Amazon is constantly innovating to bring consumers the best and newest way to shop. The online retailer which started as an online bookstore now offers a one-stop shopping experience for nearly anything and everything. Shoppers can now order fresh produce online and have it delivered to their door within an hour. As the company continues to innovate to improve profit margins, consumers continue to expect more from Amazon. And now, Amazon is delivering in a big way with its new Amazon Go stores. What makes the new concept so special? And how does Go stand to expand Amazon’s bottom line?
Amazon Go Brings Offline Shopping Experience To Customers Online
The future is now.
At least, that’s what Amazon has shoppers thinking as the online retail giant looks to increase profit margins by relieving the frustration consumers experience every day at the grocery store of waiting in long lines and dealing with frustratingly slow cashiers. On Monday, Amazon released a video for Amazon Go, a new concept store opening in Seattle in 2017. The new store will feature no lines and no traditional checkout. Shoppers just grab what they want and go. Why is Amazon so excited about Go?
Amazon, while one of the biggest names in online shopping, produces very small profit margins in relation to other online giants such as Google or Ebay. And though Amazon leads the pack in customer satisfaction, a business must continue to produce profits. Amazon’s profits are largely driven by its Amazon Prime membership program, in which members receive benefits such as discounts, free shipping, and streaming television and movies (as well as soon-to-be live streaming sports). But Amazon’s newest announcement, Amazon Go looks to level the playing field by combining the experience of online shopping with the reality of everyday offline hustle and bustle.
Forget about self-checkout. There’s no more waiting to pay for groceries. Members will simply walk into an Amazon Go store, scan their free Amazon Go app, and select their choice of products. They simply walk out. Amazon takes care of the rest.
The pilot store is supposed to open in “early 2017” as a 1,800-square foot store featuring ready-made meals, well-known brands, and pre-packaged Amazon Meal Kits. Scanners at the exits will read all selected items in bulk and charge members’ Amazon Go accounts. But the real benefit here is to Amazon.
Grocery stores are much bigger than 1,800 square ft., and renting or even owning the buildings can become expensive. In addition to that cost, Grocery stores face high costs in spoiled food, and more than anything else, labor. Regardless of where Amazon sets up shop (no pun intended), renting or even owning the building makes a lot of sense since 1,800 square ft is a relatively small space. But Amazon’s distinct advantage comes in the labor department. Every store relies on cashiers to process payment for goods or services rendered.
And while more stores (even McDonald’s) experiment with self-checkout at kiosks or other lanes, cashiers are still always present. And that cost adds up. But Amazon will be able to increase their bottom line in a big way by eliminating that expense, not to mention that line. Amazon Go stores will have employees present to answer questions and assist customers as needed, but the concept looks to be a huge win for an online brand expanding offline.
Check out Amazon’s video release of the Go concept:
Investors agree, as Amazon.com, Inc. (AMZN) is up on the news. As with all things Amazon, expect shares to continue up.
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