Amazon has come up with a plan to ensure that its cost-cuttings become even more profitable and effective for their business. However, the company is now doing this at the cost of potentially sending the wrong message to the investor.
Amazon to Lose Go Convenience Stores
The e-commerce giant has just announced that it plans on shutting down its Go Convenience Stores. It is one of the latest services that Amazon had introduced that was completely self-serve.
All the users had to do was walk into the stores with their Amazon accounts logged in which would be scanned the moment they entered the store’s premises.
They could pick any item they wanted to buy and simply walk out of the store without the need to go to any cashier and make the payments physically.
Instead, the users just help themselves out of the store and the barcodes on the items get scanned, sending them a report of what they had purchased.
Now it seems that the company is spending too much to run these stores and they are not bringing in much business for the company.
This is the reason Amazon has decided that it is going to lose some of the stores it has been operating for some time.
The officials have confirmed that they have decided to shut down 8 Go convenience stores. The announcement about the shutting down of the stores was made by Amazon on Friday.
For a while, the company has been trying hard to pull back on its physical footprint. The company has been adopting AI technology wherever it can to cut labor costs.
However, it seems that the company will need to do the same with the AI stores as well. Its cost reduction strategy now includes shutting down the Go convenience stores.
Sites to be Closed
As communicated by the spokesperson from Amazon, the shutdowns will not be carried out in the same city. Instead, these will be carried out throughout the country.
They will be closing down four stores that are based in San Francisco. Two stores based in Seattle that will be shut down and two based in New York City will be shut down as well.
They have confirmed that the stores will be closed starting April 1, 2023. However, there is great news for the employees who were taking care of different roles at the store.
The employees will not be affected at all as they will be sent to different sites where they will either have the same roles or different ones.
Statement by Jessica Martin
One of the spokespersons from Amazon provided clarity on their latest decision to contain the situation among the shareholders.
Jessica tried clarifying the decision that the company has made, revealing that it was just a decision based on their assessment.
She revealed that they do not just asset the physical employees in terms of their work and performance. They do the same for businesses that are running automatically through AI or similar technologies.
If they feel the need to optimize a business, they go for it, otherwise, they make a different decision. Here, they realized that optimization was required not with the technology but with the costs of running these businesses.
Therefore, they have decided to make a call of shutting down 8 different sites for the Go stores.
Total Stores Operated by Amazon
Jessica Martin made it clear that shutting down 8 sites was part of their optimization. It must not be perceived as a failed business or an attempt from Amazon’s side.
They will continue operating other Amazon Go sites as normal. As of now, Amazon is operating over 20 Amazon Go stores that are based across the United States.
These sites will continue operating and as they see fit, they may increase the number of the sites in the future.
After the announcement, Amazon’s shares surged by 3.01% in the premarket trading session.