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Taking Stock #20: Amazon Go: the future of retail or a distraction from the grim reaper?

by Sean Fleming

Say what you like about Amazon, it is a huge success and a blueprint for anyone wanting to turn disruption into a superpower.

First it sold books, disrupting the bookstore sector completely – from independents to chains, book sellers went out of business as Amazon grew and grew. Then, once it was the biggest seller of books, it went to war with… books. The Kindle revolutionised the way people read, and completely disrupted the sale of physical books. I can’t think of any other business that would fight so hard to disrupt a market, get to the number one spot and then start disrupting all over again.

From a business that started in his garage in 1994, Jeff Bezos has become the richest man in the world. Love Amazon or hate it, it’s hard not to be impressed by the scale of what’s been built.

In January of this year, the online colossus did something that would have been unthinkable at one time – it opened a grocery store. The shop-and-go, no checkouts model of Amazon Go is described by Amazon as “a new kind of store” using “the world’s most advanced shopping technology.”

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On its website Amazon also says: “We asked ourselves: what if we could create a shopping experience with no lines and no checkout? Could we push the boundaries of computer vision and machine learning to create a store where customers could simply take what they want and go?”

It doesn’t say whether anyone stopped to ask why they should do it.

Back to the future?

In an article recently published on Forbes, Chris Walton writes about the built-in weakness that could one day bring about the downfall of Amazon Go.

It’s a great piece and I heartily recommend it to you, but for now here are some edited highlights.

“Amazon Go, in an insanely un-Amazon-like manner, forgets one psychological fact – shopping is not the same as buying,” he writes. Then he goes on to say it’s “really just a ‘store’ in the purest form of the word – a place that ‘stores’ inventory for consumers. A consumer walks in, grabs what he or she wants off the shelves, and walks out. It would be the perfect innovation . . . if it was 1965.”

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A large part of his article focuses on the poor customer experience that Amazon Go offers and how that contrasts with what shoppers actually want; while everyone else works hard to offer you a frictionless shopping experience, a visit to Amazon Go leaves you having to do all the grunt work. Walton suggests that, by turning its back on the idea of minimising inconvenience, the retail giant has exposed a weakness that others can exploit. He doesn’t delve much into the ‘why launch Amazon Go’ question, but he warns that “retailers should not get distracted by” it.

He’s right. Certainly on that last point.

Are you watching closely?

I’ve written before about the influence Amazon has over the rest of the retail sector – delivery too. Its powerful media presence, and the manner in which some in the press blindly accept every Amazon announcement as a wondrous innovation, means it can cast a very long shadow over everything and everyone else.

Three or four years ago it was drones. Whenever Amazon issued a statement about drones, the media went nuts, with journalists forgetting their job is to question the veracity and legitimacy of claims from commercial organisations, not to slavishly amplify them.

By distracting the rest of the retail world, by sewing confusion and anxiety, Amazon can quietly go about its business. No one will ever know how much time, effort and money the rest of the retail and delivery world spent (by which I mean ‘wasted’) looking into the feasibility of using drones for delivery, so that they could keep up with Amazon.

I wouldn’t be surprised if senior execs at Amazon are given a copy of Sun Tzu’s Art of War on their first day and told to stay away until they know it by heart.

Amazon Go or Amazon Gone?

Walton believes smaller, niche players as well as other global giants like Alibaba, could well turn the tables on Amazon by making the art of shopping as rewarding as possible, rather than turning it into a dry, functional activity. And he could be right.

Alibaba’s big cheese, Jack Ma, is one of the online world’s big kahunas and he’s investing in something he calls New Retail. Think of it as an attempt to blend online and offline shopping by removing the distinctions between the two. Stores become places where you can browse and shop, or browse and order, or a bit of both. Pick the groceries you want, have most of them sent to your home and select a few items to carry out with you – handy if you want to pick up some lunch to eat on the go. It’s all about blending inventory management, customer data, and app use to deliver on the promise of convenience and frictionless shopping.

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You can find out more about New Retail here, if you’re interested. It might leave you wondering what on earth Amazon Go hopes to achieve in the longer term.

Will it turn out to be a glorious failure? Or is it something else? I don’t think there’s a serious option for ‘it will be a retail success story’ because, well … the appeal of not waiting in line to pay is one thing, but it won’t be enough in the long term. Having to drag your shopping home in person is a drag. And if there are availability issues – there are always availability issues – you end up having to visit another retailer anyway. But back in the 1990s when Jeff Bezos was not the world’s richest man and Amazon was just getting started, the company had a stated aim of selling books in order to collect data on, and form relationships with, customers. That way it would be in the best possible shape to start offering other things, not only books.

Maybe Amazon Go isn’t a retail play at all. Maybe it’s something else entirely that Amazon is testing while hiding it in plain sight. Maybe the people who shop at Amazon Go are taking part in a top secret experiment without even realising it.

I’ve no idea what it might be, of course. But part of me thinks we’ll find out in the fullness of time when Amazon Go turns into Amazon Gets Going, Again.

 

#Amazon, #Taking Stock

    
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