Amazon just launched its latest innovation set to disrupt the grocery industry this week. The retail giant officially opened its first full-sized cashier-less supermarket on Tuesday, located just a stone's throw away from its headquarters in Seattle, Washington.
The grocery, called the Amazon Go Grocery store, is significantly larger than the company's typically Go convenience stores. Different types of grocery items, around 5,000 products according to the company, fill out the 10,400-square foot store. Similar to its smaller Go convenience stores, the entire shop is automated using the same type of cashier-less technology.
Shoppers can pick any item they want inside the store after they scan their Amazon app on a turnstile upon entry. A series of cameras and sensors placed throughout the store automatically detect the items people take and then charge them to the person's account when they leave.
While some retailers have focused on growing their online presence, Amazon has been ramping up its investments in its brick-and-mortar business. This included the rapid expansion of physical retail stores for its different brands, including its Whole Food stores and its high-tech Go stores. The company has also expanded its non-food retail outlets, namely its Amazon 4-star stores and its Amazon Books stores.
When looking at the bigger picture, Amazon's physical retail offerings don't really generate a lot of revenue for the company. Amazon revealed in its latest earnings results that its physical store segment only generated about $4.4 billion in sales last year. That is a drop-in a bucket when considering the company's $87.4 billion in net sales for its fourth quarter last year.
Amazon likely isn't putting up the stores to generate more revenue. Instead, the company is likely looking for ways to significantly change the physical retail industry with its innovative new store concepts.
The cashier-less supermarket is the company's latest volley in a series of possible new offerings that is part of its already complex brick-and-mortar strategy. Apart from the new concept store, Amazon has also launched various other initiatives covering its slew of other products.
By combining concepts and integrating systems, Amazon has managed to create a rather innovative retail ecosystem that could very upend the global retail industry.
The company's Whole Foods Market subsidiary, which it acquired for $13.7 billion in 2017, already offers exclusive discounts to its Prime members. The company also started offering delivery for customers through its AmazonFresh service. Its Amazon Go stores are also starting to gain traction, with the company stating it has become an integral part of its strategy to transform traditional brick-and-mortar retail.
