Amazon on Tuesday unveiled a new supermarket prototype that relies more on technology than human workers — a controversial, job-killing business model that CEO Jeff Bezos had dismissed as nutty three years ago.
The 10,400-square-foot “Amazon Go Grocery” store in Seattle’s Capitol Hill neighborhood uses cameras and sensors to detect which products customers pick off the shelves, allowing shoppers to pay for a bagful of groceries without the help of a cashier.
The new store has five times as much shopping space as the Amazon Go stores that first opened in January 2018, which are typically around 2,000 square feet.
The Post first reported in February 2017 that Amazon was developing a “supermarket-sized version” of its Amazon Go shops.
The story, citing sources, said the two-story concept would have robots grabbing and bagging goods on the top floor while shoppers picked up items such as produce, meats and booze on the ground floor. At the time, insiders said Amazon was aiming to open stores that could operate with between three and 10 employees.
Bezos had lashed out at The Post’s story in a rare Twitter post, saying the paper’s sources had “mixed up their meds!”
On Tuesday, an Amazon spokesman tried to explain Bezos’s denial by saying the new store will have “dozens” of employees to help stock shelves and answer shoppers’ questions.
“It’s both incorrect and misleading to suggest that Amazon destroys jobs – the fact is that no other U.S.-based company has created more jobs than Amazon,” the company said in a statement. “In the U.S. alone, Amazon has created over 500,000 jobs for people with all types of experience, education, and skill levels. Amazon jobs – including at Go stores – come with great compensation and benefits, including our $15 minimum wage that is more than twice the national minimum wage.”
Nevertheless, the new prototype raised hackles from the United Food and Commercial Workers union, which cast it as part of a business strategy “designed to destroy millions of grocery worker jobs.”
“At a time when millions of Americans are already struggling, when most Americans are one paycheck away from disaster, what does it say that Bezos wants to create stores that serve food and groceries and eliminate the jobs real people need,” union President Marc Perrone said in a statement.
A 10,000- to 20,000-square-foot supermarket typically employs between 60 and 70 workers, according to David Marcotte, senior vice president at Kantar Consulting.
Amazon’s new, high-tech supermarket in Seattle is just about a mile from the company’s corporate headquarters. After scanning a code from the Amazon Go app at the entrance, shoppers will be able to pick up veggies, meats, bread and other grocery staples and walk out before the app charges their credit cards and sends a receipt.
“It is now obvious that Jeff Bezos made an error in Tweeting his ‘off their meds’ response to the Robot Store story in the New York Post,” said Brittain Ladd, a former Amazon executive and supply-chain consultant. “Amazon will leverage technology wherever possible to increase the customer experience and reduce costs.”
At the time, sources said Amazon’s grocery stores aimed to eventually achieve operating margins north of 20 percent — a figure Bezos mocked at the time. Nevertheless, with the help of robotics, “stores have the potential to achieve up to 20-percent margins on certain categories, and double-digit margins on almost all categories,” according to Ladd.
Amazon’s prototype unveiled Tuesday doesn’t have robots shuttling products from the back room to store shelves to replenish stock, but the 20,000-square-foot store it’s planning to open in Woodland Hills, Calif., will have these robots, Marcotte says.
Amazon made an aggressive move into the grocery market when it purchased the upscale supermarket chain Whole Foods for $13.7 billion in 2017. The company has also offered its Prime members free two-hour grocery delivery through Whole Foods and its Amazon Fresh service.
But Amazon reportedly does not mean for its standalone supermarket to supplant Whole Foods — and there are currently no plans to bring the “Just Walk Out” technology to the chain.
The company also had to adjust its technology to the fact that grocery shoppers often inspect fruits and veggies before deciding which ones to buy.
“See something you want? Grab it off the shelf and pack your bag or cart as you shop. Change your mind? Put it back, no problem,” Amazon says on a website for the store.
“There’s a lot more interaction that tends to happen” with produce than with a can of soda, said Dilip Kumar, Amazon’s vice president of physical retail and technology.
“For now, what we are focused on is this concept and see what customers think of it — [and] go from there,” Kumar told the tech news website Recode on a tour of the Seattle store.
This story originally appeared in the New York Post.
By Noah Manskar and Josh Kosman