Bloomberg Businessweek July 22, 2019
49thekitchenstaffhoodiesandothercold-weathergear.The
peopleinvolvedintheserviceindustry,it turnedout,were
provingastrickytomanageasKumar’salgorithms.
TheoriginalGostore openedto Amazonemployeesin
December2016,buta publicopening,scheduledforearly2017,
wasdelayedanother 12 months.Thesystemtendedtofreeze
when 20 ormoreshopperswereinthestoreatthesametime.
It losttrackofproductswhenshopperspickedthemupand
setthemdownona differentshelf.Theshoppersthemselves
alsogotconfused.“Wenoticedlotsof
customershesitatingattheexit,ask-
ingtheentryassociateif theyreally
couldleave,”Puerinisays.“Intests
weputupa bigposterthatsaid,‘No,
really,youcanjustwalkout!’” A ver-
sionofthesignis stillthere.
Amazonalsotinkeredwithfood
preparation.Itstartedrelying less
onitsownkitchensandbuyingmore
foodfromoutsidevendors,includ-
ingTaylorFarms,whichmakessal-
adsandsandwichesforStarbucks
and7-Eleven,amongothers.Those
priceyGermanovensapparentlystill
situnusedintheoriginalstore.
Earlyon,theGoteamenvisioned
thousandsofstores,ineverymajor
urbanarea.“Wealwayswantedtobeoneverycorner,”a
formerexecutivesays.“Wewantedtobeascommonas
Starbucks.”Butnow,sevenyearsintotheproject,Amazon
is justgettingtoits14thstore,inSanFrancisco’sdowntown
EmbarcaderoCenter.Thecompanyhasalsodramatically
slowedtheopeningofAmazonBooksandintroducedAmazon
4-starstores,anothernewformatthatfeaturesa selection
ofwell-revieweditemsandAmazongadgets.Theseexper-
imentsinphysicalretailhardlyaffectthecompany’sfinan-
cialresultsinthewayBezoshadinmindwhenheinstigated
theprojectin2012.It’seasytoimaginetheCEOcuttingbait:
He’stalkedinthepastabouttrialingconceptsforsevenyears
beforeexpectinga financialreturn.
Atthepaceit’sgoing,theGostorewillgreatlyexceedthat
spanbeforeit canhopetopayofftheinvestment.People
familiarwiththeprojectestimateAmazonhasspenthundreds
ofmillionsonit,includingfrom$2millionto$3million on
the pilot store alone. One former employee claims it’s one of
the most expensive research and development projects in the
company’s history, though Kumar disputes that, saying the
stores use off-the-shelf hardware and Amazon’s existing cloud
computing infrastructure. Still, considering the dense place-
ment of cameras and sensors, and the tech-support crews that
are on call at all hours of the week, it’s much more expensive
than running, say, a 7-Eleven, which could be staffed by a sin-
gle cashier and—with the possible exception of the Slurpee
machine—have little in the way of bespoke technology.
In customary Amazon fashion, Kumar professes that it’s
“still early” for the Go project and notes that “customers
love the experience” of walking out without stopping to pay.
Analysts (and Yelp reviewers) mostly agree, comparing the
experience to the feeling of going through TSA Precheck in
the airport: Once you get used to it, you don’t want to go
back. That, Kumar says, gives the project “a lot of latitude and
degrees of freedom to be able to try other kinds of things.”
It’s those “other things” that beguile investors and observ-
ers of the company. Incidents of flops that subsequently lifted
Amazon pepper its
history, such as the
early auctions busi-
ness, which led to
the wildly successful
introduction of third-
party sellers, and the
Fire Phone, many
of whose engineers
later applied the les-
sons of failure on
Alexa. “Like so many
things Amazon does,
I’m sure it doesn’t
look at it as a conve-
nience store, doesn’t
look at it as a book-
store, but looks at it
asa dataexperiment,” says Neil Stern, a senior partner at
McMillanDoolittle, a retail consultant. “The stores them-
selves are not the big idea.”
Kumar himself is cagey about future plans but notes the Go
technology could be adapted outside the convenience stores.
“If it makes sense for other things, we’ll do it there,” he says.
Meanwhile, Amazon’s commitment to physical retail seems
to be expanding. Over the past few years, Kessel has been
given oversight of Prime Now and AmazonFresh, the com-
pany’s fast-delivery and fresh food operations. When Bezos
acquired the Whole Foods Market franchise over the sum-
mer of 2017, Kessel was also put in charge of 500 or so Whole
Foods stores—and thousands of conventional checkout lanes
that require the old-fashioned act of waiting to pay.
And then there’s the midsize grocery store on Capitol
Hill that Bezos scotched in the fall of 2015. Earlier this year,
Amazon quietly filed new plans with the city of Seattle and,
to the relief of neighbors, resumed work on the empty space.
Plans for an on-site kitchen were withdrawn, and “optical
speed lanes” were added to the blueprints. The store, at more
than 10,000 square feet, is significantly larger than the con-
ventional Go format, and the newer concept remains tightly
under wraps, with window frosting obscuring the facade that
looks out onto East Pike Street.
But if you stand on the sidewalk and squint through a gap
in the frosted glass, you can just make out the telltale shelv-
ing of what appears to be an Amazon Go store. <BW>DISRUPTING THE DESK SALAD