Amazon Go Case Study: Risks, Alternatives, and Issues Analysis

This case study analysis examines Amazon's foray into the offline retail market with Amazon Go. It delves into the potential risks associated with the venture, including technological challenges, competition, and consumer adoption. The analysis explores alternative strategies, such as online-to-offline marketing and leveraging mobile technology to enhance the customer experience. The main issues discussed include high investment costs, inexperience in physical store management, and the potential for customer resistance to the new shopping model. Despite these challenges, the analysis highlights the potential for Amazon Go's success, particularly among younger generations seeking convenience. The document also references Amazon's competitors and provides a detailed breakdown of the company's financial performance, and the potential impacts on annual revenue. The analysis emphasizes the need for Amazon to address data privacy concerns and adapt to the evolving retail landscape, concluding with an overview of the factors that could determine the success of Amazon Go.

Running head: BUSINESS STRATEGY
BUSINESS STRATEGY
Name of Student
Name of University
Author’s Note

Potential risks
The idea of Amazon Go that had been introduced by Amazon might not be successful
because it had started its business in e commerce platforms and the organisation had been
very successful in this aspect, but the concept of physical stores might not prove to be
successful for the organization. One of the risks to the Amazon Go might face include the
introduction of further technologies, these technologies were introduced to aim in verification
of the purchases made. One of the technologies that are introduced include RFID tags, it
helps in tracking the customers; movement within the store and provides a standard level of
personal surveillance (Ives, Cossick and Adams 2019). The risk associated with the
collaboration of technologies is the fact that Amazon would be able to use the data collected,
for the purpose of manipulating the purchasing impulses of the customers on a certain
granular level. One more risk is that the organization can sell this data including their
consumption habits and the location. They can also integrate the data with many more aspects
of the business of Amazon like anticipatory shipping model which is responsible for
predicting the products that a certain customer is likely to purchase.
The risks that sustained in Amazon Go included the fact that how the organization
would manage to run the business in an online format. This is because the market had been
very competitive along with the requirement of more amount of investments (Smith, Rupp
and Offodile 2017). One more risks that existed within this attempt of the organization is that
it might fail due to lack of experience in management of stores that are physical in nature.
The next threat can be obtained from the competitors of the organization who had been in this
business since a long time. This might prove to be a challenge for Amazon because it would
be a latecomer with no proper knowledge regarding brick as well as mortar retail markets
(Grewal, Roggeveen and Nordfält 2017). This would be challenging because the concept of
delivery systems had allowed the customers to purchase more products from online platform.

One more potential issues that is faced by Amazon Go includes the fact that no all he
customers would use smartphones, which is most important factor while using Amazon Go.
According to findings around 19% of adults in United States do not make use of
smartphones. The stores of Amazon Go do not have registers or any cashier (Johnston 2018).
When an individual enters the store, his code is scanned but the people who do not have
smart phones would not be allowed to enter the stores. Customers who want to purchase
items with cash would be unable to do so because there would be no cashiers. Cameras would
follow the customer but they cannot be linked to a certain account. Besides this they would
not be allowed to walk out of the store because they would require to pay the cash to
someone. This wastes ample amount of time of the customers and hence make the process
inconvenient instead of making it more comfortable.
Alternatives
Amazon can use various alternatives that can help the organization in moving its
business from only online oriented business to offline business as well. The alternative that
could be used include online to offline marketing. This strategy would help the organization
in reaching out to their customers at every touch point for driving the sales as well as
engagement. The aspects that are included in this alternative include click and collect, in this
concept the customers would purchase products online but pick up from a store that is present
nearby (Marron 2017). This particular strategy can be optimized with the use of numerous
steps. The steps are as follows
Permitting online activities to occur offline: click and collect shopping is considered
as one of the most popular trend where customer order their desired products from the online
website but collect the product from a certain store that is situated nearby. This strategy can
used by Amazon such that customers who would have to pay a high rate of delivery charge

due to their geographical location from the store, would be allowed to order the products
online but will be provided with the name of a retail store where the product would be
available and which would be nearer to their geographical location (Chen, Mislove and
Wilson 2016). This strategy would feed directly in the desires of the customers.
Prioritization of mobile first: Amazon can make use of the customers’ love for
mobility with the use of beacon technology in there stores. This strategy would help the
organization in transmitting various messages to the devices of customers while they are
present around the physical store (Galloway 2017). This would help in tracking the buying
patterns of customers present in a particular area or city and hence target more customers
around them.
For the risk of data breach or data getting stolen that is related to the customers and
has the ability to manipulate the buying habits of the customers, the organization can use an
alternative of introducing or collaborating with some other technologies that would ensure
that the data shared by customers would not be manipulated or accessed by the organization
or any other attribute (Polacco and Backes 2018). This would help the organization in gaining
trust of the customers. An alternative that could be used by the organization include the
opening of new intelligence data scenarios which had been touched upon till now. They can
ensure the customers that the data that is collected after numerous transactions on the portal
can be cross-checked with data on the customers’ individual behaviour in the stores.
Main issues
The main issues that could be faced by the organization include the high amount of
investment that has to be made in order to implement according to the proposal. The issue
related to the investment includes the fact that in case the idea does not succeed in attracting
sufficient customers, the investment would be a loss for the entire organization (Smith, Rupp

and Offodile 2017). The next issue that the organization might face include the inexperience
in the maintenance of physical stores. Amazon has been successful in its business through
online platforms, the initiation of physical stores require different strategies for management
and maintenance and some more factors, this might be challenging for the organization
(Galloway 2017). The next issues that the organization could face include the less number of
customers, the end customers of the organization had been habituated to the home delivery
services provided by the organization, and hence the concept of physical stores might not be
acceptable for the customers.
One more major issues from the customers might be the inability to attract potential
customers to the organization (Chen, Mislove and Wilson 2016). The online presence had
made it less expensive and less time consuming for the organization to promote its products
and services, hence the physical presence of the Amazon go would result in promoting the
organization that is more time consuming as well as more cost incurred in the process,
initially the organization would have chances of limited number of customers. As per exhibit
1, Amazon had been ahead of many more organizations such as Apple, Walmart, Macy’s and
many more, the issues pertaining in the introduction of Amazon Go might result in effecting
the annual revenue of the organization which had increased from 14,835 in 2007 to 135,987
in the year of 2016 as per Exhibit 2. This could happen because Amazon Go is not the only
project in this particular field, it has numerous competitors all over all the world. One of the
biggest competitor include Walmart’s similar system of in store (Raber, Ziemann and
Krueger 2018). One biggest competitor include 32M which has started inserting chips into
the bodies of its employees.
One more major issue that would be faced by Amazon in introducing Amazon Go in
numerous places includes the fact that it seems unlikely, this is because it would require a
huge amount of real estate effort (Raber and Vossebein 2017). The numbers that had been

promised by them would be difficult to build or introduce. Besides this in numerous rural
areas, the frictionless experience would be difficult to handle due to insufficient knowledge
regarding the technologies.
Success of Amazon Go
Inspite of numerous issues within the introduction of Amazon Go, the business had
been very popular among the young generations who have a tough schedule and prefer a less
time consuming and convenient process of purchasing items. The business of Amazon Go
had improved to such extent that other business retailers have been facing trouble (Althafairi,
Alhoumaida and Saxena 2019). The customers of Amazon Go are provided the advantage of
shopping fast along with providing a different experience as well as product selection. When
compared to other store, Amazon Go stores do not seem to compete with the retailers
directly.

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