In case you missed it, on January 22, 2018, Amazon opened it’s pilot Amazon Go store in Seattle, WA, also the home of Amazon headquarters. Amazon Go is Amazon’s answer to the traditional corner grocery store and as with most Amazon products, it is disruptively innovative. Think for a minute back to when Amazon was founded in 1994 and started taking away business from small local bookstores by selling books online. That was Jeff Bezos’ entry point to enticing the customer through convenience.
“Lots of companies don’t succeed over time. What do they fundamentally do wrong? They usually miss the future.” – Larry Page, CEO Google
Since then Amazon has grown like a cancer into almost every area of our lives and it all has to do with making the customer’s life easier. Yet in the background, the giant retailer was secretly not only learning the shopping habits of each customer, but saving the data for being able to predict trends and to facilitate revenue from advertising in addition to the profit margins.
Think Amazon Prime – free shipping was a game changer. Since shipping was free (if you could justify needing to buy more than $99 worth of shipments in a year), people started to shop more on Amazon. It’s another win-win. Amazon gets more sales, the customer gets free shipping, Amazon gets more customer data.
The website is so convenient and disruptive too. Not only are there reviews, but Amazon (like Alexa) will recommend similar products based on your previous buying history and what others like you have purchased. As a consumer you feel like Amazon is your very own personal shopper, always recommending the best items and finding the right deals.
Furthermore, Amazon Marketplace sells used items and products from third-party retailers giving the consumer access to the largest online marketplace in the world.
“What we need to do is always lean into the future; when the world changes around you and when it changes against you… you have to lean into that and figure out what to do.” – Jeff Bezos, CEO Amazon.com
The innovation of Amazon Go lies in the fact that shoppers use the app on their phones to check-in to the store and this means they don’t have to check-out via the standard line at a register. Hence the “Just Walk-out Shopping” tagline. “No lines. No checkout. (No seriously.)”
The app on the phone works with cameras throughout the store and according to the app “uses technologies similar to those used in self-driving cars: computer-vision, sensor fusion and deep learning.” As a customer, you are charged based on what you take off the shelves, but the invoice only appears after you leave the store. If you take something off the shelf and change your mind about buying it, just put it back, no problem. Amazon Go understands. So you just tap your app upon entry into the store, grab whatever you need and walk out. For your first time visit, I imagine it feels a bit like stealing. And for those of us who love the idea of frictionless experiences, I imagine it feels quite liberating.
I imagine anyone in loss prevention is wondering about the potential for increased theft. I’m sure Amazon has had to think through many potential risks, like power outages, loss of internet connection, phone battery failure etc. What would happen if you switched your phone off mid-shopping at the store?
Amazon Go removes even the sense of having to pay for something. There is no transaction other than a quick check on your app to see if you were charged for everything correctly and over time, that need to verify will fade as customers trust their convenient and fast corner Amazon Go store more and more.
Since Amazon is no longer just an online retailer after acquiring Whole Foods Market for $13.4 billion in 2017, I predict we will see a lot more Amazon Go like features in Amazon’s brick and mortar locations. We may even start to see the Amazon Go app made available in Whole Foods locations. Imagine being at your local Whole Food Store waiting in line to check out and seeing people just walking out with their groceries. Yup, my jaw would be dropping too. I would definitely want that app and use it unless of course it got too popular and the lines to get into the store are just as bad as the lines to check out.
Shoppers will expect other retailers to follow Amazon’s lead and we’ll start to see Walmart, Target, Safeway, Kroger and Costco introducing apps or enhancing their existing ones to facilitate the checkout-free shopping experience.
No app, no phone, no entry. Without a phone, shoppers will be prohibited from the store. This means that Amazon Go stores and any copycats will cater to a more affluent audience. The rollout of similar stores will likely start in the most metropolitan areas and neighborhoods where early-adopter techie types live or work. This may further increase shopper marketers’ ability to target based on income and location.
Grocery stores with longer lines will face competition from those with the Amazon technology enabling the check-out free experience.
Since Amazon started in the digital space, it understands the value of data probably better than any other company on the planet and it has perfected personalization. Amazon bases decisions for innovation and growth on data and intelligence and it understands the needs of 21st-century shoppers.
The reliance on data will further increase the need for shopper marketing teams to have data scientists on board to work with shopper marketing strategists on the best ways to promote your product. The pay to play model will dominate and brands that can afford to promote products on Amazon will have the advantage.
Amazon makes everything super convenient, yet it also holds all of its data very securely, i.e. it is not sharing information with other shopper marketing organizations and therefore in order to promote a product Amazon will ultimately be able to charge more for businesses to get their products in Amazon Go stores as well as in the online catalog.
Convenience is something people are willing to pay for even it means they are paying for it with their privacy. Skip ahead to when there are as many Amazon Go stores as Starbucks. Since Amazon will know what each customer likes to purchase AND they have the customer’s order history, the ability to target a specific type of customer will become increasingly more sophisticated. Not only will Amazon know what you have just purchased, but it will also be able to predict when you may be likely to purchase the same item again and send incentives if their predictions are not met.
Imagine listening to Amazon’s Alexa and her asking you if you would like to order anything you just recently purchased at an Amazon Go store for delivery via Amazon Prime.
Since Amazon knows where people are when they are checking into a particular store, it can offer push notifications that are geo-fenced to specific stores to increase product trial or incentivize customers to impulse buys. This will be one of the advertising options for shopper marketers.
Because people will be able to pay on their phone, fewer people will carry cash or even credit cards on them. This means there will be increased usage of couponing apps like Ibotta and Checkout51.
Since there is no checkout stand, those magazine and candy bars that are ever-present at the checkout lines will be a thing of the past. Unless of course, Amazon Go starts putting them near the exits. Then we’ll see true impulse buys because there will be less time for consumers to think about what they are buying. Speed shopping will become a trend giving a whole new meaning to the phrase grab-‘n-go.
“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” – Bill Gates
Whether you want the experience of purchasing groceries with a person checking you out at a register or not, time is what most of us want more of. Amazon Go is a small nod to this need and a big step towards understanding more about you to enhance personalized marketing. I am excited to see how this future unfolds. How do you think it will look?
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