Amazon is rapidly opening up stores and there have been some announcements in the past month. Although we’re still talking like less than ten stores, which is you know, a long way off from 3,000. That’s a very very ambitious goal for any company to open up 3,000 stores in the next few years.
It would appear that they’ve perfected or as close to as necessary perfected the system, the cameras, and the sensors. To this point have not heard of any glitches that have occurred however it did take Amazon a year of testing with their own employees. So they seem to have succeeded in that and it seems to be going smoothly although of course, we’re getting this second hand. We would try to do an in-store visit when Amazon Go opens in New York.
Should Merchants be worried about the potential of 3,000 Amazon Go Stores?
I think we sort of have to take a deep breath here because every time Amazon makes an announcement like when they applied for some pharmaceutical store pharmacy licenses, the major pharmacies CVS and Walgreens stocks took a hit when they have announced or been poking around for the auto parts selling auto parts on Amazon website, the auto parts stores took a hit. However, when it comes to C-stores I really don’t think that would be the case because a lot of sales in C-stores are tobacco products lottery games in many locations you see stores sell alcohol beer and wine and you need in-person age confirmation for that which could not be handled on a self-checkout basis.
I think the fast-casual restaurants and Quick Service Restaurants would be most threatened by Amazon Go. In other words, the places where people go in and grab a quick, you know sandwich shops were people go in and grab a quick sandwich for lunch or a quick snack in the morning or afternoon. This category of merchants could be most susceptible to competition from an Amazon Go store.
Is this business model profitable for Amazon and do they worry if it is not?
Amazon has a very long time horizon. Let’s look at Amazon web services, for years that product didn’t make any money, as they do now and even other parts of Amazon weren’t really profitable but again Amazon being Amazon, they’re willing to take the long view and invest millions for something that they believe in and even if it takes several years to turn a profit they believe that something is going to be successful in the long term.
In addition, I do believe that there’s going to be an angle for Whole Foods with the Amazon Go concept. Whether it’s to make a piece of Whole Foods into an Amazon Go Zone. Another reason for opening up the Amazon Go stores in more volume and more numbers is that they could add another benefit for Prime members.
