Amazon’s ‘Old is New Again’ Innovation

Amazon’s unveiling Monday of its new brick and mortar venture, Amazon Go is, rightly so, generating a lot of interest:

The full strategy, as reported on the Verge is for three types of stores in a range of sizes:

Of the three varieties of stores Amazon is considering opening, the convenience store model is the most concrete. Earlier today, the company took the wraps off Amazon Go, an ambitious cashier-less store in its hometown of Seattle that uses artificial intelligence and sensors to track which items consumers take off shelves. That way, you can simply walk out of the store without having to go through a checkout line. This gives Amazon a critical way to track consumer buying behavior offline.

The other store formats Amazon is considering include a smaller drive-thru variety and a huge, European-style discount chain. The drive-thru prototypes are weeks away from becoming a reality, The Wall Street Journal reports, with two stores under construction in the Seattle area. The larger discount chain model would involve constructing 30,000- to 40,000-square-foot stores that combine instant purchasing with a kind of IKEA model. That way, consumers could order in-store via touchscreens or online and then pick up the finished packages curbside later on. In a statement given to The Verge, an Amazon spokesperson said the company doesn’t comment on rumors or speculation.

While the technology behind the “walk in, grab, and go” convenience store model is cool, what’s even cooler (in my humble opinion) is that the large discount chain model is exactly like what I discussed in “Innovation – What’s Old can be New Again”, back in April. In other words, it’s the rebirth of Best Products, made viable by changes in technology. Not that I’m even remotely suggesting that anyone at Amazon read the post (I’d strongly suspect this has been in the planning stages for far, far longer), but it’s nice to have some confirmation of my ideas. In my opinion, marrying Amazon’s logistics capabilities with digital technology to revolutionize offline shopping is a clear winner.

Greger Wikstrand and I have been discussing the topic of innovation for a little more than a year now. In his last post, “Big bet innovation and other types of innovation”, Greger talked about the difference between making big bets, failing fast, and incremental, continuous innovation. Amazon’s move, particularly with the largest store, I think represents just this type of incremental innovation. Amazon has been experimenting with physical outlets for a while now, starting with bookstores. Moving into groceries and other consumer goods (which is a more complicated segment of retail – books don’t go bad on the shelf!) represents a way to keep pushing the envelope bit by bit.

The hybridization of online and physical retail represents an interesting situation, an innovation toward the middle, if you will. Having grown large in the digital space, Amazon is now continuing its evolution into areas considered the domain of more traditional retailers. It’s interesting that Greger’s article links to a similar case of e-commerce merging with physical presence (in Swedish, but translates well).

It’s been said before, not all change is innovative, but innovation implies change. Intentional change that allows your business to continually optimize its fit to its operating context is truly innovative.

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