If you’ve ever wished you could just go to Amazon and grab the thing that you want, your wish has been granted. Amazon is about to bring cashier free, brick-and-mortar stores to New York, expanding a program that could revolutionize the retail industry. Investors and consumers alike should be looking forward to an entirely new retail sector, with limited employment and improved self-servicing technology.
From the outside, Amazon is interesting to look at. Amazon began as the eCommerce alternative to brick-and-mortar bookstores. After destroying most brick-and-mortar bookstores, it then began selling things… in brick-and-mortar stores. But these things are cyclic, which is why Hulu just reinvented cable after killing cable.
However, it does make sense. Amazon has created a supply chain and delivery system for its goods and services that is fine-tuned and optimized to the point that they can deliver a more affordable brick-and-mortar experience with less of the overhead that traditional stores had. Presumably, this should mean that they will be more profitable and competitive in the brick-and-mortar retail space than their predecessors were.
Amazon’s “Go” shops already exist in Seattle, and the company has plans to expand into both Chicago and San Francisco. These stores don’t carry all of Amazon’s goods; instead, they’re designed as convenience stores to provide things that Amazon wouldn’t generally be able to ship. These are mostly food items such as chocolates, cheeses, breads, and milk.
But these are only pilot programs as well, and it’s likely that Amazon is going to continue to expand its stores as long as it remains profitable. Amazon’s Go stores are able to provide an infrastructure through which there are no lines or checkouts. People are able to grab what they want and simply leave. And there’s no reason why this can’t work for any type of store.
On Amazon Go, users launch the app and then enter into the store. Anything they take from the store is already charged to their previously created account. Technology throughout the store tracks all of the items so they can’t be otherwise stolen and so that users aren’t charged for items that they put back.
Imagine any retail store that functions like this: the ability to go in, grab what you want, and walk out, knowing that your transaction has already been completed.
Amazon Go cuts down on much of the traditional complaints about self-service kiosks. Many self-service checkouts use outdated technology that is difficult for customers to use, leading to errors that need to be repeatedly cleared by physical attendants. People need to wait in line for self-service kiosks, and these lines can be long due to the non-intuitive nature of the checkouts. All of these issues are solved by the Amazon Go technology.
Of course, Amazon Go still has employees. They will be hiring people to keep the shelves stocked, provide customer service, and even make ready made food for customers purchasing it. But Amazon Go will not have cashiers and it appears as though many retail stores are going to be moving in that direction.
That means better profit margins for retailers, but it may also have some economic consequences further down the line. As more systems become automated, an entire class of jobs will be eliminated from the economy. Over time, this could have some depressing effect on the national economy. And, of course, it may mean that Amazon may expand so aggressively into the retail space that only niche retailers eventually remain. Companies such as Best Buy should be wary of this expansion.
For Amazon specifically, everything looks as though it’s moving along very well. Amazon is rapidly increasing its profit generation, expanding into new sectors, and leveraging its existing technologies. It’s an extraordinarily diversified company, now maintaining a huge market share in cloud-based technologies while also aggressively expanding even further into the retail sector. Once a joke stock that people avoided, Amazon has become one of the strongest companies to own. That could be good news for Amazon and bad news for the rest of the retail industry.
Regards,
Ethan Warrick
Editor
Wealth Authority
