Where will Amazon go with its cashier-free concept?

Discussion
Photo: @RLTheis via Twenty20
Dec 12, 2018
George Anderson

It’s the Amazon.com way to keep pushing out news items to keep the company front and center in the mind of the press and consumers. The strategy is typically quite overt with the e-tail giant pushing press releases or having executives write blog posts. Other times, news about Amazon’s considered plans go public from unidentified sources. Among the most frequently covered stories of late has been the Amazon Go store concept. The retailer has publicized opening versions of the format in a smaller footprint, eyeing airports as a destination and making plans to expand the concept overseas.

On the smaller footprint front, Reuters reports that Amazon opened a scaled-down version of Go inside one of the company’s offices in Seattle. The new store, located in the old Macy’s building, measures 450-square-feet and focuses its product selection on salads and snacks for office workers.

Gianna Puerini, vice president of Amazon Go, told the wire service that a smaller footprint would enable Amazon to place stores in a wide variety of locations, including office lobbies and hospitals. The e-tailer currently operates eight Go stores in Chicago, San Francisco and Seattle.

Earlier this week, Reuters reported that Amazon was also looking at airports as a landing spot for its Go concept. The theory is that cashier-free stores with a lot of grab and go items will be a good shopping fit for business travelers making their ways to a plane or killing time in between flights. Dallas Fort Worth International Airport is one facility that has attempted to recruit Amazon, according to the report.

Amazon is also, according to The Telegraph, planning to take Go on the road to a location near Oxford Circus in London’s West End, one of the busiest shopping districts in Europe. The U.K. market is strong for Amazon overall. The e-tailer reported record Black Friday sales in the U.K. to kick off the holiday selling season.

DISCUSSION QUESTIONS: What do you think of the upside potential for Amazon to open smaller Go stores in office buildings, airports and markets outside the U.S.? Do any of these stand out to you as being substantially greater opportunities?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Cashier-less airport stores sounds like a good match. Where more than in an airport does one need expediency?"
"The traditional rules and risks in evaluating cross-border expansion need not apply. This is the dawning of a new age of possibilities where the P&L lacks a labor line-item..."
"To support the cost of the technology and operating expenses, Go locations need a relatively high available traffic."

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24 Comments on "Where will Amazon go with its cashier-free concept?"


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Shep Hyken
BrainTrust

This is all about convenience, something that Amazon has always been focused on. Small stores, and lots of them. Employees there primarily to keep stock and give support – and not worry about checking out, managing a cash drawer, etc. It is now a reality.

Charles Dimov
BrainTrust

Airports and very high traffic zones are ideal for Go stores. Airports specifically would cater to time transaction speed as you run to catch a connecting flight.

As for Markets outside the U.S. — YES. U.K., France, Germany, the Nordic countries, have all adopted omnichannel retailing much faster than the U.S. market. So if Go catches on here, then there is definitely good potential for it in Western Europe. Other regions would be about being selective. It might be a good strategy to focus on airports around the world which are particularly high density.

Frankly, a big part of adoption will be due to the novelty factor. Everyone wants to try this. It caters to that feeling that you are trying something new, or that subversive feeling that you are trying something sneaky (not paying at a cashier for your goods).

Mark Ryski
BrainTrust

Amazon will continue to do what Amazon does, and experimenting with the Amazon Go concept is part of it. Amazon Go stores could fit in lots of places, but I doubt that there will be any particular “best” place for these stores. The reality is, Amazon Go is a glorified convenience store and essentially a live demo of their cashier-less technology platform, which I expect is really what Amazon is trying to establish. Like Amazon Web Services (AWS), I believe that Amazon’s bigger play is in the provisioning of technology to retailers — once the model is proven and the technology is affordable, which I believe is still a long way off.

Bob Amster
BrainTrust

Cashier-less airport stores sounds like a good match. Where more than in an airport does one need expediency? I would also guess that most business travelers are tech savvy enough to embrace it.

