Love Letter: Amazon Go, and the Top Ten Things to Love About It

Unless you live under a rock, Amazon’s “checkoutless” Go store concept is on your radar.

Being blunt, this is genius, and it ranks up there with Walmart’s ability to land goods cheaper than anyone else, or Sear’s and Roebuck’s first catalog, or Kroger’s price-promo-driven string of 50 straight quarters of growth as a source of sustainable competitive advantage. Over the course of a decade in my former life, I briefed retailers on six continents about the future of checkout. Now you can visit it in Seattle.

Here are the ten things I love.

1. Execution beats speculation. IBM (a beloved former employer) had a great “stuff your pockets full of meat” checkout video. Brilliant concept and like most IBM marketing, full of knowing winks and nods. Another (Toshiba) pushed that connectedness into the home. And some retailers like Metro real in Germany played with RFID. For a variety of reasons, it never scaled. Amazon got it done – and nailed it.
2. Addition by subtraction. Random-weight, cash payments, bulk packages, non-SKU, people without phones, coupon shoppers. Amazon solved these by not solving them. They know their customer, their assortment, and their process. And the subtraction is hidden, because everything is opt-in and new. Amazon is not taking away from a prior Go experience because it didn’t exist.
3. Left behind. Now anything more than a “Me Too!” has to solve additional challenges, costing competitors time, money, and margin as they admit complexity into the model. Outside retail, this “skimming” has proved profitable, as innovators attack the easier-to-solve parts of a supposedly hard-to-serve space. Capital One found less risky individuals in supposedly riskier credit segments. Progressive found insurable drivers in supposedly riskier insurance classes. And technology is key, too. Much of the ugliness Amazon leaves behind creates technology issues for high-volume retailers today (coupon redemption, cash management, WIC/EBT qualification just to name three).
4. Expand into larger formats, segments. Despite point #3, Amazon clearly will test larger format stores and non-grocery assortment. But they can treat these market entries as extensions of the core Go model, not as unique models in their own right.
5. Payments. In many grocery transactions, tender time accounts for 25-50% of the transaction time. Go makes that negligible for the customer (and it’s already zero-labor for Amazon). And it reinforces Prime + App as a mobile wallet, without actually highlighting it. Consumers have shown they don’t value mobile wallet as-such, but they do value a seamless overall experience.
6. Paves way for cross-channel. Order pick-up is an obvious play. And who wants to bet that location-based concierge service is on tap. You get within a certain distance of the Go store, and your order is staged so when you arrive, you avoid what most consumers views as the worst part of BOPIS. Amazon might also save on shipping costs with deliveries already hitting their Go stores.
7. Data-rich by design. Real-time inventory? Done. Dwell-time, traffic flow, hotspots – the technology powering Go will capture all the data needed to assess these phenomena and more, in real-time, without requiring third-party bolt-on systems or siloing data for analysis. And that 360-degree view of the customer? With every shopper identifiable (no anonymous shoppers, no anonymous tenders), Amazon will become the only retailer with a true 360-degree view of customers in-store, day one.
8. Returns. This may be a small part of Go’s overt value, but a physical return location saves Amazon postage on reverse logistics. And Amazon now tacks on the possibility of additional purchases during a return process, which L2 estimates clock-in at 18% of the original purchase.
9. Alexa. This is pure speculation, but Amazon can push Alexa into the Go model as AI-based customer service. It could be as simple as answering questions about or voice-ordering for products on display. It could be a personal thanks coupled with a reminder that an order is on delivery. It could be suggestive selling or shopping list reminders. Maybe Alexa remembers? “Tadd, yesterday you asked me how to sauté spinach. That’s just over here if you need some.”
10. Millenial hotbuttons. #food #mobileonly #nottalkingtoacashier #selfservice #urban #dontbothermewithtoomanychoices #experienceovertransaction #grabandgo

This list is not exhaustive. That may be the scariest thing for competitors.

My only complaints about Amazon Go: it has nothing to do with contact center innovation; despite the convenience, a plane flight to Seattle is expensive; and I don’t hold equity in any of the mobile checkout startups sure to get increased interest as retailers look to respond quickly.