Should the Convenience Channel Be Worried About Amazon Go’s Expansion?

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Should the Convenience Channel Be Worried About Amazon Go’s Expansion?

By Tammy Mastroberte, Convenience Store News - 06/08/2018
Amazon Go store
Amazon has chosen a pair of promising locations in Chicago for expansion of Amazon Go.

NATIONAL REPORT — Amazon continues to be a disruptor in the ecommerce world, and is starting to take the disruption to the brick-and-mortar world with its new checkout-free store concept, Amazon Go, which is poised for expansion.

Amazon Go offers convenience store items, but allows customers to shop and walk out of the store without paying a cashier — it’s all done through an app and proprietary technology.

Amazon Go’s flagship 1,800-square-foot store, located at the retailer’s Seattle headquarters, opened to the public in January. Now, Amazon has chosen a pair of promising locations in Chicago for expansion of Amazon Go, as Convenience Store News recently reported.

Amazon is also looking to bring the Amazon Go store concept to San Francisco, where it's expected to open near the city’s Union Square. Los Angeles, too, has been reported as a metropolitan area that can expect an Amazon Go site in the near future. 

But is this technology, and Amazon itself, a threat to the convenience channel?

Is Amazon trying to break into the c-store industry and take on leading companies like 7-Eleven, Wawa and Sheetz?

Ken Gold, CEO of Skilken Gold, a real estate development company based in Columbus, Ohio, doesn’t think so. He believes Amazon has other motives.

It's not about growing brick-and-mortar stores, it’s about growing its logistics and distribution network, Gold told CSNews. When Amazon Go expands into new locations, those locations will be in places that make it easy to deliver ecommerce orders, he explained.

"Everything they are doing is about logistics," said Gold. "Did they really want to be an owner of Whole Foods because they wanted to be a supermarket chain? They were having difficulty delivering groceries at a profit and they saw Whole Foods as great distribution centers. They wanted to be closer to where the customer lives and works, so that last mile will be cheaper in terms of deliveries."

As Amazon expands the Amazon Go concept, the company will likely be looking into urban areas in large cities to assist with distribution and growing its ecommerce and delivery business, said Gold, noting that cloud storage and ecommerce are what really bring in the money.

"How much money can they make out of an Amazon Go location?" asked Gold. "These locations will be located where they can make deliveries from orders over their ecommerce site."

If Amazon does decide it wants into the c-store business, then the company will have to believe they can do convenience better than Wawa, which “will be a hard thing to do,” he pointed out.

"If they want to get into the business, they would have to buy somebody because it’s hard to find land on the East Coast to buy c-stores otherwise," he added.

Download our full report, "The Cashierless Convenience Store: Fad or Future?", by clicking below.