Costco claims it's had a version of Amazon's futuristic grocery store for 20 years
Reuters/Larry Downing
Amazon announced its next big push into brick-and-mortar retail on Monday.
At Amazon Go, a store first scheduled to open in Seattle next year, the company says shoppers will be able to walk in, pick up their groceries, and walk right out the door. Through an app, the products will be automatically added to a digital cart and billed to the shoppers' Amazon account when they leave.
But Costco says it beat Amazon to this concept two decades ago.
"In terms of scan-and-go, honestly we've had a version of scan-and-go literally 20 years ago," Richard Galanti, the chief financial officer, said Wednesday during Costco's third-quarter earnings call.
"A member would walk in, get an RF gun, radio frequency device, walk around, scan their own items, come up to the front, hand that thing to the cashier, and the scanner, and they print out a receipt."
It's not the same thing, and it's far less efficient than what Amazon is introducing, by Galanti's own disclosure.
But at the very least, it previewed what was to come. And just three days after the announcement of Amazon Go, analysts wanted to know how Costco would respond.
After earning the lion's share of e-commerce sales, Amazon is now coming for retailers' core business, with a reported market potential for up to 2000 stores in the next decade (Amazon says it's "not even close.") And if Amazon's domination of e-commerce is anything to go by, the company's entry into the brick-and-mortar business could be a chilling prospect for retailers.
Amazon Go.Amazon
Costco says it's watching what is happening but is not rushing to copy Amazon just yet.
"We want to make sure we understand what all of these people are doing," Galanti said.
"We do — and not just from a competitive price shop, and whether it's them or someone else — recognize convenience is a value. But there's also some things that we can and can't do. So I think that we're looking at these things offensively, not defensively at this point."
The rivalry between the two companies has heated up as the number of people signing up for Amazon Prime has exploded. According to Cowen, the share of households with Prime membership surpassed Costco and Walmart's Sam's Club sign-ups in early 2015.
Costco already holds some key competitive advantages over Amazon, though.
Sometimes, it's still more convenient and time-saving to drive to a Costco and load up. For grocery shopping, most people still prefer to go to a store than shop online, according to a Cowen survey cited by Bloomberg. And with a large cart in hand, shoppers fill it with things they had not planned to buy.
The bill would most likely be cheaper compared with Amazon, as Business Insider's comparison of a variety of products in October found. Costco membership costs $55 annually, less than $99 for Amazon Prime, though Amazon offers movie streaming, cloud storage, and other benefits with free two-day shipping on almost anything.
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