Starbucks is exploring a new store format in partnership with Amazon that will allow customers to buy drinks, snacks and other items without waiting in line, utilizing automated checkout technology developed by the e-commerce giant.
The first concept store opened recently in New York City, on 59th Street between Lexington and Park Avenues. The companies currently have plans for at least three locations, with the second opening in The New York Times building in New York City next year and the third location to be determined.
Starbucks is the largest company that has agreed to test the technology, which Amazon has put in its own growing fleet of physical stores but struggled to sell to others. The locations will be operated jointly, part Starbucks and part Amazon Go, the line of convenience stores that Amazon has been opening since 2018 to test and showcase its automated checkout technology.
Starbucks customers who want to grab a quick coffee will find the experience similar to placing a mobile order at any other location: They order what they want ahead of time on the Starbucks app and find it ready when they arrive.
However, the new locations will also feature a section operated by Amazon. The store concept presents an interesting meshing of the two Seattle-based companies. Behind the counter, Starbucks baristas in their green aprons conjure up lattes and present them to customers. The full Starbucks menu is available, and customers can earn loyalty points for those items. However, Amazon has put its own branding at the entrance and in the section of the store it operates. It makes many food items in its own kitchen, and items it sells are not eligible for points on the Starbucks app.
It’s a new twist on Amazon’s efforts to convince other companies to use its technology. It began licensing the tech to third parties last year, but adoption has been slow and many retailers are reluctant to work with a company they view as their largest competitor. Amazon’s technology is currently being used by seven third-party customers at stadiums, airports and convention centers. “We’re in locations where customers tend to have a lot of time anxiety,” says Kumar.
Cost is another barrier to adoption. According to internal documents obtained by Business Insider, the company has been working to bring expenses down, with the goal of lowering annual operating costs by nearly 75% between 2020 and 2023.
Forbes.com, Lauren Debter