AmazonGo's retail productivity: at least $2700/sq ft selling area & 50 inventory turns/year
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Now that the initial AmazonGo stores are up and running, there’s talk about 3,000 units being rolled out in the next few years. So what gives Jeff Bezos and Amazon the confidence to launch a major deployment of these new stores?
Our colleagues spent several days studying the operations of the first AmazonGo store in Seattle, and based on their observations, we think the answer to the question above is the extreme retail productivity that the model delivers.
Rocking the retail productivity metrics
Amazon has designed a store that maximizes customer throughput and sales to produce exceptional results. In fact, AmazonGo stores produce more sales per square foot than virtually any other retailer except Apple and a few other specialty stores.
Sales/square foot
Based on our colleague’s observations of the Seattle store, we estimate the annual sales per square foot of the selling area was $2,700, even in the early days of operation. As impressive as this number is, it’s likely to go higher as:
- More customers become aware of the convenience of shopping these stores.
- Amazon finds ways to drive even more sales from the modest footprint
Inventory turns
AmazonGo also outperforms on inventory turns. Based on the same observations mentioned above, we estimate that the Seatle AmazonGo store is generating about 50 inventory turns per year – 4 to 5 times what’s typical in other retail operations. Expect inventory turns to increase also as more customers shop the store.
BMC POV
The exceptionally high performance of both of these retail productivity metrics makes it clear that Amazon has succeeded in disrupting the established self-service model by developing a model that makes much more efficient use of inventory and the retail footprint.
Since there’s nothing similar operating at the same level in the US, Amazon is now free to roll these stores out with no direct competition – and that’s exactly what Amazon looks for and needs to continue to drive the very rapid growth of their enterprise.
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> Reverse-engineering Amazon Go: What you should know
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Comments
The Chicago stores are more constrained than the ones in Seattle so we anticipate that the Amazon Go team in Chicago is striving incremental improvements that will increase retail productivity and, in the process, overcome some of the limitations you’ve pointed out. Time will tell exactly how big an idea this proves to be and, at the end of the day, it’s “location, location, location”.