No Go For Amazon Go?

by Raymond Pucci 0

Many American shoppers want fast and convenient—and mobile self-checkout apps fit that criteria quite well. As the following article reports, the Amazon Go store opened for Amazon employees in Seattle about a year ago, and its self-mobile checkout process is still in the testing stage.

Amazon unveiled the store last December, opening it to employees only as it beta-tested the technology before allowing the general public to shop there. That grand opening was supposed to happen in the beginning of this year, but by the end of March Amazon said that technical challenges had caused it to delay the opening indefinitely. According to The Wall Street Journal, the technology ran into trouble when more than 20 people were in the store, or when customers did not replace an item in the spot they took it from.

Since then, there’s been little news on the store, and the Amazon Go website says it’s still only open to employees in its beta program.

At the time of its launch, many expected that Amazon Go would be the template for the company’s expansion into groceries, as such technology would give it a decided advantage over the competition. However, something happened to redirect that narrative.

Amazon made its blockbuster $13.7 billion acquisition of Whole Foods, a move that may have been partly motivated by the struggles with Amazon Go — the two parties didn’t start discussing a deal until April. With that move, Amazon’s focus on groceries clearly rests with Whole Foods rather than Amazon Go, and the recent announcement that Whole Foods is planning to hire 6,000 more people shows that old-fashioned manpower and not automation will be the driving force behind Amazon’s expansion into groceries through Whole Foods.

Besides the Amazon Go pilot, there are some current examples of mobile self check-out apps, the largest from Wal-Mart and Sam’s Club, called Scan and Go. They do utilize exit door monitors to verify products being taken out of the store. Amazon Go is fully automated and purchases are not verified by staff. C-stores are an ideal category for mobile self-checkout since their typical store traffic consists of quick stop and pick-up of small items. When Amazon Go becomes public has not been revealed. Some apparent technical issues have not been fully solved. Meanwhile, the Whole Foods acquisition will provide Amazon with more real-world grocery store experience and insight into consumers’ preferences for no lines and faster store check-out.

Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group

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