What Amazon Go Will Look Like in an Amazon Flex World

Amazon Go + Amazon Flex

Amazon Go, unveiled at the end of last year, is fascinating because, at first look, it looks like such a departure from what Amazon is usually building. The (wrong) rumor Amazon would build 2,000 stores around the US equipped with Amazon Go was/is part of this collective head scratching.

It also shows how we often look at things within the context of what already exists.

‘Amazon Go will revolutionize brick-and-mortar grocery retail.’

Really? Why?

It may be illuminating to look at where Amazon most likely gets the inspiration for Amazon Go from. Is it retail stores? Maybe. More likely though, inspiration comes from Amazon’s own warehouses, the company’s fulfillment centers. There is an obvious technological vicinity between technology assisting (and tracking) what warehouse workers are doing and shoppers shopping at an Amazon Go location.

Amazon Go only works under the premise that everyone owns a smartphone with the Amazon (Go) app installed. Only then an easy checkin / identification is possible. Only then the whole concept is feasable.

So, now we imagine customers going to Amazon Go locations to shop fast, with no lines.

Here is the thing though. Think of Amazon Go not as the evolution of grocery stores but as the evolution of Amazon’s fulfillment centers. Once one looks at Amazon Go through these glasses the whole thing changes significantly.

Let’s talk about Amazon Flex, Amazon’s Uber-like delivery service.

P2P on-demand services like Uber, Lyft and Amazon Flex, all of them, are only possible with the same premise as Amazon Go: Everyone owns a smartphone.

Technologically, it makes no difference for Amazon Go wether a customer or an Amazon Flex worker indentifies themselves at checkin and pulls products from shelves to carry them off.

We wrote at length about what makes sense for Amazon Go here:

What makes more sense is a franchise hybrid model. Like Amazon Marketplace, locations in this model would be (co-)branded with ‘Amazon Go’ (or something similar). But they would also be run locally by (more or less) independent actors (like a McDonalds restaurant) and could take up very different shapes and forms (unlike a McDonalds restaurant).

It is unlikely that many existing stores would be (or could be) retro-fitted into “Amazon Go” locations. The incentives for this remodelling will not be particularly high at first. (The up-front costs will be too high.) More likely, new small businesses or local chains will form around this system, piggybacking on Amazon’s platform to success. (With the same dependent and distribution-driven model like Amazon Marketplace merchants, eBay powersellers or, say, YouTube stars.)

In a market like the US, Amazon can use Amazon Prime members to lure new businesses into this model.

There is a reason we say ‘locations’, not ‘stores’. Amazon could use locations with ‘Amazon Go’ for a lot of different things: for example as pick-up locations of orders by customers or ‘Amazon Flex’ workers, or for local events etc. for Prime members. Once local locations are outfitted with Amazon technology, all kinds of transactions can be fulfilled there.

And this only makes sense as a Franchise/Marketplace hybrid model, as this is the only way to get it to scale fast.

Now, the point we want to emphasize, though, is this: If Amazon Go is like an Amazon warehouse opening up to the ‘public’, it may (to be sure: it will) be frequented by customers and by Flex workers.

Imagine this in your head.

Did you see an Amazon Go store with a lot of customers and few Amazon Flex workers in between? If so, that is why most of us look at new concepts by comparing them to what came before.

But once one starts thinking about this a bit longer it becomes clear fast that it is more likely that Amazon Go locations will in due time be frequented by far more Flex workers than customers. It will be more likely to have a split of say 95+% Flex workers and the rest consisting of customers, than the other way around.

Being able to walk right into an Amazon fulfillment center to get some groceries (and other products) will be a nice add-on for customers, instead of the main purpose.

Traditional grocery shopping will not go away. Not now, not next year, not next decade.

Some of us still buy Vinyl. Some of us still own horses. And some of us will still go to (automated) stores to buy some groceries in different situations for a variety of reasons.

But this is not where the future of grocery shopping lies. Same as Vinyl is not the future of music and horses are not the future of transportation.

Wether music, transportation or grocery shopping, when a whole set of premises changes the fundamentals of an industry, companies need to start thinking really hard about wether they really want to cater to the hobby of a subset of the population or to the needs of the mainstream.

Amazon Go may go (hey) in a different direction than what we portrayed here. (It may not be Flex it connects to mainly but a different Amazon service. Amazon Fresh may not work perfectly in unison with Flex and Go.) The point of this thought experiment is more about the fact that to get an idea where we may go towards as an industry it makes sense to stop thinking about the future of traditional retail and instead to start thinking about the retail of the future.

More on this topic:

2 comments

  1. […] We can see that with the ongoing rise of marketplaces at Amazon. Once a ‘pure’ online retailer, Amazon now commands one of the largest (and fastest growing) marketplaces in the world, already the size of eBay in the US and growing beyond. Beyond that, every new business at Amazon is from the start conceived of as a marketplace/platform. Prime Now is a marketplace (for local partners), Prime is closely tied to Amazon Marketplace, and even the Treasure Truck is a (local) marketplace in the making. Amazon also applies platform thinking to logistics with its p2p delivery service Amazon Flex. Thus, Amazon Go has to be looked at in this marketplace/platform light, as well. […]

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  2. […] We recently looked closer at the potential future of Amazon Go, which is worth pointing out again: […]

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