Amazon Pulls the Plug on Palm Payments | Fast Five Shorts

Amazon is shutting down its Amazon One palm recognition payment system and in the same week is closing all 72 of its Amazon Go and Amazon Fresh physical stores according to multiple outlets.

Amazon announced it will end Amazon One and remove all palm readers from physical locations by June 3rd of this year, citing limited customer adoption.

Simultaneously, Amazon said it would close all 72 of its Amazon Go and Amazon Fresh stores across the US Converting various locations into Whole Foods Market stores.

Amazon stated, quote, while we've seen encouraging signals in our Amazon branded physical grocery stores, we haven't yet created a truly distinctive customer experience with the right economic model needed for large scale expansion.

End quote.

John, we're going to you here first.

What do you think is the bigger headline here?

That Amazon is shutting down its standalone grocery stores or that it's ending its palm payment efforts?

Yeah, I think that's a great place to start, right?

What is the bigger headline?

Because it's a very curiously written headline.

If a big retailer is pulling out of 70 stores and kind of closing in a huge format, which was a big bet, I mean, I would lead with that, right?

I mean that's where my eyes go.

And if I dissect that a little bit, you know, we know that Amazon is not afraid to ramp something down, right?

Or sort of kill an experiment.

Does anyone remember the fire phone?

Just, you know.

Yeah, PSA for, you know, rest in peace.

Right?

The fire phone, it came, it went, didn't work.

Too crowded of a space.

Are we seeing a rhyming here, you know, with, with grocery store actual retail formats where, okay, they gave it a go.

The value proposition was essentially around affordable pricing and you know, some interesting features, right.

A different shopping experience.

I remember the days when they opened those small formats and you had all the cameras in the ceiling and it just knew what we're getting and so on, right.

And okay, they tried it for a while, several years.

They had the Whole Foods brand, which is obviously a more premium brand.

So you have these Amazon Fresh kind of playing a fighter, affordable strategy, Whole Foods securing the premium.

And they basically said to the market, you know what, this experiment down here didn't quite work.

Which.

Okay, let's move on.

Right.

So I think it's a interesting milestone where, hey, some of these technologies, maybe the privacy concerns were just a little too far.

We're not quite ready for it.

Maybe the technology and the camera cameras weren't, weren't quite where they needed to be.

So we're going to pause for now and double down on a strong brand that we have that's kind of my takeaway for it.

And we'll see what goes on in the future and where some of these technologies go because I don't think they're going to go away forever.

But it's okay.

We need to try again and figure this out.

So, John, your thoughts are really more focused on like it was more about the technology not working in the store and like, is it less about the offering, the grocery offering that Amazon was able to provide or how do you kind of think about that?

Yeah, on the offering.

So, you know, just an anecdote right from my side, where I happen to live right now.

I have a Lidl nearby, I have a shop.

Right.

I have a Trader Joe's.

You know, Whole Foods is a little further, not really realistic to drive there.

And I do have an Amazon Fresh.

And when I first moved to this area 18 months ago, I said, all right, well, I'm going to go to all of them, right, and see what the deal is.

So personally, and you know, someone who's worked in grocery for a while and they thought about this a bit and you walk around the Amazon Fresh format and yeah, there's some interesting bells and whistles, but like the floor space isn't really super optimized.

You know, the offering, yeah, there's a lot of brands here, but then this other part of the aisle is kind of tight.

I'm not sure they had a super clear value proposition other than more affordable prices because it's Amazon.

So I always get the best price.

And you know, there are going to be some cool features as the cart.

There's going to be a cool dashboard on my cart and I can scan things and all this and that.

But it just, it was never quite a cohesive, kind of shiny experience, if that makes any sense.

Yeah, absolutely does.

And I think tells and further, I think justifies what you were saying earlier about, you know, eliminating things like Palm payment that were really the, like that's the driver is the technology and the convenience that you get with some of the technology in some of these Amazon stores.

All right, I want to hear what you have to say, Ken.

What, what's your perspective on this?

Are you, which do you think is the bigger story?

Is it more eliminating some of that technology or is it closing the Fresh and go stores?

I think it's closing the Fresh and grow stores.

Just the Palm technology is, is interesting, but it's kind of to me, you take the combination of who Fresh might have been targeting, which is a younger consumer that's a little Bit more technology enabled to be cool.

But that's going to come into the next question we're going to talk about in today's session about the growth of grocery e commerce.

Those targeted customers might be the exact same people that are ordering everything online and want to deal with that.

Whereas potentially the order demographic may be less interested in some of the technology that's in these stores.

And quite candidly, you know, where do you go today without your phone?

Do I really want to register my credit cards with yet another recognition technology?

Probably not.

And you know, and if you think about a younger demographic, they don't leave their phone for more than a hot second.

And so you've got all your payment capabilities there and why bother with the palm reader capability?

Yeah, I agree with you too, Ken.

I think that's, you know, I did, I loved the Palm pay, but I totally agree there's, there's really rare, rarely is there a moment where I don't have my phone with me that I can, you know, very quickly tap to pay or use, you know, the, the functions on my card to quickly scan through.

I'm curious what your thoughts are about, you know, what this means for Amazon, like talking about the conversion to a Whole Foods concept.

And I think, you know, also what John, you brought in about price point and like you shopped Amazon because the price point was competitive.

I, I actually think this could be a really interesting move for Whole Foods to further position it as like the low price leader when it comes to higher quality produce and ingredients and better food than some of the competitors like maybe the Trader Joe's or the sprouts that are starting to gain in popularity, especially with a nation that's, you know, increasingly using GLP1s and is looking for these fresh offerings.

I'm curious your thoughts on whether or not like, I think the bigger headline here is definitely the closing of the fresh stores and the conversion to Whole Foods because I think that Amazon stands to get really competitive if they can bring the, the scale of Amazon to a Whole Foods location.

So curious Chris, to hear, maybe wrap us up here with your thoughts on, on bigger headline and if you think there's an opportunity here for Amazon to really take Whole Foods and make it attainable or something that more people could shop at.

Wow, that's, that's kind of a different tangent to, to what we were discussing previously.

You know, to get back to the question at hand, I mean, I actually disagree with Ken a little bit and I think, you know, from my perspective, I think if you take Amazon out of this question.

You know, there's a new entry into grocery in the US market.

It didn't work.

We've seen that before.

We've seen that lots of times.

But when you think about it from the perspective of someone just tried biometric payments and Ken, the part I agree with, what in terms of what you said is like, yeah, there's just no utility in it and so we don't need it.

And so a company with like Amazon can't make a technology like that work.

And I think that's pretty telling.

Like in terms of where does the future go in terms of biometrics versus where does the future grow and go in grocery?

Because I think we all kind of expected them to shut these stores down, which gets to your point.

And back to your other question on the tangent is, is what do they do with Whole Foods?

I don't, I don't know what they're going to do with Whole Foods.

I mean, I think you could potentially take the prices down, but those prices are that way for a reason because they don't have as large of distribution as they do throughout the national grocery chain.

So I think you're in kind of a.

They're in a tight spot here in which.

But that's why I think the next headline is really important too, which Ken alluded to as well, which is the increasing increase in grocery E commerce penetration and Amazon's hand at that.