Amazon In Airports - What I Like, What I Don't Like, And What Intrigues Me

If you’re not familiar with Amazon Go, essentially it’s a cashierless convenience store. Download the Amazon Go app, link it to your Amazon account (and who doesn’t have one these days?), and head to the Amazon Go store near you. The only problem is that you’re not likely to have one near you. Currently there are 26 of them in existence! But if you’ve frequented one or watched videos of them you know that it’s walk in and then walk out. Easy.

Reading about Amazon Go almost two years ago, I thought it to be a perfect fit for airports. At least the concept of it. Amazon, or another solution that mimics the Amazon Go store, is what had me intrigued because the goal in airport travel has been about reducing friction, probably more so now in the era of COVID. 

Adding to the intrigue was news that the Just Walk Out technology would be available to many operators, beginning with New York City-based OTG. The invasion has begun! Amazon has it’s Trojan horse!

Why I like it

1. Ease of use. It was about 20 years ago when file sharing service Napster had the music industry in a Ronda Rousey arm bar. They provided users with a means to share music and not pay a single dime. Apple came along and started to charge 99 cents per song. Nobody believed that they’d be able to overtake what was available for free. Apple overcame free by creating something cool (the iPod) and something easy (seamless integration amongst its products and services) that was supported by an established behavior (using iTunes, at the time just a program and not yet a store, to make mix CDs). Amazon uses the same formula except swap out the iPod with the Go store.

2. Airports will think much more creatively and much more quickly. Yes, many of the innovations that travelers are now seeing were not just in response to dealing with COVID but were likely gestating in airport R&D labs for some time. COVID happened to hasten their implementation. For retail and restaurant operators, such a disruption usually results in a need to keep pace in a race to remain relevant. Watching nature shows where a cheetah is chasing a pack of gazelles tells me that you don’t want to be the slowest gazelle. The speed of innovation and the fact that COVID has accelerated schedules of adoption and implementation, will mean that obsolescence in the form of Amazon is the cheetah. Airport dining and retail in a post-COVID world will be markedly different for the better, not different just because we had to adjust to a new normal.

As an example, traditional retailers have long been impacted by the internet. Big box retailers like Best Buy, Walmart, Target and the like, with both a physical and web location, pivoted. They’re doing well by essentially turning their brick and mortar stores into mini-warehouses. Buy online pick-up in store or BOPIS as experts call it, is an example of such a pivot.

Additionally, Amazon is such a behemoth that I can see the entire environment—both physical and digital—shifting to accommodate it and benefiting from its strengths. It’s like getting LeBron James on your team. You want to fill the roster with complementary players that will support and benefit from his talents. As a result, those players also tend to perform much better statistically.

3. I’m a customer. She’s a customer. Everyone’s a customer. Well, nearly. Essentially, there is a user base so great that you need not try to create a following. And this despite many having never set foot in an Amazon Go store. That familiar logo would serve as a beacon. My wife has been a Prime holder for about five to six years. I can even argue that she has single-handedly tried to carry the U.S. economy through her Amazon account. I envision many like her flocking to these units if they’re available in the concourse. Basically, there is no customer acquisition needed since, well, many are already customers of Amazon. 

Why I don’t like it

1. This will reduce, if not eliminate, competition. Airports are an environment where the contracting of leases is put through a competitive bid process. Proposals, after all the costs that go into travel, dining, research, production, creative, etc. are totaled, can be quite expensive. Since these opportunities rarely become available, bidders certainly put their best feet forward. And let me say that the cost of showing out is pretty high. Now, what happens when a company the size, scale, and influence of Amazon decides to throw millions of dollars at something that others are unable to match? Doesn’t seem to be a very level playing field to me.

2. Competition, but this time for travelers. Airport retail and dining for years has been defined by several tiers that influence a traveler’s decisions. A lack of alternatives (meaning limited convenience and food options to choose from in a concourse) combined with a captive audience. Next would be the traveler’s appetite (no pun intended) to explore alternatives relative to the time they have to do so. The final tier would be proximity to their gate because gate huggers are still a thing. These are not listed in any particular order but they are no more or less impactful in influencing a traveler to walk into your store as opposed to another. But what if stores are now competing on recognition and brand loyalty? 

Do retailers pivot with a better line of products to offer? There’s very little that Amazon couldn’t provide that a traveler would want unless a retailer goes totally local. Do retailers euro step and push their customer service? In the age of COVID where social distancing, contactless payments, and mask wearing are the new norms, customers are not necessarily looking to be engaged when they likely already know what they want: water, chips, a magazine, for example. Do retailers counter with price? Considering the very thin margins in this business I will go out on a limb and say, “No”. 

