If the company executes its ambitious expansion plan, these establishments can generate an income of 4,500 million dollars in 2021.
A year ago, Amazon opened its first physical supermarket to the public in the United States. After a period of testing, Amazon Go started in Seattle, the vision of the e-commerce company about what the store of the future will be like. An establishment where, thanks to the intensive use of technology, it is possible to make the purchase of convenience products without going through a line of boxes.
Beyond the proof of concept about the future of the stores, the Amazon Go model can become a succulent source of income for the e-commerce giant. If Amazon’s ambitious expansion plans are met, we could be, in a period of three years, before a business of 4,500 million dollars, according to the estimate of RBC Capital Markets.
In his report, RBC calculates that an Amazon Go store records annual sales in the environment of one and a half million dollars. Around 550 buyers pass through it, whose average purchase ticket is about 10 dollars. According to the analysts of the firm, these stores enter on average 50% more than a convenience store establishment of the same size.
The potential of this business depends on the speed of Amazon in the expansion of these establishments. Currently, the company has about ten such futuristic stores in American cities such as Seattle, Chicago and San Francisco. The expansion confirms Amazon’s interest in physical commerce after the purchase of the Whole Food supermarket chain in 2017 for 13,700 million dollars.
Although the current network is still small, Amazon has big ambitions. Bloomberg said in September last year that the company led by Jeff Bezos wants to have deployed in 2021 a network of 3,000 Amazon Go stores in large metropolitan areas of the United States. The plan foresees to count at the end of 2019 with fifty of these establishments.
If the rate of openings is met and stores follow a similar pattern of revenue to the one analyzed by RBC Capitals, Amazon Go can turn into a business with a turnover of around 4.5 billion dollars.
Of course, an ambitious commitment to this business model will require Amazon significant disbursements. According to Morgan Stanley, deploying a network of 3,000 Amazon Go stores would require an investment of about 3,000 million dollars.
With Amazon Go, the company is exploring how to change the shopping experience of consumers in stores. Through the use of sensors, cameras and artificial intelligence, Amazon is able to detect what items the user puts in his shopping cart. In this way, the user is automatically charged the amount of the purchase when he leaves the establishment, without having to pay in cash.