Watch out, 7-11: Amazon’s new cashless convenience stores may outperform traditional ones

The Seattle-based company has opened nine Amazon Go convenience stores, which operate without cashiers, and plans to open as many as 3,000 by 2021

Jan.January 06, 2019 12:00 PM

(Credit: iStock, YouTube)

Amazon’s new automated convenience stores, which operate without cashiers, may generate more revenue than regular convenience stores and could soon become a multi-billion-dollar business for the Seattle-based company.

Customers who shop at the new Amazon Go locations simply take merchandise off shelves, and the company charges them automatically when they exit the high-tech convenience stores.

Amazon Go stores generate approximately 50 percent more sales revenue than the average convenience store, according analysts at RBC Capital Markets.

RBC analysts estimate that $10 is the average amount of purchases at Amazon Go stores, and 550 is the average number of customers who walk into the stores each day.

If those estimates are accurate, Amazon Go can generate $1.5 million annual revenue per store.

That is about 50 percent more than the annual revenue a regular convenience store generates, slightly more than $1 million, according to data from the National Association of Convenience Stores.

Amazon will open as many as 3,000 Amazon Go stores by 2021, according to a report by Bloomberg, which means revenue at the futuristic stores could total $4.5 billion.

Amazon didn’t comment on the estimates by RBC analysts.

Creating a large chain of Amazon Go stores that operate without cashiers would be costly. The first Amazon Go store required more than $1 million of sensors, cameras and other hardware to enable automated purchases.

According to estimates by Morgan Stanley, Amazon would have to spend up to $3 billion to open 3,000 Amazon Go stores.

So far, Amazon has opened nine Amazon Go stores in Seattle, San Francisco and Chicago, and the company is still testing different store formats.

Some Amazon Go stores feature only salads, sandwiches and other prepared foods, putting Amazon in direct competition with such companies as Pret A Manger.

Pret A Manger generates about $2.5 billion in revenue per store, in line with per-store revenue at McDonald’s, Panera Bread and other quick-service restaurant chains.

It is unclear how the labor costs of Amazon Go store would compare with those at regular convenience stores.

Though Amazon Go stores operate without cashiers, they have employees who greet customers, stock shelves and prepare sandwiches. [Recode]Mike Seemuth

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