With Go and 4-Star, Amazon Accelerating Push into Offline Retail
October 1, 2018 | Contributed by: Greg Sterling
Amazon opened its first cashier-free convenience store, AmazonGo, last year in Seattle. It now has three Go stores, with more planned for New York, San Francisco and Chicago. And according to a Bloomberg report, the company is seeking to have as many as 3,000 by 2021:
Amazon.com Inc. is considering a plan to open as many as 3,000 new AmazonGo cashierless stores in the next few years, according to people familiar with matter, an aggressive and costly expansion that would threaten convenience chains like 7-Eleven Inc., quick-service sandwich shops like Subway and Panera Bread, and mom-and-pop pizzerias and taco trucks.
As the quote points out, there are a number of brands and businesses that might be disrupted by AmazonGo. Subway, with more franchise locations than McDonalds, strikes me as particularly vulnerable. Seven-Eleven is also in that category, with its outdated brand and generally poor in-store experience.
Of course, Amazon bought Whole Foods in June of last year for nearly $14 billion. Since that time it has added Amazon merchandise, Amazon lockers, expedited food delivery and other services. Whole Foods is also yet another vehicle to reinforce the value of Prime membership. And the chain is expanding. (At least some of Go’s food inventory is coming from Whole Foods.)
Amazon’s grocery and other retail rivals are being forced to react and invest more in technology accordingly. The skip-the-cashier experience in Go stores is a major retail development that others are going to have to address.
There are two other offline initiatives (that we know of). Amazon opened its first bookstore in 2015 and now there are roughly 15 locations with more planned. Most recently, Amazon is opening a store in New York called “Amazon 4-star,” which will sell products that are rated four stars and above on Amazon.
There’s a wide range of merchandise being featured in 4-Star. Prime members will also receive lower prices than non-members, another reinforcement/incentive to be part of the program.
There’s a lot going on, on multiple retail fronts:
- Whole Foods
- Amazon Books
- Amazon 4-Star
All of these efforts build and reinforce the Amazon brand and Prime membership. They’re also starting to erase the advantages of traditional retailers.
It’s entirely possible that Amazon could open more specialty retail stores in the future (e.g., furniture, apparel, electronics, gear). And Amazon’s brand is as strong or stronger than any traditional retailer’s out there.
What’s more significant is how quickly this is happening. Aside from a few bookstores, Amazon didn’t really have a meaningful offline presence until roughly a year ago.