Amazon launched Amazon Go, it’s very own physical grocery store, in Seattle today. As is the case with nearly everything the company does, the store has its own Amazonian twist to it: no cashier and no waiting in lines. You just enter, pick up your stuff and walk out, because the Amazon Go app will track your purchases and bill you accordingly.
Grocery is one of the weakest links in Amazon’s retail experience, due to the fast-paced logistics involved in the segment. Despite dipping its hand in grocery ten years ago in Mercer Island, Washington, Amazon Grocery dreams still remained a dream for the company. The segment strictly remained under the control of brick and mortar stores that already had a vast network of physical stores spread across the breadth of United States, with their procurement and supply chains clearly in place and working smoothly for many years.
Amazon didn’t have that kind of muscle, and was unable to compete with brick and mortar stores, as consumers preferred seeing the items before they bought. And even for those who were okay with the goods being delivered directly to their doorstep, the freshness of the items was obviously more important than anything else. That’s something a company can only achieve when they have physical stores at nearby locations.
And there is one other big advantage to having a nationwide store network when shipping perishable goods all over the country. It makes it a lot easier to forecast and manage inventory. Obviously, it increases the upfront investment, but cuts down the last mile shipping cost, which is always the most expensive part of the delivery journey.
The brand new Amazon Go spans a modest 1,800 square feet of retail floor and is in beta mode, which means only employees of Amazon can use it for now. A public opening is expected in early 2017. To use the service, employees simply download the Amazon Go app on their smartphones and use their Amazon account credentials to log in. Once that’s done they just walk in, bag whatever they need and walk out the store.
Thought it’s still far too early to call this a success or even a milestone, it’s encouraging to see that Amazon is actively moving in this direction despite past failures.
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