Skip to main content

Amazon Go: Four things retailers can learn

Walking into the new flagship Amazon Go store in Seattle is like walking into a giant vending machine, and about as personal. After unlocking the physical barrier to entry by scanning their designated app, shoppers are free to roam around the store, pick up food, and simply walk out. Is this the start of a retail revolution? The end of the long and frustrating checkout line?

Since Amazon first introduced its “just walk out” payment technology earlier this year, several other retailers have announced plans for similar platforms. Microsoft is testing new technology for an automated checkout experience, working with retail giants like Walmart. Albertsons also announced a pilot program in Texas that creates a checkout-free experience for selected items, such as prepared meals.

What can other retailers learn from the Amazon Go experience?

Brand impact
Building on the success of Amazon Prime, shoppers have already bought into the convenience that Amazon affords them. The brand and the technology are trusted. Shoppers already equate Amazon with easy shopping, cutting-edge technology and painless returns. Amazon Go cleverly translates these elements into grocery shopping, taking away the frustrations that so many of us have with simple retail purchases – no need to stand in line, no need to carry a wallet, no need to interact with anyone.

Amazon took the time to carefully research and test the new technology to ensure its success. Introducing new technologies can strengthen your brand story, but moving too quickly or carelessly can invite disaster.

Impersonal can be personal
Amazon’s vision of the retail future uses big data to help carefully curate items that appeal to customers in the area. It feels as if Amazon personally understands what we are looking for when we need to grab a bite on the run. That is the key – understanding the customer.

Amazon anticipates our frustrations and offers a new way to buy that is easy, quick and tailored to our lifestyle. What Amazon has done so well is make the impersonal personal – there is no human interaction, yet the insight they use to populate the store helps it feel personalized.

Find the right niche
Amazon’s retail dominance is rooted in understanding what customers want online, but their move to brick-and-mortar is a test of how well they can physically draw them in. Situated in Seattle’s busy business district, Amazon Go is offered to those select consumers who will be most likely to engage with it – the young, tech savvy, cash-rich, but time-poor city dwellers. It is no surprise that Amazon plans to roll out Amazon Go stores in Chicago and San Francisco this year [as well as another in Seattle].

Turn the mundane into exciting
Sandwiches and pre-packaged meals are essentially an ‘unassisted purchase,’ a necessary drain on time-poor consumers. Buying a sandwich is not normally exciting. Yet, Amazon Go makes it exciting. By putting preparation kitchens in the window of the store, they have created a theatrical element. The physical barrier to the store, only unlockable by scanning their app, creates a feeling of being part of a club. And there’s a certain frisson of excitement you get when you walk out without physically paying.

Groceries are ideal for this type of no-interaction experience. The question is – how long before we are walking out with a huge cart full of food rather than one sandwich?

Ready to jump in?
For other retailers wanting to enter the underdeveloped food convenience sector in the U.S., perhaps Amazon Go should be seen as a challenge rather than an unbeatable rival. But there are tough strategic questions to work through:

• Will established brick-and-mortar brands have the ability to overcome legacy thinking and move quick enough?
• Will the lack of human interaction eventually become a downside?
• The Amazon Go vending machine is all very well and exciting now, but will shoppers care who actually made that particular machine when more retailers open up in this space?

Translating the experience into other retail sectors will be harder. There will always be a need for human interaction with certain purchases where shoppers value the advice and expertise of an experienced sales team. Removing the human interaction also removes the sense of identity. Impersonal is only good when it leads to quick and convenient transactions. It is hard to imagine a wedding dress shop ever evolving into a no-interaction experience.

At the moment, Amazon has first mover advantage. For those early adopters, stimulated by something new and inquisitive about different experiences, this is definitely an exciting development. It won’t be long before there are replicas. But it won’t be easy. Amazon has a ready-made community. Many of us have been trusting Amazon for years, and can’t imagine life without an Amazon account. Amazon has built up a huge wealth of data on our shopping habits. Will challengers be able to replicate this sense of community, trust in technology and effective use of data?

It as an interesting retail experiment, and one that is sure to leave a big impression. Think about other Amazon experiments, such as its online book store: it had a huge impact on the humble book store, but it didn’t kill them off altogether. Amazon Go shows us what is possible.

Competitors are already working out what elements they should replicate. Others may fight back by embracing what Amazon lacks: the human face of retailing, distinguishing themselves through the very people that make their particular store stand out. An online community is a powerful thing, but a living, breathing army of human ambassadors for a brand is even stronger. Time will show who has the loudest voice.

Andy Morris is VP and head of Egremont Group’s global retail practice.
This ad will auto-close in 10 seconds