Amazon is having quite a week, and it’s making other companies so nervous that it’s starting to rattle the stock market. After shaking up a whole bunch of ecommerce sites with a test of a new visual-based shopping service, Amazon Scout, Bloomberg is reporting that Jeff Bezos’ growing empire of brick-and-mortar stores could be joined by up to 3,000 cashier-less Amazon Go Stores by 2021.
This move would be both astonishing in its effects on communities and potentially a neutron bomb to everything from existing convenience chains like 7-Eleven to quick-service food stores like Subway and even entrepreneur-owned restaurants and taco trucks.
Bloomberg reports that Amazon’s head honcho, Chief Executive Officer Jeff Bezos, sees eliminating meal-time logjams in busy cities as the best way for the company to reinvent the brick-and-mortar shopping experience.
Remember, Amazon already has nearly 500 new Whole Foods locations it can use as test platforms for new point-of-sale experiments, as well as one functioning Amazon Go store already operating near its HQ in Seattle. And now the firm has announced plans for upcoming sites in an additional store in Seattle and new ones in Chicago, New York and San Francisco.
The company also operates about 20 bookstores around the U.S. but Amazon Go would represent the most ambitious launch of an Amazon brand to date. Add onto all those factors the data the company generates through Amazon Prime memberships and Bezos’ personal fortune and influence, and the idea of a virtual coup against the status quo is not that unthinkable.
One major hurdle is reported to be the cost of setting up shop. The first Amazon Go in downtown Seattle is said to have cost millions to build, stock and put into operation, and company has yet to nail down the final concept. The question is whether to open up a convenience store that sells fresh foods and a limited grocery selection, like a gas station or convenience store — or, to frame Amazon Go as a place to pick up a quick bite to eat, known as a quick service restaurant (QSR) in the industry, or to go more high-end with stores like New York’s Pret a Manger, successfully ported to urban centers in the U.S.
What’s likely to stay constant is Bezos’ bold vision for a cashless world. In the current Amazon Go model (which we said feels like a heist), shoppers use a smartphone app to enter the store, grab what they want, and stroll out. Sensors, high-technology cameras, and more than likely some advanced analytic programs detect who the shoppers are and what they take and bill them; no checkout lines. However, initial reports indicated the technology hit a few snags at first.
Bloomberg postulates that the expansion could put Amazon back into an investment cycle, raising funds to bet money on Bezos’ commitment to long-term success. The media outlet cites the example of Amazon Web Services, the fast-growing computer cloud business that lost money for years.
Opening 3,000 stores of any model would put Amazon head to head with some of the largest brands in the world. By comparison, Kroger operates about 2,500 stores under a variety of brands that generate sales of over $100 billion. There are a little over 3,500 Walmart locations but they’re mostly located in suburbs, away from the dense urban areas and affluent customers that Amazon is targeting with Amazon Go. And there’s a pretty big drop-off as you go down the list, with Albertsons clocking in with 2,400 stores but only generating about $60 billion.
In terms of near-future development, Amazon is considering opening another 10 locations by the end of this year and about 50 locations in major metro areas in 2019. We’ll continue to monitor the story and let you know if an Amazon Go store is likely to end up in your neighborhood anytime soon.
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