Why Amazon Go Grocery May Fail in the US

( [email protected] ) Dec 10, 2016 04:29 PM EST
This week, Amazon has announced its launch of cashier-free groceries in the UK by 2017.
Amazon Go groceries promise "No lines and no checkout." The Verge.

This week, Amazon has announced its launch of cashier-free groceries in the UK by 2017. Although Amazon made its first trials in its Seattle headquarters, release in the US, Amazon's biggest market, has not yet been confirmed.

The cashier-free grocery innovation will be under Amazon Go, described by the company as "a new kind of store featuring the world's most advanced shopping technology. No lines, no checkout... Just grab and go."

Users can do their shopping and payment online via the Amazon Go app, then visit an Amazon Go grocery store for item pick up. Definitely, a "just grab and go" concept as to how Amazon imagined it to be.

Amazon is currently in partnership with Morrisons, one of UK's largest supermarket chains, for its first leg of operations before it hits nationwide next year.

But even with Amazon having its biggest market in the US, with 183 million unique visitors from the US each month, there is a big possibility of the cashier-free innovation failing to take root in the country.

There are several reasons for this:

For one, cultural difference. In the UK, more people are getting into online grocery shopping with 48% of the population now doing their groceries online. According to a survey by Mintel, the main reason UK consumers prefer shopping online is because of convenience, with as much as 60% agreeing to this reason.

In the US, however, people generally prefer service over payment convenience. Nicla Di Palma, an analyst from Brewin Dolphin, says, "For example, one of the reasons why Fresh & Easy, Tesco's business in the US, did not succeed was that they were focusing on self-checkout, whilst the American consumer likes service."

Another factor that would deter Amazon's self-checkout groceries in the US is on the issue of jobs. One survey shows the US currently has 38,015 supermarket stores, and there is an average of 72 full-time employees per store. That's a total of 2.7 million people who will most likely lose their jobs to self-checkout counters. And that number does not consider people who work part-time or on a contractual basis.

In the UK, the retail sector remains to be the region's biggest employer with over three million people working in the industry. However, there has been massive shifts in the recent decade of technology taking over jobs, so the concept of cashier-free groceries is something that is not new. It is assured though that before Amazon Go grocery gets fully implemented in the UK next year, regulations will be made in terms of securing and maintaining jobs.