Amazon Expands into Physical Retail with Milan Store as North Carolina Workers Push for Unionization

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Amazon (AMZN) shares slightly fell last week, marking a 0.73% decline in recent trading. Over the past week, the stock dipped by 0.21%, while year-to-date, it has appreciated by 4.23%, bringing its market capitalization to approximately $2,423.49 billion.

Moving into the retail sector, Amazon has set a new strategic course in Italy with the introduction of Amazon Parafarmacia & Beauty, its first brick-and-mortar store in Milan. Slated to open on February 12, the store broadens its retail spectrum, offering a vast collection of beauty and personal care products, as well as over-the-counter medications.

This physical store in Milan aims to bridge digital advancements with in-store experiences. It will feature "Place & Learn Stations," incorporating interactive digital displays, and a skincare bar for complimentary digital skin analysis and product recommendations.

Amazon's pivot to physical retail underscores its ambition to translate its online success in beauty and personal care products to the physical realm. Notably, this category ranks among Amazon's fastest-growing verticals. A recent study highlights Amazon as the leading online beauty retailer in the U.S.

Historically, Amazon ventured into the beauty and health market in 2000, initially offering mainstream brands before expanding into luxury lines like Estée Lauder and La Mer. Market research indicates that while e-commerce has surged, in-store experiences have remained largely unchanged, suggesting a strategic opportunity for retailers like Amazon to innovate.

This new venture in Milan reflects Amazon's latest attempt to innovate within the brick-and-mortar sector, following previous endeavors with bookstores and pop-up shops, all of which eventually shuttered due to underperformance. Simultaneously, the company is scaling back its Amazon Go convenience stores, having recently closed a location in California. In the grocery domain, Amazon owns Whole Foods and its Fresh chain.

In a separate development, Amazon warehouse workers in North Carolina are casting votes this week on whether to unionize, an effort led by the "Carolina Amazonians United for Solidarity and Empowerment" (C.A.U.S.E.). The vote could see Amazon's second major warehouse become unionized in the U.S., following the Staten Island facility.

The facility employs over 4,700 staff, with starting wages at $18.50 per hour. C.A.U.S.E. is pushing for higher wages and better conditions. An Amazon representative expressed the company's openness to employee input, emphasizing their preference for direct engagement over union representation.

This marks a continuing challenge for Amazon, which has historically resisted unionization efforts. This past December, workers staged a strike during the holiday shopping season, protesting Amazon's refusal to negotiate with the Staten Island union regarding wage proposals.

The unionization vote in North Carolina marks a significant chapter in Amazon's ongoing labor relations saga, representing broader national trends following landmark strikes and labor movements in Amazon facilities across the country.

Additionally, Amazon recently reached a historical peak with its third-party sellers, with their sales accounting for 62% of total sales in the fourth quarter of 2024. This assertive pivot is in line with Amazon's broader strategy to transition from a retailer to an infrastructure provider, prioritizing seller fees and advertising revenue over traditional retail operations.

As Amazon evolves, it is focusing its resources on these high-margin revenue streams, with third-party services and advertising poised to surpass first-party retail in overall contribution to the company's income within three years.

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