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Amazon to Expand Cashierless Technology to Bigger Stores

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Amazon.com, Inc. (AMZN - Free Report) intends to test its cashierless technology in bigger stores now, according to reports.

This news is in sync with the e-commerce giant’s strategy of aggressive expansion into the retail space. Just a few months back, it was reported that Amazon aims to open about 3,000 stores by 2021.

The latest plan of the company is likely to further heat up competition with retailers like Walmart (WMT - Free Report) , Target (TGT - Free Report) and Kroger (KR - Free Report) , which are already reeling under its influence.

This dominance of Amazon can be attributed to its vast e-commerce platform, expanding online product portfolio and strengthening fast delivery services.

Coming to price performance, shares of Amazon have returned 44.5% on a year-to-date basis, outperforming the industry’s growth of 5.6%.

 

 

Technical Challenges

Reportedly, Amazon’s cashierless technology works well in a small space with fewer items. However, when used in bigger spaces with higher ceilings and more products, the results have not been very successful. Therefore, the rollout of the stores was delayed in 2017 as the technology did not provide support when the store had more than 20 people inside it.

Until now, Amazon’s cashierless technology has been used in stores that are not very big. Infact, the size of such stores is smaller than a grocery store, with little items and fewer people to keep track of.

For now, we need to sit back and see whether this technology works well with bigger stores or not. However, growing proliferation of artificial technology (AI), machine learning (ML) and internet usage is likely to aid growth of these kinds of stores in this data-driven age.

We believe that the company is well poised to take advantage of the technical progress in the retail sector, with the increasing number of innovative technologies.

Amazon Go

Amazon brought the concept of cashierless store in the beginning of this year by setting up the first one in Seattle. Since then, the company has established quite a few Amazon Go stores that stock ready-to-eat food items like salads, sandwiches, wraps, quick eatables, grocery items along with Amazon meal kits.

With the cashierless concept, the company strives to enhance the shopping experience of customers by letting them pay for the items shopped from Amazon Go after reaching home via their smartphones.

Per a report from Statista, revenues in the U.S. food and beverages market are expected to witness a CAGR of 12.5% between 2018 and 2022, and reach $25.98 billion by 2022. Further, revenues in this particular market are projected at $16.2 billion for 2018.

All these endeavors are likely to aid the company in rapidly penetrating the grocery and ready- to-eat food retail space. Furthermore, this will strengthen Amazon’s physical presence that will help it address the traditional section of the population, which still hesitates to shop online.

Amazon.com, Inc. Price and Consensus

 

Amazon.com, Inc. Price and Consensus | Amazon.com, Inc. Quote

Zacks Rank

Amazon currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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