Amazon Goes Offline With Bricks-And-Mortar Grocery Chain; Envisions Opening 2,000 Stores
After launching Amazon Fresh, an online food delivery service, in numerous cities just a few years ago, Amazon (AMZN) has now decided it has to go "offline" to capture incremental share of the grocery market. As such, the company revealed its first brick-and-mortar small-format grocery store, Amazon Go, one of at least three formats the online retail giant is exploring as it makes a play for a higher share of grocery spending. With in-store technology designed to track customers' every step, the Amazon Go concept promises "No Lines" and "No Checkout."
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The first Amazon Go concept store is roughly the size of a convenience store, though according to the Wall Street Journal the company is also testing a drive-thru concept as well as a traditional 30-to-40,000 square foot grocery store that would combine in-store shopping and curbside pickup.
The Amazon Go store, at roughly 1,800 square feet in downtown Seattle, resembles a convenience store-format in a video Amazon released Monday. It features artificial intelligence-powered technology that eliminates checkouts, cash registers and lines. Instead, customers scan their phone on a kiosk as they walk in, and Amazon automatically determines what items customers take from the shelves. After leaving the store, Amazon charges their account for the items and sends a receipt.
Meanwhile, in the suburban Seattle neighborhood of Ballard, a handful of workers on Monday were finishing up one of Amazon’s two drive-through prototypes in the area, which according to the people close to the situation are slated to open in the next few weeks. The wood-paneled building with green trim and an overhang appeared to have at least three covered bays for cars to pull up and pick up orders, with a paved driveway in front.
The third concept, the newly approved multi-format store, combines in-store shopping with curbside pickups, according to the people. It will likely adopt a 30,000- to 40,000-square-foot floor plans and spartan stocking style like European discount grocery chains Aldi or Lidl, offering a limited fresh selection in store and more via touch-screen orders for delivery later. Stores in this format, which are smaller than traditional U.S. grocery stores, could start appearing late next year.
While the store formats are still in the concept stage, Amazon ultimately envisions opening up to 2,000 brick-and-mortar locations.
Amazon envisions opening more than 2,000 brick-and-mortar grocery stores under its name, depending on the success of the new test locations, according to the people. By comparison, Kroger Co. operates about 2,800 locations across 35 states.
Adding grocery pickups will be “part of their secret sauce in terms of all of the different ways in which they can engage the customer in bringing the product to them,” says Bill Bishop, chief architect at grocery and retail consultancy Brick Meets Click. “Everyone is looking at grocery because of frequency. Frequency guarantees that you have density.”
Of course, Amazon isn't the first to test drive-thru and curbside grocery as Target (TGT) and Wal-Mart (WMT) both plan to launch curbside pickup in 1,000 stores by the end of next year.
Meanwhile, with nearly 40,000 grocery stores in the U.S. employing roughly 3.5m people, most of whom work at or near minimum wage, Bernie's "Fight for $15" agitators may want to take note of this development.
Disclosure: None
My local ShopRite created a similar program not long ago. In theory it was great. Connect to their instore wifi, scan any items you want to buy with your phone, then on the way out, just scan your phone and at a kiosk and pay.
Sounds brilliant but it never worked well. The WiFi would drop out frequently, prices wouldn't always scan properly (same thing at a manned checkout counter, but very easy for them to override), and it was incredibly tedious constantly scanning every single item. Say you wanted 10 of the same item, you couldn't scan once and then do a quantity of 10, you had to scan each one individually.
Not to mention, one time I did a huge shopping order, only to have my phone battery die when I went to pay at the kiosk. The was the last time I even bothered trying and shortly there after, the whole system was pulled.
I'm curious to see if #Amazon can make this work. $AMZN always manages to do things better. The idea is great, but to date, implementations have been poor.
It all comes down to this: "#Amazon automatically determines what items customers take from the shelves. "
No idea how they do this. But if it works, it could solve all the problems and complaints of the programs that came before. It would also limit petty theft/shoplifting which is a major problem in this industry. $AMZN
Thanks for the heads up, Tyler. I can't imagine why anyone would want to support this technology. If you go into a grocery store, and you see self checkout and human checkout, many will stay in line to take advantage of the human cashiers. In the concepts that eliminate all checkers, I would never go into that store.
I agree with Gary in that I rarely use self checkout. But the reason is that when I do, something always inevitably goes wrong and I need to wait for someone to come and override. Not to mention, there are often lines at my local self checkout as well. The customers take longer to do it then the trained cashiers.
I could see early adopters and tech savvy individuals jumping on this, but it would have to work smoothly. For others it would be too intimidating.