Amazon Go and Prime Air - Shaping the Direction of the High Street
In my previous post I discussed the ways in which the Automotive industry is being disrupted and how Volkswagen is looking to stamp it’s own authority on this space by launching an offshoot, Moia.
The next thing that’s struck me as notable in terms of driving innovation in a particular sector is the effort that Amazon is putting in to further refine and expand on its customer experience.
Physical Versus Digital Retail
The ecommerce giant is looking to make a firm step into building its presence in the physical retail space. Amazon opened its first permanent (bricks and mortar) grocery store on 5th December (2016) near its headquarters in Seattle, USA, and while it’s been initially just open to employees, it’s still listed on the official Amazon Go page as opening to the public in “early 2017”. While it hasn’t announced any plans beyond this single store yet, Amazon did also register a UK trademark on the 5th December hinting at further potential expansion.
This follows Amazon having already opened a physical book stores in Seattle, San Diego and Portland, with books the same price in-store as they are on the website. Book stores are now being rolled out to New York, New Jersey, Massachusetts and Illinois too.
One of the major pain points with in-store retail is paying a higher price for an item you could get cheaper online if it’s not absolutely urgent for you to have that item immediately. Even then, with it’s One Hour Delivery option for Prime members, Amazon is pushing the boundaries there. The main obstacle to having parity between online and offline prices is the overheads involved in physical retail. If these figures could be reduced to be more in line with delivering an online shopping experience, it becomes a lot more palatable and that’s another direction in which Amazon seems to be thinking.
Amazon may even be looking to solve two pain points in one. Coming out of the festive period a few months ago, I’m sure we’ve all had our share of waiting in line to buy gifts and the frustration of not being able to simply pay quickly and leave. It serves as a reminder of what a potentially unnecessary bottleneck this causes in store between customers and the items they’re looking to purchase. The opportunity to offer an alternative has been there for some time now and it looks as though Amazon is going to step up to the plate.
Amazon Go
If the tech behind Amazon Go is as slick as it appears, this is a potential game changer. The worst part of an in-store shopping experience is when you’ve found what you’re looking for, head to pay for your items and realise there’s a long line and you’re going to have to wait just to pay.
There have been alternative attempts to solve this problem, but they’ve usually involved the customer taking on more load in terms of scanning items themselves or similar. What Amazon has seemingly achieved is not only removing the pain point from the experience, but potentially saving customers time and effort at the same time. Without having to pay at a till , you can actually load items you’re buying directly into however you’re taking them home as opposed to putting them in a trolley or basket to then transfer them into a different bag.
With only one store, it’ll be interesting to see how quickly Amazon looks to open more stores once the proof of concept has been successful. Alternatively, whether they use this demonstration of their tech to sell the technology to other physical retailers instead. Even this route would be interesting to them as presumably it would open the door to customers using their Amazon account to purchase in non-Amazon stores (as you can already do on many ecommerce websites). It would also allow Amazon to gain a greater understanding of that person’s offline spending habits and preferences away from ‘Amazon-specific’ purchases.
From a UK perspective, it’s notable that along with their UK trademark secured in December, several sources are citing that Amazon is now in the process of looking for space in Central London.
Prime Air
The other channel Amazon has been looking to innovate in is the variation of ways in which it can deliver goods. Not long ago, drones delivering your shopping would have been the thing of April Fools Day just in terms of the sheer improbability of the sound of it. Step in Amazon however, and and that’s exactly what they’ve announced as a new service that they’re going to be offering called Prime Air.
The idea is to be able to deliver (relatively light) packages in 30 minutes or less from the moment someone clicks the button to purchase. You can imagine that for many this would actually be quicker than bothering to get into the car, drive to the shops, park and buy the item in store.
Being independent of the road system and without requiring multiple deliveries to be made in a specific sequence (as is the case with delivery drivers), you can see how that in the long term this could even help make delivery times quicker and more predictable.
Potentially problematically however, you exchange the problems of the road for that of adverse weather and the potential legal complications of unmanned drones being viewed differently in the various locations in which Amazon operates. There’s a good chance that in many countries, drones will be completely unregulated. Besides these logistical issues, you can see that it would add another string to the bow for Amazon in terms of quickly delivering goods.
Amazon has completed a test in the UK so far, in a rural area very close to a depot. How successful Prime Air will be in urban areas with a lot more obstacles and a lot less space to complete such deliveries will be interesting to monitor. For now, you need enough outside space (that you presumably own) to lay out a landing pad for the drone to find.
Takeaways
One of the most interesting elements of these launches is not even necessarily whether pick-up-and-go tech or drones are eventually adopted into the mainstream, it’s that even with such a commanding position in ecommerce, Amazon is not content. It’s the same innovative thoughts and initiative shown by a 30 year old Jeff Bezos in the establishment of his online book store in 1994 that is driving the company now.
Amazon not only has the license and budgets to explore new avenues but also the ethos to drive it. Where I discussed an industry like Automotive that had largely stagnated, Amazon is pushing far beyond the constraints of ‘retail’ and viewing the tech giants as it’s rivals. Where any process, supply chain or customer experience can be broken down and rebuilt with tech (be it AI, drones, sensors, or something else) to be faster or better, the first-mover will be rewarded and that’s where Amazon, Google and others are looking.
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7yIt's easy to think that major innovation is only for the big boys. All companies of any size can be innovative if we as leaders provide the right environment and creative thinking skills.