Rick Moss
Staff

Many urban commuters would have a similar need, Bob, and exhibit equal comfort with the technology. Any location near mass transit stops and within stations and hubs would be welcome. (Nothing more nerve-racking than waiting for your change from the bodega guy as your train is pulling up.)

Jeff Sward
Guest

Wow — talk about the opportunity AND ability to localize. Not just neighborhood by neighborhood, but building by building. It will be interesting to see what kind of combination of existing data plus testing it will take to get as microscopic as necessary to make this work.

Richard J. George, Ph.D.
BrainTrust

As I noted in a similar article last week, the upside of Amazon Go is potentially unlimited. Look at the sales per square foot comparisons: Amazon Go’s retail productivity of at least $2,700 per square foot selling area and 50 inventory turns/year is unmatched in retailing. Consider that Tiffany averages $2,900 per square foot of selling area. I would expect the sales per square foot to be even higher in smaller footprints like office buildings and airports. My first choice would be airports for a couple of reasons: 1. huge upside traffic potential versus an office building, 2. a terrific opportunity to build awareness and generate trial in markets not yet served by Amazon Go.

Neil Saunders
BrainTrust

Isn’t a place to get a few snacks in an office called a vending machine? Seriously, I think there is potential to roll out the Go concept to many places – airports, travel hubs, Main Street – but how profitable are nano locations like offices? That’s the long-term determinant of success.

Zel Bianco
BrainTrust

Neil, visit one and you will see and understand that a vending machine is no substitute for what these offer. Especially in a place like Chicago where you may not want to venture outside in cold weather to grab a salad.

Neil Saunders
BrainTrust

I’ve visited two. The vending machine comment was an irreverent one!

Mohamed Amer
BrainTrust

The expansion of the smaller Go stores concept addresses unmet needs of high density traffic areas. Amazon minimizes initial investment through small footprint as well as operational costs with the help of technology. Using purchase data, they can continuously adjust the assortment to deliver the goods.

The traditional rules and risks in evaluating cross-border expansion need not apply. This is the dawning of a new age of possibilities where the P&L lacks a labor line-item entry.

Zel Bianco
BrainTrust

I had commented a few months back that I visited an Amazon Go store in Chicago with my friends from the Category Management Association and Walgreens and we all walked away very impressed. We were purposely picking up items and putting them back to test how well this was working and then we each purchased a few items. I had entered the store without having downloaded the app so my purchase would automatically be applied to my colleague’s purchases. When my buddy’s receipt popped up on his phone, all items were correct and none of the items that we picked up and put back had been incorrectly charged.

If they can perfect the technology to be scalable across any size format, especially when the store is really busy, then I think they have a big opportunity regardless of where the store is physically housed. This particular store which was in an office building in The Loop had almost everything you might need including very well prepared sandwiches, salads, and fresh fruit.

Brandon Rael
BrainTrust

Convenience is what the Amazon Go playbook is all about. This model could scale significantly across big cities, airports, train stations, and anywhere where kiosks and other convenience stores dominate.

Another gold mine for Amazon could potentially be the co-working universe, where WeWork is establishing a global empire. Theoretically, at a typical WeWork, you have a very captive audience where both pop-up retail experiences and convenience formats such as Amazon Go could dominate. In addition, the repurposed department store and mall spaces could be yet another strategic opportunity as they evolve into shared workspaces and experiential centers.

Ricardo Belmar
BrainTrust

Compeltely agree, I could see Go stores popping up at every WeWork location being extremely popular and successful!

Ray Riley
BrainTrust

There is huge potential in office buildings, airports, and international locations. I’m more interested in how Amazon goes about it. Do they acquire a Rite-Aid like player? Launch a franchise model in order to initially attain scale — particularly in more rural and suburban markets?

Gene Detroyer
BrainTrust

Amazon’s best bet on Amazon Go is to prove it out and license it to everyone else. It will take considerably less investment in funding and management than opening Amazon Go stores and it will take a fee on every purchase made by every retailer.

Ralph Jacobson
BrainTrust

I’m wondering why retailers are waiting to see what happens next. Why can’t someone else be innovative?!

