First reported by Bloomberg, “people familiar with the matter” revealed that Amazon CEO Jeff Bezos regards the expansion of convenient grab-and-go meals as the best way for the company to reinvent the brick-and-mortar shopping experience.
Amazon currently has four cashierless convenience outlets – three in its home town of Seattle and one recently opened in Chicago – with two of them offering a limited range of groceries, similar to 7-Eleven, while the other two are more like Pret A Manger, the UK-based chain that offers freshly prepared sandwiches and salads.
According to Bloomberg’s sources, Bezos is experimenting with the best format, bearing in mind that prepared foods have wider profit margins and the high cost of opening each location.
The concept behind Amazon Go is that customers simply scan an app to enter, pick whatever they want from a range of prepared food and drinks, and then leave without having to queue at a cash register. Sensors and vision technology then detect their choices and bill them automatically.
However, the cost of this technology could be a problem, with one of Bloomberg’s sources reporting that the first Amazon Go outlet in downtown Seattle required more than $1m in hardware alone.
That said, Amazon has a long history of being prepared to operate at a loss as it built up its international presence or its expansion into cloud computing.
Adding 3,000 convenience stores to its portfolio would not come cheap, but it would make Amazon Go one of the biggest convenience chains in the US – a market worth $233bn in 2016 for non-fuel purchases, according to industry group NACS.
Bloomberg also reported that Amazon sees its target audience being young and affluent consumers who lead busy lives and are prepared to spend a little more for good quality food.
That would make the offering very much like the UK’s Pret A Manger, which concentrates on London but has expanded overseas into select major cities like New York, Chicago, Hong Kong and Paris.
Amazon is reported to be planning on opening ten Amazon Go locations by the end of this year, about 50 in major cities by 2019 before rapid expansion to up to 3,000 by 2021.
Sourced from Bloomberg; additional content by WARC staff