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Amazon should add gas stations to its physical store portfolio, analyst says

Incorporating gas stations into its physical store expansion will help advance Inc.'s delivery efforts, according to a Jan. 2 report by D.A. Davidson analysts.

The report comes as Amazon reportedly plans to expand its supermarket chain Whole Foods Market Inc. stores in an effort to improve its delivery capabilities. D.A. Davidson analyst Tom Forte believes adding gas stations to its physical store portfolio would provide Amazon with "thousands of commercial locations to advance its delivery efforts." The analyst firm said that Amazon delivery initiatives such as Amazon Locker, a self-service kiosk where consumers can pick up packages, and Prime Now, a free two-hour delivery service exclusive to members, could be incorporated into operations at the gas stations.

The new venture would also serve as an additional source of revenue for Amazon. The report noted that Costco Wholesale Corp. makes 10% of its revenue from gas sales. In addition to a boost in sales, gas stations could also help the company increase Prime membership signups and retention. Amazon has over 100 million Prime members globally, according to the company's 2017 annual report.

Amazon Go could also be included in the gas stations by providing a cashier-less checkout at the gas station convenience store, the report noted.

Amazon did not immediately respond to S&P Global Market Intelligence's request for comment.