AMZN Amazon.com Inc

By Sebastian Herrera 

Amazon.com Inc. is adding another option for customers to get packages from the online retailer: picking them up at Rite Aid drugstores.

The digital marketplace said Thursday that shoppers will be able to pick up purchases at specialized counters in more than 1,500 Rite Aid locations by the end of the year.

While financial terms of the arrangement weren't disclosed, Amazon will gain access to a nationwide delivery system and Rite Aid will potentially gain foot traffic and the sales that could come with it.

The deal is Amazon's latest effort to expand last-mile delivery options and to work with traditional bricks-and-mortar retailers that have long been seen as its foes. Rite Aid, among the chains that have been stung by competition from Amazon, now finds itself in a position to benefit from the site's efforts to broaden the way it gets packages into the hands of consumers, including placing lockers inside apartment complexes and turning cars into personal drop-off points.

Amazon, which will initially roll out its Rite Aid delivery option in about 100 stores, plans to add other retailers to the program. The online behemoth already has arrangements with department store chain Kohl's Corp. and consumer-electronics retailer Best Buy Co. In March, Kohl's said it would expand the sale of Amazon products to about 200 stores following a trial period in about 30 locations.

It has been working with Kohl's to sell Amazon products and process returns. Last year, Amazon said it would join forces with Best Buy to sell television sets powered by Amazon's Fire TV operating system.

"We designed this program to be used by partners that are large and small," said Patrick Supanc, director of Amazon Hub, which includes the counter and locker programs. "You'll see this network continue to expand."

Customers living near eligible stores will see in-store pickup as an option when they check out and pay for their items on Amazon.com. Shoppers will have two weeks to pick up their orders at the location, where staff members will handle orders at counters that feature Amazon branding. Amazon said tens of millions of items will be available with the in-store pickup option, including clothing, appliances and other best-sellers.

The service will be free. Customers won't be able to return items to the Rite Aid locations.

Jocelyn Konrad, an executive at Rite Aid, said the company expects the counters program "will create a stronger customer experience for new and existing customers and drive increased foot traffic to Rite Aid."

Rite Aid may welcome the boost. The drugstore chain's operating loss widened to $667 million in the most recent fiscal year amid sluggish sales. In March, the company replaced three of its top executives, including the chief executive, months after shareholders rejected a prospective merger with grocery chain Albertsons Cos in a bid to stand out among competitors, from Amazon to Walmart Inc.

That may be where Amazon and Rite Aid's interests really align. The Rite Aid pickup program is another spoke in Amazon's delivery strategy as it competes with Walmart and Target Corp. and other big-box chains that have long offered in-store pickup for online orders throughout their thousands of stores. Rite Aid stores have the space to accommodate Amazon deliveries that some of its other delivery partners might not have.

Amazon has thousands of self-service kiosks in 900 cities in the U.S. at various convenience stories and at Whole Foods Market, a chain it owns. Thousands of apartment complexes throughout the country have installed lockers for residential package pickup, and Amazon also drops off packages inside customers' homes, garages and cars through its Key by Amazon operation. The so-called counter program started in May at locations in the U.K. and Italy, and Amazon tested the service at some Rite Aid stores in recent months.

At Whole Foods, foot traffic during the first quarter for micro visits, or in-store trips that take less than five minutes, increased by about 10% from the same quarter a year ago, according to marketing campaign firm inMarket. The firm linked the bump to the presence of Amazon's lockers.

Write to Sebastian Herrera at Sebastian.Herrera@wsj.com

(END) Dow Jones Newswires

June 27, 2019 03:15 ET (07:15 GMT)

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