We all know Amazon’s reputation as a titan of ecommerce. No other company has made it easier to purchase everyday items from the comfort of our own homes, and it has reaped the rewards for ushering in this digital retail revolution.
Now that it has dominated the online space, it’s no surprise that Amazon is making a play for bricks-and-mortar stores as well. Last month, it opened its first Amazon Fresh grocery concept in Woodland Hills, California. The store injects a dose of hi-tech innovation into a traditional retail setting to deliver a unique in-person shopping experience. And while some of the store’s shiny new technology might sit beyond the short-term horizon for most major grocery chains, there are still a few lessons that they — and other storefront retailers — can take away as part of their long-term innovation strategies.
The unmistakable star of the Amazon Fresh experience is its Dash Cart, which definitely is not your average shopping cart. Equipped with cameras, sensors, scales, and a video display screen, these carts tally your purchases as you shop. Log on by scanning a QR code through your phone’s Amazon app, add a couple of empty grocery bags, and start shopping. The cart recognizes each item as you fill the bags in your cart.
If you have a change of heart about any item, simply remove it and return to the shelf; the same sensors that record an item going in will remove it from your running tab as it comes out. And since your Dash Cart already knows what you’re buying, there’s no need to go through a typical checkout process. Just sign out on the touchscreen and it will automatically bill the credit card associated with your Amazon account and instantly email you a receipt. Remove your bagged groceries and you’re on your way!
Hi-tech shopping carts aside, not much else looks or feels different about Amazon Fresh. Its layout is similar to your local big-chain grocery store. The produce section takes its familiar spot at the front of the store, with meat and deli counters lining the perimeter, and frozen aisles bisecting the floorplan. And the products and brands that fill the shelves are the same as any you’d expect to find at Kroger’s or Ralph’s.
There’s a real lesson here for retailers: innovation is necessary and important, but too much innovation at once can easily overwhelm your customers. When Amazon set out to reimagine grocery shopping, it easily could have taken a scalpel to every aspect of the experience. Instead, it focused primarily on using Dash Carts to fix the single biggest pain point of grocery shopping: the checkout process. As they indulge in this new and streamlined process, customers will become much more likely to trust Amazon if and when it rolls out its next generation of innovations.
As much as the Dash Cart offers an unprecedented customer experience, its real value may be in its potential to unlock unprecedented insights. You can bet that Amazon is using this technology to learn about changing customer journeys and path to purchase — things like which items customers remove from carts and which items are replacing them. They could also analyze in-store customer journeys and learn how much time shoppers are spending in individual sections or aisles. These insights can potentially help Amazon test and optimize floorplans and shelving configurations to maximize sales and deliver the best possible in-store experiences.
Of course, many grocery chains don’t have Amazon’s financial muscle and tech capabilities to develop their own Dash Carts any time soon. But they can consider implementing other innovations in the near term to gather critical data and insights. They may want to consider licensing existing in-store technology or collaborating with outside innovators to curate similar data and insights. Retailers also might find it easier to work directly with a modern marketing services firm to develop smart, creative, and cost-effective approaches to gather new insights that can inform their CX and product development.
As great as the Amazon Fresh experience is, there are some kinks to work out. First, as with any disruptive technology, there’s a brief learning curve for consumers to get used to the Dash Cart. And while the technology is remarkably responsive and accurate, it wasn’t 100% foolproof; the Dash Cart doesn’t always recognize every item on a first try, which could understandably frustrate customers.
Then there’s the running list of items — and their prices — on the cart’s display screen. Every time you add an item to the cart, the total price keeps going up. It keeps you highly conscious of just how much you’re spending at any given moment, and it makes you think twice about impulse purchases — like that sugary cereal you haven’t had since your teens — that are commonplace at grocery stores.
Behavioral economists have studied this “pain of paying” phenomenon over the years. Any business that uses any sort of running meter risks leaving money on the table. From a consumer perspective, it takes away some of the joy of grocery shopping by driving purchase decisions with your rational wallet, as opposed to your irrational stomach.
These examples speak to an interesting paradox that any business will face from time to time: when you innovate to solve for one pain point, you risk creating others. A thorough analysis can help your business decide whether those new risks outweigh the reward. Or you may want to continue down the innovation rabbit hole to address them. No matter how you choose to approach unexpected issues, it helps to promote a culture of flexibility and action so you can confront them swiftly and thoughtfully.
It’s easy to assume that everything at Amazon Fresh is driven by hi-tech automation, but it doesn’t feel as extreme as you might expect. Yes, they have Alexa stations to help you locate items and answer other questions through voice assistant technology. But there is also just as many people stocking shelves, preparing fresh foods, and minding traditional checkout lanes (for those who aren’t quite ready for the Dash Cart experience) as any other grocery store. During my first visit, a number of employees roamed the aisles, chatted me up with friendly greetings, and offered assistance. When I struggled to locate fresh burrata, two separate clerks helped me try to find it (turns out it was the one item on my list they didn’t have in stock).
And maybe that’s the one thing that will never change about any in-store experience: no amount of technology can replace the warmth and comfort of friendly human-to-human customer service.