Amazon | Whole Foods | Buffalo, NY | New Orleans, LA | Certified B Corp
No checkout lines at the store has an appeal. While most businesses have been actively trying to increase their online presence over the years, Amazon has been transitioning towards Brick and Mortar. They opened their first “Amazon Books” store in 2015 and have since expanded across the country with locations in 9 states. In August 2017 they further increased their presence among offline consumers by acquiring Whole Foods. Now, a year after originally planned, Amazon has opened their first market.
As the opening line suggests, what makes this new Amazon store so unique is it eliminates traditional lines and wait times associated with markets. This is the first glimpse into that science fiction future we’ve been promised for decades by movies and literature. How it works is a combination of cameras, sensors, and scanners following the movements of the customers and charging them for what they take out of the store; customers scan their Amazon Go App, take what they want and leave. It’s a store designed like their online platform. Whatever a customer picks up is put in their shopping cart. Whatever they leave with they are charged for.
The delay came from Amazon programmers underestimating the complexity of their algorithms. The technology struggled during high traffic testing, and needed to be trained to follow the random movements of a human shopper. Some of the issues the algorithms had to learn to account for are things we take for granted when we shop, like suddenly dropping to grab something off a lower shelf, or accidentally covering the label of the product with our hand when we hold it. Though this store is almost exclusively automated there is one employee Amazon is not taking a risk with; they will have a human check the IDs of people purchasing alcohol.
While these kinks have been corrected for a small capacity market, there will likely not be major changes to larger shopping centers in the immediate future, but with the acquisition of Whole Foods over the summer, and now the introduction of a completely automated store (which features Whole Food products), one can only assume that Bezos and the company have their eye on expansion.
Views expressed are the opinions of Jeffrey Goldfarb and the Financial Advisors at Goldfarb Financial and not necessarily those of Raymond James.