Amazon Go Venturing Into Traditional Retail 33 PDF

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Amazon Go: Venturing Into Traditional Retail Case Analysis Emily Bondrager 10/30/2017 BUAD 485

1. Amazon started off diversifying by offering a fully online service. They focused on eliminating unnecessary shipments of products and having them ship directly to the consumer along with eliminating bricks and mortar locations. Amazon Go and Amazon Elements brought back the bricks and mortar theme however, they were innovative in the sense that they eliminated cashiers and hassles that come with checkouts. Amazon and Jeff Bezos understand that people want their products quickly and conveniently. With changes in the culture and society people are longing for less interaction that may cause them to spend more time running earns and more time doing their activities of choice. This new idea will also cut down waiting time and cost to train, pay and ensure employees as they will need very few if any in these store locations. Jeff Bezos took a different approach to advertising his new bricks and mortar expansion. He has always had an interesting method of advertising which included a very small investment from the company that resulted in a lot of free press. For example, bananas were handed out to people on the streets to initiate a positive brand image and create a relationship with its potential customers. When advertising for their new growth they reduced the cost of advertising by simply releasing a video of how the store will function the day it opened. Bezos explained that because their brand awareness was already so high they did not have to invest millions into advertising. The most difficult part of advertising, creating brand awareness and loyalty, had already been done with their online portion of the company. To top off the advertising, competitors helped spread the word about the new expansions in the company. Although Amazon was not being advertised in a positive way,

competitors were still talking about them and spreading the word to the public. Bezos recognized the threat to a business if a stock out occurs, so he solved the problem. Instead of having multiple companies ship their products to a warehouse which would then ship out to multiple store front locations he removed the unnecessary product shipments. The product(s) ordered would ship directly from the producer to the customer. This proved to be extremely efficient and beneficial for Bezos and Amazon. Moving into the bricks and mortar business Amazon will also be able to rely on their online presence to aid in never stocking out. Even if the physical locations did not have the product, customers would be able to order them and potentially get them the same day depending on the city they live in. Looking more into what Bezos was able to reduce we see that Amazon did not hold many fixed costs in terms of property and building expenses. Even moving into the bricks and mortar industry, it can be presumed they will have low expenses in the property industry. This can be assumed because they will not need the extra space for checkouts and lines. The first location is only 1,800 square feet, allowing a conclusion to be drawn that Bezos does not want large locations that take a long time to navigate. The stores are designed to get people in and out quickly so large locations would be inefficient. They are also able to reduce their fixed costs by minimizing the costs of employees. Amazon worked hard to raise the importance of delivery time and reduce it significantly. Although, Amazon Go and Amazon Elements does not focus on delivering products, the convenience factor has continued to be a goal of the company. Bezos focus with Amazon Go and Amazon Elements was to

raise convenience to customers and he did just that. If Amazon was not convenient enough for you because you need something instantly, then you can walk into Amazon Go and leave without lines or checkouts. While Amazon started off by creating an online store they knew it was time to expand and grow. Bezos knew from the start that warehouse management was going to be a key focus for the company at the start and through their growth process. Even with the expansion into a physical store location Amazon must be able to quickly move products and ship them where they need to go as their online business will surely continue to grow and thrive. The technology (robots) used in the big warehouses will surely be continued into the smaller store locations. It only makes sense if you have the technology to use it and save on employee costs. “If you’re competitor-focused, you have to wait until there is a competitor doing something. Being customer-focused allows you to be more pioneering.” This quote from Bezos himself explains just how highly amazon values its customers and their experience. Bezos wants Amazon and all its branches to pioneer the market. He wants them to live in the blue ocean, no other sharks, just them in a big ocean to themselves to grow to their full potential unharmed. Amazon is an inventor, patient and puts their customers first. Amazon wanted to create an exclusive, innovative shopping experience that customers cannot get anywhere else. They want to always think of the customers first which will allow them to continue making the first move and leading the market in an ocean that will eventually become crowded.