Travelers will certainly benefit, but it would be the inverse for operators.

3. The Amazon addiction. It was only about four or five years ago when my wife and mother-in-law were discussing retail’s decline thanks to the internet. They pointed the finger to the Bezos Baby. They talked about the joy of going to a store and holding, touching, and trying on what they were interested in. Can’t do that online, they would snicker. Then, my wife happened to get a subscription to Prime as she virtually attended class to pursue a master’s degree in educational leadership. I know that last sentence is just full of contradictions when juxtaposed against her stance on internet retail. Well, she got hooked and I swear it’s hard to open my front door without being greeted by the sight of a package adorned with that mocking smile of a logo. Oftentimes, I know a package from Amazon has arrived because I get a notice on my phone with a video of the delivery thanks to my wonderful Ring video doorbell, which is a product now owned by—you guessed it—Amazon. As a result of these experiences, we rarely think twice about buying online, using delivery, or signing up for subscription services like Bark Box (well, because I now have a dog). Amazon created and furthered the addiction. Such a dependency grabs a hold so tight that it’s nearly impossible to extricate yourself. 

Why I am intrigued

1. You get the entire Amazon family! My intrigue contradicts what I wrote earlier. But an Amazon integration has me even more intrigued by what we, as travelers, will get by turning further into the crazy spin. Think about the personal assistant Alexa. Is it out of the realm of possibility that you have an Alexa-enabled device that you can say, “Alexa, have a bottle of Smart water, a bag of Nacho cheese Doritos, and the latest issue of Forbes waiting for me in Concourse C in Atlanta airport.”? When you arrive you go to a wall of Amazon lockers that will be unlocked by your mobile device or an emailed code and—voila!—you have your order. This would be extremely handy when you’re pressed for time and trying to make a connection. 

2. Logistics evolution? It can be a lengthy and tortuous journey to get product off airport property onto airport property. And even once it makes its way into the storage facilities, there’s the choreography of moving the product from storage and to the many units that a company operates, which can all be located in different concourses. To be so successful, Amazon must have a tremendous logistics platform. We customers only see the result of the experience, which is a seamless journey from order to delivery. Much like it’s Just Walk Out tech, being a logistics company for hire to service retail and dining operators in airports would be a truly intriguing business. Well, this wouldn’t be a side hustle because it’s already a hustle! Amazon currently has a logistics program though it is more akin to a franchise model for entrepreneurs to start their own delivery business. On one hand, it helps promote small business growth while on the other, it allows Amazon to be more vertical and lessen their reliance or supplement their use of FedEx, UPS, and USPS. Can they extend further and build facilities on or adjacent to airport property? Why not? 

I can almost feel the Amazon root system taking deeper hold as I write this. 

3. It’s all about the Benjamins. Airports are constantly looking to generate additional revenue, or at least diversify their revenue streams. As the current state of the economy impacts virtually every industry, airports are not immune. The Passenger Facility Charge, which is a fee that travelers pay per ticket when flying out of an airport, the sum of which is used to pay for improvements to an airport, has been stuck at $4.50 for two decades. And with fewer people traveling through an airport for at least another two years as traffic inches its way back to pre-COVID levels, there will be less in the PFC bucket for airports to use on needed improvements. Imagine revisiting a naming rights sponsorship for airports or even terminals. Stadiums and arenas do it. For a sum, universities will name buildings after people. Could a naming rights sponsorship be revisited? Who in this beautiful world could possibly have the cash for that? Insert thinking emoji here.

4. I tried to stick to three but this was too hard to resist. Does the entry of Amazon open the floodgates? A Walmart or Target may match Amazon on the retail side but collectively they’re dwarfed by Amazon’s sheer size and breadth of services, the latter of which differentiates Amazon from the pack. Airports could prove to be more intriguing to these big box retailers or reignite their interest if it’s a matter of providing as many means of access as possible to a captive user base.

Final thoughts

What’s to stop retailers from creating their own Amazon Go store? Absolutely nothing. But it comes down to appetite over the cost of building the technology and then working to establish awareness and trust. It’s a marathon that many will not have the deep pocketed stamina to run. Can a firm create a product that mimics an Amazon Go store and peddle that to retailers? Again, absolutely. And again, it becomes an issue of trust that you need to gain for people to comfortably hand over their credit card to access the unit.

So what will make this a success for Amazon is because, well simply, they’re Amazon. They’re known. They’re trusted. Simple as that.

Amazon is inevitable so I will keep this conclusion short: airports, retailers, and travelers be ready.

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