Dennis Green: If you're the operator of a local
convenience store or corner shop or bodega and
an Amazon Go opens up just around the corner,
you might wanna look over your shoulder.
Amazon first announced its Amazon Go project in 2016.
The first store didn't open until 2018, January.
There are now four Amazon Go stores in operation.
Three of them are in Seattle and one of them is in Chicago.
Reportedly they want to open at least 3,000 stores
in three years.
That seems a little optimistic when it took so long
for them to open the first one.
They're pretty small stores to start out with.
They're only a couple thousand square feet
which is kind of closer to a convenience store
than a full-fledged grocery store.
Amazon Go stores are the famous thing that Amazon
likes to say is it has just walk out technology
where you can go in, scan your app, you can take whatever
you want off the shelf and then you just walk outside
and then it charges you for whatever you took.
It uses sensors and cameras to kind of tell what customers
are taking in order to charge them correctly.
There's two kinds of Amazon Go stores.
There's a more grocery-oriented
where you can go in and get some light groceries.
And there's another format that's more oriented towards
prepared food that's kind of like a lunchtime spot.
You can just go in and grab a sandwich or a salad.
So this isn't stuff that you really wanna wait for.
It's maybe like a candy bar that you just wanna grab.
Something that you're gonna go and kind of consume
immediately or a grocery item that you need for a recipe
that you wanna cook that night.
They also sell their Amazon meal kits in these stores
which are refrigerated kits with a bunch of different
ingredients that you can cook.
90 percent of all retail sales are offline.
It's kind of staggering when you think about it.
You think about the fast growth of online is still
only amounts to 10 percent even in 2018 so
there's kind of like a lot of room to run there.
Most estimates peg Amazon as taking up basically half
of all e-commerce.
There's some room for them to grow and estimates by analysts
show that they will grow but they're looking for other
avenues of growth to maintain the velocity that they have.
And the one that they've pegged right now is
bricks and mortar.
When Amazon moves into a market they kind of operate
with this low margin mentality where profitability
doesn't really matter until they kind of achieve mass scale
and then they can kind of tinker with the levers.
As far as Amazon making money off of these stores,
that's kind of TBD.
There's a report that the technology
that went into the first one
cost a million dollars to install.
That adds a big additional cost
to opening the store in the first place.
As far as the break-even point, we don't really know
what the economics of these stores even are, so it's hard
to say if they're making money, or they're not making money.
Amazon uses what customers are already buying online
to guess what customers wanna buy in their Amazon Go stores.
So that's kind of like a reminder of what they have on you.
It's a reminder of what they know that you already like
to kind of entice you to buy it again in a store.
So if they know that a specific neighborhood or city likes
a certain kind of seltzer they're gonna stock more
of the seltzer and they're gonna have more flavors
of the seltzer.
Whether or not that's a good thing, I mean,
it's serving customers right? It's what customers want.
It's putting it in front of them in a new way.
But it might make some customers uncomfortable.
Other retailers are trying to come up with things
that compete with Amazon.
A lot of them have new pick up options where they can order
online and then pick up in store or can deliver
right to customers
some even with autonomous vehicles.
But no grocery stores have that kind of data
to draw from like a big E-commerce giant like Amazon has.