Amazon Go

By Dave Rogerson

This past week, we saw the announcement of the new Amazon Go store… a brick-and-mortar grocery store planned to launch in Seattle without lines or checkout counters, kicking off new competition with supermarket chains. They’re already taking the fight literally to the doorstep with Amazon Fresh, which is their home delivery service for fresh produce and groceries.

I’ll be totally honest here. I’m jealous. I work for Microsoft and I see what Amazon is doing and I applaud them for their innovation. The 1,800 sq. ft. store will open in early 2017. When you enter the store, you’ll get in by using the Amazon app on your phone which will recognize you and allow you to pass through the wicket. As you remove merchandise from the shelves, it charges your account. Hotel rooms offer a similar idea when you remove an item from the mini-bar. The advantage of Amazon Go is that they remove the item from your virtual basket when you replace an unwanted item back on the shelf. Hotel mini-bars don’t seem to have that functionality.

There will be staff in the store to answer questions and re-stock shelves. I assume that they’ll also be there to watch out for people who jump the turnstile to get in without a registration. While it hasn’t been confirmed, another benefit for Amazon will be their ability to use the locations to accept returns of other merchandise that you had shipped to your home. A huge cost savings for them.

We’ve come a long way from the Horn & Hardat automat that opened in Philadelphia in 1888. At the time, coin operated technology was the best they could do. Shoppers at the time would have thought Amazon Go was pure science fiction. First of all, you’d have to explain the idea of a communication device that you carried around in your pocket not to mention that the device would also serve as a method of payment.

Even IBM took a swing at this idea more than 10 years ago. Remember this commercial? The idea was very cool at the time, although looking back I have to ask why they thought it would be necessary to have a paper receipt when the rest of the transaction was digital.

https://www.youtube.com/watch?v=eob532iEpqk

Earlier this year in Sweden, Robert Illijason opened Naraffar, a small serve-yourself store in the town of Viken (pop. 4,200). The technology is very similar to what you would find in Amazon Go. While his brand certainly doesn’t carry the gravitas of an Amazon, you have to admire his ingenuity.

https://www.youtube.com/watch?v=F5NHWZ58vKY

One could complain and say that the Amazon Go format doesn’t address the full range of products that you’d find in a large grocery store. That’s not what they were attempting to do. Amazon kept it simple, no scales, no paper coupons (though I imagine virtual coupons are a possibility). The merchandise within the store is more like a C-store with some ready-to-serve fresh products. Convenience stores will be the retailers to experience the disruption caused by the Amazon Go model.

Last week I travelled to New York City with a colleague to scout a walking tour of innovative retailers for a group we’re hosting at NRF in mid January. He joked about including the “Snuffleupagus Store”. It had been a while since I had watched Sesame Street so I asked him to explain what he meant. Snuffleupagus was the invisible creature that only Big Bird could see. He said that from time to time Amazon promises to launch physical stores but they never seem to come to fruition in the way they describe them. I can’t say whether Amazon Go will follow the path of the Snuffleupagus, but I do suspect they’re going to shake up retail again with this new idea.