Amazon Go makes Amazon Prime a grocery disruptor
Amazon continues to reinvent the retail shopping experience, this time with the public opening of their first Amazon Go store in Seattle.
Housed in Amazon's headquarters, the store features hundreds of cameras, sensors and computers that track inventory and charge for items without the aid of a cashier. Customers can simply walk in, scan an app on their phone, pick the products they want and walk out. The items are automatically charged to their Amazon account. This was a proof of concept to test the technology and machine learning required to change the retail checkout experience dramatically.
Amazon continues to frame everything through the lens of technology as an enabler for retail, and Amazon Go is simply the latest way to integrate themselves into people's everyday lives.
It’s allowed them to disrupt retail and other industries. Grocery is the next biggest one to dominate. Using Prime to give shoppers a better grocery experience and making it available to everyone will ultimately win over vast amounts of new members.
By focusing on their customers paint points and pushing the boundaries, they continue to reinvent the shopping experience and create millions of loyal Prime members.
Everything Amazon does seems to push people to Prime. Events like Prime Day encourage customers to sign up for Prime by offering a lot of exclusive deals. Concepts like the free-tier of Prime Video are ways to get Amazon into people's lives.
By getting people comfortable using Amazon and their mobile technology for everyday routines like grocery shopping, Amazon becomes integrated in their day to day routines. They become part of the overall Amazon ecosystem.
And once people are in it, it’s much easier to get them into Prime. Prime members and Whole Foods customers currently have something in common. They’re both affluent. The majority of Prime’s 90 million members have annual household incomes in the six figures, and it’s no secret that most of Whole Foods customers have enough disposable income to shop there.
If Amazon can wow them with the Go tech at checkout, they can likely get them to convert to Prime, and Prime customers spend nearly five times as much per year as nonmembers. And who wouldn’t want to join in after waiting in line while seeing others simply picking up their items and walking out?
Amazon is also considering lower-income households. They’ve already started to leverage their massive buying power to lower prices and they’ll continue to do so. Their plan seems to include giving grocery shoppers of all income brackets a chance to experience what Amazon has to offer.
Amazon has been challenging the status quo and disrupting the retail industry for decades.
In the early days of e-commerce, shipping was the biggest customer pain points of online shopping. While many loyalty programs were offering the same transaction-based benefits, Amazon listened to what their customers wanted.
They turned the industry on its head with the launch of Prime and free two-day shipping in 2005. Amazon has continued to build Prime out around its customers ever since.
From free-shipping to Prime Video, eBooks and photo hosting, Amazon has continued integrating Prime into people's daily routines, making their lives a little more convenient.
Grocery has been in Amazon’s sites for years. It’s very appealing because shopping volume and frequency is high, but the margins are low, and the logistics are difficult because of spoilage.
Amazon dipped their toes into grocery with programs like Amazon Pantry and Amazon Fresh, but their recent acquisition of Whole Foods for $13.7 billion is an opportunity to reinvent the way retail works.
This is Amazon’s opportunity to once again push the boundaries of computer vision and machine learning to create a retail experience where customers can simply take what they want and go.
And what better way to add convenience to people's lives than taking away checkout lines, bagging and card transactions?
While Amazon has no official plans to expand the Amazon Go concept or sell its innovative technology, the Whole Foods acquisition is where things start to get interesting.
Is it merely a coincidence that the interior design of Amazon Go looks and feels a lot like Whole Foods? The Whole 365 brand is also featured prominently throughout the store.
In addition, Amazon and Whole Foods Market technology teams are now beginning to integrate Amazon Prime into the Whole Foods Market point-of-sale system. The two companies will invent in additional areas over time, including in merchandising and logistics, to enable lower prices for Whole Foods Market customers.
It seems likely that Go is a proof of concept to use this technology in Whole Foods. Eventually, Prime will become the premium loyalty program of Whole Foods, and members will receive special savings and benefits in-store. Could one of those benefits be the Amazon Go checkout experience?