In an effort to get each of its cashierless checkout Amazon Go stores to hit a goal of $2 million in annual sales, Amazon has been examining various ways to optimize each location, according to a recent story in The Information (subscription required). Among the things the company is at least considering is dropping meal kits from Go stores.
Amazon Go stores are the convenience stores that offer a range of fresh and packaged food, snacks and grab-and-go items. The stores are built from the ground up to provide a cashierless shopping experience. Users scan the Amazon Go app on their phone as they walk in, then high-tech cameras and sensors keep track of what they purchase, so shoppers are billed automatically as they walk out.
The Information reviewed an Amazon internal analysis document, which revealed that the ideal size for an Amazon Go store was 1,440 sq. feet (not including the entryway). The decision teams at Amazon faced was to figure out how to best design the store and offer the best selection of inventory to meet fill the space and hit the sales goal.
You should read the full story as it delves into some real nitty gritty (like the debate around fountain sodas). But one item in particular in The Information’s reporting caught our eye:
A category in which Amazon Go hasn’t performed as well is meal kits, the boxes filled with ingredients a customer can take home to prepare a designated meal, such as chicken parmesan, according to the analysis. It referred to meal kits as a “strategic focus” for the company, but said they could be cut from Go stores. The company plans to add flowers, greeting cards, loose produce and bakery cases to stores this year and next year to test new product categories.
It’s not hard to understand why meal kits could be a strategic focus for Amazon at its Go stores. A Nielsen survey in March of this year found that in-store meal kit sales are where most of the growth in the sector has been taking place, generating $93 million in sales in 2018. A March 2019 study from NPD found that 93 million Americans haven’t tried meal kits but want to.
Given that growth, it was no surprise that meal kits were featured in Amazon Go’s debut store, and that Amazon meal kits started appearing on Whole Foods shelves this year. Both Amazon Gos and meal kits are all about convenience, and the combination of the two seemed like chocolate and peanut butter. Go is all about speed. For busy professionals, being able to bring home a full-fledged meal-in-a-box on your way home seemed like a winner.
But hindsight being 20/20, it’s easy to see the flaw in this logic. First, according to an InMarket study last year, “Peak visits to Amazon Go happen during business hours. Noon, 2 p.m., and 1 p.m. bring in the most visits, followed by 8 and 9 a.m. InMarket concludes that customers are stopping by for breakfast and lunch.” So at least from that data, customers weren’t even coming into the store around dinner time.
Another big issue is that while meal kits may be easy to grab, they are still hard to make. If you are a busy professional wanting to eat something quickly when you get home, you’re better off grabbing something from the hot food section of a store. Meal kits may be pre-portioned and include all the ingredients, but you still have to put them all together and cook the food. That’s not super convenient.
Granted, all of this is based on one news site, going from one strategy document. There is obviously a lot of discussion and experimentation going on internally at Amazon about Go, err, going forward. We know that Go stores might be shrunk down to fit in office buildings, Amazon is eyeballing airports as Go locations, and even changing existing locations to accept cash where required.
At the end of the day, whether or not Amazon sticks with meal kits at Go stores or not isn’t even that important. What remains impressive about Amazon is that they are always experimenting to see what works. It’s why we named the company to our Food Tech 25 list this year. The company lives for optimization, and iterating Go stores, and what’s in them, is just a part of that.
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