Amazon is getting more serious about its brick-and-mortar retail ambitions with its first-ever Amazon-branded grocery store. The store opens today in Seattle’s Capitol Hill district, confirming reports from last year that Amazon was developing a more ambitious version of its cashier-less Go model. The new store, which The Verge toured late last week, is indeed…
Amazon is getting more serious about its brick-and-mortar retail ambitions with its first-ever Amazon-branded grocery store. The store opens today in Seattle’s Capitol Hill district, confirming reports from last year that Amazon was developing a more ambitious version of its cashier-less Go model. The new store, which The Verge toured late last week, is indeed modeled after a standard Amazon Go location, but it has been expanded to include a wide array of grocery items you’d find at, say, Amazon-owned Whole Foods.
In fact, the store does source a number of its items, including some produce and meat and other fresh food, from Whole Foods suppliers. It also carries Whole Foods’ 365 brand for certain items. But Amazon’s store offers other products, including breakfast cereal and soda, that you won’t find at Amazon’s higher-end, organic-focused subsidiary.
Amazon says the store combines the product availability and low prices of a grocery chain like Publix or Walmart with the convenience and quick shopping times of its Go model, with a selection that includes both big mainstream brands and local, organic produce. It joins the nearly 20 Go stores currently open throughout the country in cities like New York and San Francisco.
Amazon Go stores use overhead cameras and computer vision technology, paired with smartphone geofencing, to track both shoppers and items throughout the store. That way, the system can identify when a specific person has picked something off the shelf and placed it in their cart, and even when they decided to put something back.
The end result is that customers don’t have to sit through check out. When you’re done at a Go store, you just walk out and your receipt is sent to you through Amazon’s companion app. The same is true of Amazon’s new grocery store, which features shopping carts, but no checkout lanes or counters.
Amazon says its Go system has been trained to handle tricky situations that are unique to grocery stores, like customers handling unpackaged produce that looks similar and sits next to other fruits and vegetables or unboxed baked goods that might get stuffed into a single plastic bag. You can even buy alcohol by taking it off the shelf and walking out, although a human employee will have to check your ID before you enter the store if you intend to peruse the libations aisle.
Go stores have so far focused on prepared foods, snacks, and a light amount of grocery items including frozen food and condiments. Some have acquired licenses to sell alcohol, too. But no Go store to date has the size or scope of Amazon’s new Go Grocery, as it’s called. The location, at 610 E. Pike Street, is 10,400 square feet, while a standard Go store tends to fall between 1,200 and 2,300 square feet.
This grocery effort is starting small, Amazon’s Dilip Kumar, the company’s vice president of physical retail and technology, tells The Verge. Kumar says Amazon has no immediate plans to open more grocery stores. But if it succeeds, an Amazon-branded grocery store using its Go model, which allows customers to get in and out much quicker, could become a fast-growing avenue for the e-commerce giant to continue expanding its offline footprint.
And according to Kumar, Amazon Go Grocery is not intended to be competitive with Amazon’s Whole Foods chain, but complementary instead. “Customers shop in many different ways, in many different locations. Sometimes you want it to be delivered, some times you go to the store, some times you go to Whole Foods. Our job is to be able to figure out how to add value,” Kumar says. “Because the customer has different needs… and different things that they look for at different stores, what is it we can we do here in this type of format in this neighborhood to add value? That to me is the selection we carry, the pricing we have — plus the convenience of just being able to walk out.”
While Amazon dominates many sectors of online retail, it has yet to make large inroads into the much larger offline retail market, a large segment of which is related to food and beverage consumption. People spend $800 billion a year on groceries in the United States, of which only about 2 percent happens online. Amazon’s domestic retail rival Walmart currently leads the grocery market in volume, and Walmart’s huge retail footprint throughout the country has always put it in a strong position to sell customers everything else they might need on a shopping outing. The same is true of Kroger’s, the largest dedicated grocery chain in the country.
That’s because not only do a majority of people buy fresh food in person from grocery stores, they also use those same trips to buy household goods, alcohol, and a number of other products that a company like Amazon could more easily sell in-store than online. Although Amazon has services like Prime Pantry for selling bundles of household goods and a grocery delivery service called Amazon Fresh, it would be immensely difficult and costly to scale those services to reach every grocery shopper in the country. That’s why Amazon has been investing in brick-and-mortar retail in the first place.
That complexity inherent to the grocery market is why Amazon chose to brand its new store as a Go one, instead of choosing to bring its cashier-less Go model to an existing Whole Foods location. Amazon wants the freedom to sell people products from major brands they might find at a city bodega, a neighborhood CVS, or a Kroger store, and not just the organic and high-end ones Whole Foods sells today. That sets up Amazon to service a wider variety of customers: Go stores for the office lunch crowd, Go Grocery for the everyday residential shopper, and Whole Foods for the organic-minded and more affluent.
“This is not a bigger Amazon Go store. It’s a separate format. We worked backwards from what constitutes a neighborhood grocery store,” Kumar says. “We have a section for pet food, household items, health and personal care, oral care, skin care.” Kumar says that to satisfy the needs of a grocery store, you have to “go beyond food” and include those items that people might normally buy during a standard grocery outing, from paper towels and dish soap to shampoo and deodorant.
In addition to all that, the Go Grocery store has a bakery section, as well as a prepared meals and snack section similar to what you’d find in the smaller standard Go store. Amazon says it will also offer items from local Seattle businesses including pastries from Seattle Bagel Bakery, yogurt from Ellenos, and sausage from Uli’s.
Whether Amazon Go Grocery takes off is an open question, but the steady rollout of Go stores so far seems to suggest that the cashierless model has been a worthwhile investment for the company so far. Kumar says key for Amazon right now is making sure it’s doing something customers actually want.
“How big it gets and how fast it goes, customers get to decide that,” Kumar says.