1 in 11 people in America are shoplifters; I was once one of those eleven people. Remember back in the day, at your local CVS or Wal-Mart, there’d be a huge container of color bouncy balls in the toy aisle? Naturally, like any kid would, I used to grab one of those balls and bounce them around the store while my mom shopped. One day though, as I was leaving a CVS with my mom, I walked right out the door with a purple ball in my arms without realizing that my mom didn’t pay for it. Eventually as we got to the car, my mom finally noticed the ball in my hands and dragged me back to the store to return it and apologize. Needless to say, she was pretty angry.
Till this day, I kind of still feel sorry for putting my mom in that awkward situation. Fortunately, I may not have to be sorry for shoplifting anymore. Last week, online retail giant Amazon introduced its new grocery store, Amazon Go. What differs Amazon Go from regular grocery stores is the shopping experience it presents by allowing customers to grab what they want in-stores and simply go.
The idea came about four years ago when the people behind Amazon were brainstorming about how to create more efficient and enjoyable shopping experiences. Coined as “Just Walk Out Shopping,” this concept begins with customers scanning an Amazon Go app off their smartphones as they enter the store. They would go about their usual shopping, and anything they place into their bag is automatically identified by sensors in the store. Once they’ve got what they need, they can just walk out the door and the sensors will automatically charge what they took to their Amazon account.
As of now, the convenience store model is in beta mode with only Amazon employees being allowed to test it out in Seattle, Amazon’s hometown. The store offers ready-to-eat meal options as well as your daily grocery essentials (i.e. bread, milk, etc.). An interesting feature highlighted in their video ad are these meal kits that have everything you need to whip up an high quality home-cooked meal in 30 minutes. Depending on where Amazon plans to map our their store locations, I think these meal kits would be extremely appealing to areas with busy working professionals and students who don’t have the time to cook up proper meals.
Amazon Go isn’t the only store that Amazon has planned. According to company representatives, the cashier-less store is one of three different store formats that Amazon intends to test. Other formats include a drive-thru store and a European-style discount chain. The discount chain model will allow consumers to make purchases online or in-store via touchscreen, and pick up their packages later on the curbside.
So what does this mean for the future of retail? Reportedly, Amazon’s goal is to open over 2,000 stores across the U.S. in a variety of formats. Similar to successful retailers like Zara, Amazon seems to be aiming for a more vertically integrated business model where they’d have complete control of their inventory flow from production to the consumer. With more customers shopping at Amazon for all their needs, Amazon can offer lower prices with business scaled to purchase larger quantities of inventory; consumers interested in special promotions and faster delivery may also be incentivized to subscribe to Amazon Prime. If it all works out, they can bring big competition to established retailers like Target and Walmart.
So what are your thoughts? Is Amazon Go going to be a game-changer for physical retail or are people just hyping up something that sounds too good to be true?