Amazon Go
As Amazon has partnered with Whole Foods and opened Amazon Go stores, they aim to change the grocery industry one small step at a time, which may leave other grocery outlets in the dust.
Starting on May 2, Whole Foods shut down its rewards program, including all online accounts and coupons, and began delivering online through Amazon Prime exclusively.
According to CNBC, approximately 75 percent of all Whole Foods’ shoppers are also Amazon Prime Members. This should make the transition easier for most Whole Foods customers while encouraging others to sign up for Prime accounts.
As the Whole Foods online platform merges with Amazon, the companies are offering 10 percent off previously discounted items, which they hope helps ease the transition for online shoppers. Additionally, other instant perks of Prime access include exclusive member deals that will change over time, free delivery on Whole Foods products in specific locations and 5 percent cash back when any Prime member buys anything from the grocer with a Visa rewards card.
After Amazon acquired Whole Foods last year, the company’s plans to build a grocery empire that others cannot compete with looked apparent.
This shift into exclusive grocery delivery from Amazon Prime is just one step toward Jeff Bezos’ idea for widespread, cashier-free Amazon Go stores.
What Are Amazon Go Stores?
Amazon Go stores are a conceptual idea that Jeff Bezos has had for a while. He recently began to implement it with a small test store in Seattle that opened last year.
To shop at this cashier-free store, you must have a smartphone, Amazon account, and the new Amazon Go application.
As CNN’s Heather Kelly describes:
“You enter the 1800-square-foot space through six high-tech turnstiles. Open the app and wave a code on your screen above a gate to open it. It’s a familiar experience to anyone who has ridden a subway or used a mobile boarding pass at the airport.”
Once you are inside the store, your movements are tracked through the Amazon Go app and every item that you pluck off the shelves is added not only to your physical shopping cart, but your virtual cart as well. The store’s system is advanced enough to tell if you put something back on the shelf.
While it looks like a typical grocery store at eye level, upon glancing upward, one sees a medley of cameras and sensors overhead that continuously eye customers and inventory as they change places. Since customers must be signed into the Amazon Go app upon entry and are tracked the entire time, theft is basically impossible since Amazon will automatically charge the customer’s account for anything they take.
Due to the complicated nature of this store, there is a lack of unpacked produce or personal items. Although there are no cashiers or baggers, there are still human employees there to greet guests, stock shelves and check identification of someone purchasing alcohol or tobacco products. That is until Bezos is comfortable with autonomous robots doing those jobs.
As Amazon Go cuts out cashiers, they also cut out long lines that customers dread.
As Kelly wrote:
“I used one of Amazon’s orange shopping bags, but you can also shove the items directly into your own pockets or purse. Walking out through the turnstiles is even easier and faster than coming in. The store knows you’ve left and tallies up what items it’s seen you take, charging your account. There’s the brief sensation of feeling like you got away with something, but then Amazon sends a push notification of your receipt.”
Recently, Amazon confirmed that they are expanding the experimental project in San Francisco and Chicago, but there is no timetable yet on when they will open.
Amazon’s Presence in the Grocery World
After purchasing Whole Foods and pushing the envelope to open more and more cashier-less stores, it is clear that Amazon is deeply interested in expanding its presence from the virtual world to the physical world.
Acquiring Whole Foods instantly gave Amazon 470 stores around the nation, which gives the store the opportunity to market products like the Echo Dot speakers or Amazon Alexa, which were previously only available online.
The actions Amazon has taken since acquiring Whole Foods show that they are not content to stand pat in the grocery industry either.
Whole Foods has been bashed in the past for having prices that were too high, while rival grocers like Kroger or Walmart can offer similar products for much less. Bezos responded to this by announcing price cuts the moment the acquisition was finalized on Aug. 24, 2017. The company followed suit by slashing prices again in November 2017, which helped Whole Foods sell a store-record amount of turkeys during the Thanksgiving season.
This eMarketer Retail chart shows just how much sales growth Whole Foods experienced when the company was acquired:
Another masterful way that Bezos has driven grocery sales is the implementation of a two-hour delivery system for customers who place orders over $35. This particular service is available in limited areas currently, but is on track to expand across the country within the year.
Perhaps the greatest way that Amazon has integrated Whole Foods into their network, however, is the ability for customers to pick up or return packages at their local grocery store. This is mostly just an add-on of the Amazon Locker program, but it still gives customers an easier time returning packages that they have issues with, or collecting packages they wish not be sent to their work or home.
Due to the implementation of all these different side projects, grocery competitors are scrambling to keep up. Notably, Walmart has begun a delivery campaign that advertises that you do not need a membership. The fact that Walmart’s new commercials are so blatantly angled toward slighting the Amazon Prime membership shows just how afraid they are of Amazon monopolizing the marketplace.
How Does this Affect Sellers?
As the company forges a physical presence around the U.S., more and more people will be inclined to buy from a company that makes buying any and all products as simple as it has ever been. Online shopping is obviously growing every year, but for those who are resistant to it, having the companies products at Whole Foods and Amazon Go stores will encourage them to purchase Amazon products.
The Amazon Go concept itself is so en vogue right now that there is almost always a line to get into the door of the lone location in Seattle. This sense of mystique and exclusivity should drive more customers to the newly opening stores and may end up helping Amazon dominate the grocery market once Amazon Go stores are nationwide.
The whole emergence into the grocery world shows that Amazon is truly making an effort to monopolize the market on selling, well, everything. This bodes well for Amazon Sellers, as more and more customers will continue to turn to the platform that has everything they need in the most convenient way possible. However, this could end up hurting some Sellers in the grand scheme of things if more small businesses turn to selling on Amazon due to the competition that could marginalize profits for some.
If Sellers wish to expand their market alongside the company, they should figure out how to get their products on the shelves of Whole Foods and Amazon Go stores as quickly as possible.
Cyril Zackary Penn IV is a soon-to-be graduate of Hofstra University with a Journalism degree from Sonoma, California. He started his own blog in high school and has been writing about sports, news and entertainment since. He is currently a staff writer at AXcess Baseball as well as the Hofstra Chronicle and formerly was the Sports Editor at Man of the Hour Magazine.