Amazon has announced the definitive closure of its 57 Amazon Fresh stores and its 15 Amazon Go establishmentsending a decade of experiments to reinvent physical shopping.
- Fresh They were classic supermarkets, but with technological touches.
- Go They were stores without cashiers where you entered, took products and left: sensors and cameras charged you automatically. The only staff was the replacement staff.
Why is it important. This is Amazon’s most visible failure in its attempt to move its e-commerce dominance to the physical world. A company that has made a success of selling everything online has not been able to sell basic products in physical stores while being profitable.
The context. Go opened in 2018, Fresh in 2020. Both represented the futuristic vision of retail: cutting-edge technology, extreme automation and a clear obsession with eliminating friction. Amazon has admitted that it “has not created a distinctive customer experience with the right economic model.”
An elegant way of saying that they have not found enough clients willing to pay the extra cost of all that innovation.
Yes, but. Amazon is not abandoning the food sector. Now it’s going to convert some locations into Whole Foods, the chain he bought in 2017.
Whole Foods has more than 550 stores, has grown 40% in sales and will open one hundred new stores. In addition, Amazon is also already delivering food at home in 5,000 cities in the United States.
Between the lines. These closures say a lot about the impressive technology that these stores had: not even it can compensate for a mediocre proposal. Amazon Go eliminated queues, but perhaps that did not solve much if its real competitors did not have a problem there.
Of course, “Just Walk Out” technology now operates in 360 third-party stores and more than 40 Amazon fulfillment centers. As is often the case, innovation survives where it makes economic sense. The failure of Go and Fresh was seen coming for a long time.
The pattern. History repeats itself. Amazon has closed physical bookstores, stores pop-up and now also these concepts. Each closing tells the same story: mastering online does not make you a good offline seller. Especially if you aim for profitability.
Bezos built his empire by eliminating intermediaries and friction at Amazon, but the physical supermarket has friction for a few reasons: people want to touch the fruit, compare products, decide on the fly… Human behavior cannot always be improved by algorithmic efficiency.
Go deeper. The failure contrasts with that of other technological giants that in one way or another have managed to dominate the retail. Apple dominates its stores because it sells an experience, not just its products. And Tesla controls its points of sale because the electric car requires a certain evangelization.
Amazon tried to apply its e-commerce formula (full automation, speed, elimination of staff) to a business that simply has other dynamics. A supermarket is not a logistics warehouse. And not even an entire Amazon, with all its resources, can impose its vision of the future if the customer does not buy it.
Featured image | Simon Bak
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