service that further expands the tech giant’s logistics network.
The new service, Counter, turns physical retail locations into package pickup centers, giving customers another delivery option for their Amazon orders at no extra charge. It went live today in more than 100 Rite Aid stores and will reach 1,500 locations by the end of the year. Amazon plans to ink deals with other businesses and chains. It’s under the Amazon Hub umbrella, which also includes Amazon Lockers for picking up packages.
“We are excited to partner with national businesses like Rite Aid, and local businesses in the future, to create an outstanding experience for our shared customers,” Patrick Supanc, worldwide director of Amazon Hub, said in a statement.
It’s not clear how these partnerships are structured financially. In any case, it’s a fascinating deal — physical retailers such as Rite Aid hosting package pickup hubs for Amazon, the e-commerce giant that has taken business away from brick-and-mortar retail companies over the past several years.
How does Rite Aid feel about lowering last-mile shipping costs for Amazon and helping its customers, the very ones that may have otherwise purchased products from physical Rite Aid stores before Amazon rose to e-commerce dominance?
“Creating a seamless, convenient customer experience is a key element of our strategy and digital transformation,” Jocelyn Konrad, executive vice president, pharmacy and retail operations of Rite Aid, said in a statement. “Being the first store partner for Counter in the U.S. is a differentiator for Rite Aid and we believe our partnership with Amazon, that includes Locker, creates a stronger in-store experience for existing customers and new customers that come in to pick up their packages.”
One advantage for a company such as Rite Aid in a deal like this is increased traffic in its actual store.
Rite Aid’s stock has dropped from above $170 two years ago to around $7. Shares dropped more than 10 percent on Wednesday alone after the company reported a larger-than-expected loss.
Amazon, which bought Whole Foods in 2017 and is inching closer to the $2,000/share milestone, has been rumored as a potential acquirer of Rite Aid. Amazon’s acquisition of Pill Pack last year adds more fuel to that idea.
Rite Aid’s deal with Amazon is similar to the one Kohl’s inked in April, with the department store accepting Amazon returns at its stores as part of an extended partnership.
Amazon originally launched Counter in the U.K. with NEXT and in Italy with Giunti Al Punto Librerie, Fermopoint, and SisalPay stores to positive reception.
Counter adds another option for Amazon customers beyond their front door for getting packages delivered. The Amazon Hub family includes the 2,800-plus lockers that Amazon has scattered around the U.S. — like inside Whole Foods locations or outside 7-Eleven stores — in addition to apartment lockers that Amazon developed last year. The company has also rolled out initiatives such as in-car package delivery.
The centralized pickup points help Amazon fulfill its promise of 2-day and soon-to-be 1-day free shipping for Prime members who spend $119 annually. It speeds up delivery times and offers an alternative to receiving packages at home or work, particularly for those concerned about package theft.
These services also help Amazon compete with companies such as Walmart and Target that offer in-store pickup for online orders. Walmart offers its own package pickup locations, as well.
Amazon has historically relied on partners such as FedEx, UPS, and USPS to help deliver its packages. But the company is now investing heavily in its own cargo jets, trailer trucks, and related infrastructure to help support its Prime fast-shipping program. Amazon is also debuting its delivery drones later this year.