The first store will open in Los Angeles as early as the end of 2019 while the company has signed leases for at least two other locations with plans to open sometime early next year.
These stores will operate separately from Amazon's Whole Foods division, which the company acquired in 2017, though the sources didn't say whether the company would operate under Amazon's name.
The company is in talks to open grocery stores in shopping centers in San Francisco, Seattle, Chicago, Washington D.C., and Philadelphia, according to sources.
Shares of rival Walmart (WMT - Get Report) took a hit after the report was published. While the stock bounced back slightly, it remained down 0.9% Friday. Grocer Kroger (KR - Get Report) was down nearly 3%.
Amazon is a holding in Jim Cramer's Action Alerts PLUS charitable trust.