2. Amazon has created a brand name that assures customers the products they need will be convenient to find, offered at a reasonable price and delivered to them fast. Moving into the offline industry Amazon continues to prioritize the same values and implementing them in their new growth opportunity, Amazon Go and Amazon Elements still values being convenient to the customer which is why they eliminated the lines and wait time. It can also be said that eliminating the wait time also offers their products to be delivered to the customer faster. Shopping around online it is clear that the prices on Amazon are comparable to that of offline grocers, causing no reason to suspect a change in their move to the offline industry. Customers hate going shopping and spending a long time waiting in line just to pay for their products. Amazon Go and Amazon Elements have noticed this set back in the industry and are making a change. Implementing this change will provide amazing with the opportunity to draw in numerous customers who have been going to other grocers. One of the downfalls to this method of shopping is that everyone would need to be Amazon prime members. Not everyone who uses Amazon is a prime member because of the cost or other reasons. This method of shopping would exclude them from the innovative experience. This method could also exclude older generations or people who are not technologically skilled. On the other hand and most likely what Bezos is thinking is that Amazon Go will draw those customers in and get them to sign up for Amazon Prime which in turn would create a higher profit for Amazon before they even bought anything. It is very possible that Amazon can come into the offline industry and take over. They’re a big brand name, people

know and trust the name, and they are making it more convenient for shoppers to get in and out of stores quickly. This has happened many times where big name companies introduce their stores in new locations and wipe out smaller businesses because they can’t compete with the big name. Many companies will follow what Amazon did but only a few will remain successful. Walmart will continue to be a competitor to Amazon, if not a bigger one now that they’re in the same industry. Based on Amazon’s goal to always put the customer first, allowing them to become first movers, they will be able to continue leading this industry. Amazon will find away to stay more advanced than other companies. Being the first mover, Amazon will be able to draw more customers in before other companies can catchup and by the time they do, it could be too late. 3. See above 4. Seeing as most retailers will pick up on the “just walk out technology” and how to create something that they can use as well. Amazon is going to need to differentiate themselves further to ensure they can maintain their business. In a way Amazon has been differentiating themselves from day one. Amazon has created an impeccable brand name and acquired many loyal customers because of it. Amazon continues to solve the solutions customers did not even know we had. Once competitors catch up Amazon could look to invest this technology into other areas of their business, such as, books, clothing stores, etc. Amazon could even look to growing into the restaurant industry. There is nothing worse than sitting around for what feels like forever after you ate and want to get on the way home. This would also help eliminate wait time and increase the convenience

factor. Looking into the private labels and how Amazon Elements can do a number of things to make this branch of the company successful. The first already being done, which is they need a good brand name. When they first tried this Amazon was still fresh in people's minds and they had not proved themselves to people yet. Now that they are an established brand Amazon will need to listen to the customers and solve problems in the industry. Unfortunately they did not realize the knowledge needed for this kind of industry before attempting to enter it. They are now smarter and ready to take the customers opinions into focus. They will also need to decide if the are going to be premium or not and price and design their products accordingly. It is proven that people are becoming more and more concerned with their health and what exactly they are putting in their body. To compensate for this Amazon can create a line of vitamins or pills (drugs) and focus on making them natural or at least contain ingredients that customers can recognize and trust. 5. Amazon's offline shopping idea that continues to maintain the quickness and ease of online shopping is definitely possible globally. There would be a significant cost for starting however, the technology is universal. The technology could be used in a vast variety of industries and can be used anywhere in the world. Amazon should jump on this opportunity and expand the offline stores throughout the world. Amazon is offered online internationally and so should this technology. They could examine what departments of the company would become the most successful in different cultures and develop their offline stores

to complement their research. Doing this would allow Amazon to grow faster than if they simply stayed with their one store in Seattle. 6. Jeff Bezos was absolutely the right person for this company. The fact that he is stubborn but also flexible, makes him extremely dangerous to competitors. He won't back down easily but he knows how to lead his company so success using different paths.Bezos is extremely innovative and uses his skills in development to solve problems customers are seeking answers to. Many leaders are scared of hanging on to something for too long and plummeting the business into the ground but, without Bezos doing this, Amazon would probably not have the impact in our lives that it does today. Just try and picture where you would buy all those unnecessary shoes, or where you spend you time online shopping for multiple things at once. All of that would not have been possible without the leadership from Bezos....