Amazon No-Go? Don’t Kid Yourself

Amazon No-Go? Don’t Kid Yourself

By Brent Franson | Industry Insights | 18 April, 2017

Last week, we learned that the public opening of Amazon Go – the company’s experimental walk in/walk out, no-cashier store – would be delayed.

The problem? Amazon’s technology is apparently having difficulties tracking more than 20 people in the store and items as they’re moved from the shelves.

Critics are probably enjoying the company’s setback, but let’s get real for a moment. In the Amazon arc of ascendancy, this will prove to be a very minor blip. Here’s what I think.

Amazon is experimental. They’re audacious. They like big bets. They’re clearly comfortable with intelligent risk – and the potential of failure (see: drones). The company has a good model: try something creative, evaluate progress, build confidence internally for greater investment, and then put real time and dollars behind scaling the successes.

They have more than one iron in the fire. Was the news on the Amazon Go delay negative? Sure. But we also saw the announcement of AmazonFresh Pickup – a new service where you order and pay for your groceries online, then head to the AmazonFresh store, where your groceries will be brought to your car, bagged and ready to go. The point? See above. Amazon’s not running just one experiment – they’re always experimenting and pushing the envelope. This just might be another one, particularly since online shopping is predicted to hit 20 percent of all grocery spending in the next decade.

That said, let’s be realistic. For retail, it’s easy to project our insecurities on to what Amazon’s doing and assume everything they do is gold. But physical retailers know the challenges of operating brick and mortar; it’s even more complicated when you’re layering in new technology elements like Amazon’s attempting to do. So although they’re running a big play that gets them some solid yards, it’s still very different than a touchdown. One Go store or two Fresh stores are not like launching two thousand.

But in time, Amazon will crack the code. Maybe Amazon Go works, maybe it doesn’t. Maybe Amazon Fresh works, maybe it craters. Success might look like the electronics showcase they’re rumored to be launching (similar to an Apple store concept). Perhaps it will be something entirely different. Whatever it ends up being, Amazon will get there. Nine of every 10 dollars is still spent in physical stores. The reality is that to be the powerhouse that Amazon wants to be – and that they’re likely destined to be – they will have to continue their dominance online while also creating an enduring and successful offline presence. It’s the most likely path to becoming the first company with a trillion-dollar market cap.

For Amazon, the question isn’t if they’ll be successful in physical retail. It’s when and in what form.

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Brent Franson

Brent Franson

Brent is the CEO of Euclid Analytics.

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