Amazon.com, Inc.’s (NASDAQ:AMZN) futuristic, brick-and-mortar store with no checkout lines will open to the public today. The company made the announcement via Twitter, more than a year after it unveiled Amazon Go. Amazon’s pilot the checkout-free store is located on the ground floor of the company’s Seattle headquarters.
Amazon Go’s public debut succeeding could lead to yet another retail disruption by the online shopping giant.
And that means more potential upside for AMZN stock.
What Is Amazon Go?
The concept behind Amazon Go is to provide service very similar to a convenience store (although a little more upscale), but free of line-ups to pay.
Instead, customers download an app, then scan it as they pass through a turnstile to enter the store. From there, a series of advanced cameras and sensors tracks everything they pick up and set down. When they decide to leave the store — whether they are purchasing anything or not — they simply leave. No lineups to pay for items, not even a stop at a self-scanning station. In fact they don’t pay at all. Instead, their Amazon account is automatically charged for any items they leave with.
If it works as advertised, a trip into Amazon Go is quick, easy and far faster than any other shopping experiences.
It does, however, have some repercussions for job offerings to run a store. While people are employed to price items, stock shelves, prepare food and help customers, there are no cashiers. It also has possible security implications, which is a big deal given U.S. retailers lost nearly $50 billion in 2016 to shrinkage, including shoplifting.
The potential is there to seriously disrupt the brick-and-mortar retail landscape, however. Though Amazon recently told Reuters it has no plans to add the technology to its Whole Foods stores.
Amazon Go Opens To The Public
Amazon took to Twitter to announce that its pilot Amazon Go store will be open to the public starting Monday, January 22.
Re-Code took a tour of the Amazon Go store. Inside the 1,800 square foot space was a large selection of fresh sandwiches and other pre-made meals, wine and beer (an Amazon employee checks ID for those), meal kits, produce, meat and a selection of snacks from Whole Foods.
Amazon has been testing the Amazon Go location with its employees over the past year, and the company is confident that the bugs are ironed out.
We’ll find out if that’s true shortly…
Expanding Amazon’s Brick-And-Mortar Presence
When Amazon bought Whole Foods for $13.7 billion, it grabbed a 1.21% share of the U.S. grocery market. The $612 billion market is led by Wal-Mart Stores Inc (NYSE:WMT), with nearly 14.5% of that total. Amazon is currently using Whole Foods to carve out a chunk of the grocery store business, while providing a brick-and-mortar location to display some of its key products and as online order pick-up locations.
While groceries are already a huge revenue pool, the U.S. convenience store market is larger than many people realize.
In 2016, the 154,000+ stores notched $233 billion worth of in-store sales (those numbers do not include gasoline sales). And with zero lineups and access to premium products from Whole Foods, Amazon Go has a very real advantage over market leaders like 7-Eleven, Inc. should it choose to take a run at that very lucrative convenience store market. That’s could mean significant upside for AMZN stock.
Amazon Go could continue the strategy of expanding Amazon’s physical retail presence, but at a much lower cost per location. Amazon could also use the small store to display some of its popular online goods like Kindles and offer Amazon lockers for order pickups.
Expect everyone to be watching the Amazon Go public debut. I’m especially interested to see how the checkout-free store fares when things get really crowded during the lunch time rush…
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