Ananda Chakravarty
BrainTrust

Great idea to put such an option in airports — or any high traffic location. But two key challenges remain — airport contracts are typically long term. Locations will be hard to come by with strong competition from companies like Hudson and QSRs. Airports control the assortment which can be problematic for Amazon. Second, the cost model is not yet proven to be scalable — the amount of tech equipment and material may not justify the typical daily purchases from current c-stores and typically rent costs at airports are in the 15 percent range according to the Airports Council International. There may also be security concerns by the airports. Regardless, plenty of upside potential as they enter the c-store market.

Rich Kizer
BrainTrust

Several weeks ago, Georganne and I had the opportunity to tour that store in Seattle with a representative of Amazon. It was amazing how, during the lunch hour, people from the street flooded in and purchased items. This is an absolute natural for any busy environment that allows customers the opportunity of a quality purchase, with no wait.

Ed Rosenbaum
BrainTrust

Something we should be paying attention to is this is Amazon we are discussing. They do not experiment if they already know it will be a success or a failure. Aparently they want to do this and are looking for the best first steps to bring it to the public. Airports are a good starting place with so many people waiting for their planes to depart. Other places with the potential for a large group of people waiting or congregating could be large office campuses, colleges, train stations to name just a few. Areas with high traffic is the key.

Ricardo Belmar
BrainTrust
Amazon Go stores are the ultimate retail expression of convenience, so they could easily be installed anywhere consumers are in a hurry and crave that convenient in relatively inconvenient locations. Airports immediately come to mind to fit that formula! Co-work environments like WeWork also look like a great fit. While yes, it may be extreme to think of a Go store inside an office, but this is in a way a more modern equivalent to office cafeterias in large offices. Any high-traffic international locations would also fit this formula. There is significant potential for places to put an Amazon Go store. The real question to me is how cost effective is it? Will these small format stores earn enough revenue to make the high cost-investment in technology per store worth it? I’m not convinced yet, but I do believe that Amazon is using these as a showcase to stay top of mind and ensure that everywhere we turn we see their brand throughout our daily lives! The Go concept certainly presents them as a technology… Read more »
Ken Morris
BrainTrust

The grab and go, cashier-less, concept has unlimited possibilities. I am still skeptical about the ROI on this concept. Maybe if Amazon and other retailers can scale the concept and drive down the investment per location, it will be more financially viable.

Office buildings are probably the least attractive of the suggested locations, as the sales are limited to a shorter time period (working hours) and it will be more difficult to generate enough revenues to cover the high cost of technology.

Beyond conventional convenience stores, airports, train stations, sports arenas, and any place that has high consumer traffic and where convince items are in high demand are good opportunities for the grab and go concept. Retail is changing faster than ever — how exciting!

Steve Montgomery
BrainTrust

As Ananda noted, airports are a unique environment. The rules that govern who gets to do what where are tightly controlled. The same is true but to a lesser extent in office buildings. Amazon may be able to overcome some of the issues raised because there will be a certain cachet in having an Amazon Go in your building and airport.

To support the cost of the technology and operating expenses, Go locations need a relatively high available traffic. I can see this occurring in an airport; harder to do in an office building. That being said, there is no question that the number of Go locations and the types of locations they will be in will continue to grow.

Liz Adamson
BrainTrust

There is a huge opportunity for smaller Go stores in especially airports. Talk about convenience for travelers who are in a hurry, juggling luggage and bags, etc. The easier to shop and pay the better for harried travelers. It may be confusing for travelers not familiar with the concept, but frequent fliers will catch on quickly and even come to depend on it.

wpDiscuz
Braintrust
"Cashier-less airport stores sounds like a good match. Where more than in an airport does one need expediency?"
"The traditional rules and risks in evaluating cross-border expansion need not apply. This is the dawning of a new age of possibilities where the P&L lacks a labor line-item..."
"To support the cost of the technology and operating expenses, Go locations need a relatively high available traffic."

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