Amazon Store Launch Delayed Due to Bizarre Vendor Incident

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Amazon’s brick-and-mortar store team has struggled to meet its goals in recent years due to numerous operational challenges, as Insider previously reported.

One of the more bizarre reasons was due to the arrest of a Hong Kong-based supplier in what local authorities said was smuggling products, according to internal documents obtained by Insider.

In the summer of 2020, this supplier was taken into custody on “alleged smuggling charges”, keeping some of the key components used in Amazon’s cashless stores stranded in Hong Kong for an extended period. As a result, Amazon had to reship some of these components from China, causing delays in launching its checkout-less stores. These coins are part of Amazon’s Just Walk Out technology, which allows shoppers to purchase things without having to walk through a checkout line. The technology is found in Amazon’s cashless stores like Go and Fresh.

“All the parts were in the HK warehouse which was seized by the police, and we had to re-ship them – that was the main point of delay, and unforeseen,” one of the documents read.

This incident was just one of many stumbling blocks Amazon has faced in its physical store business, as Insider previously reported. High store costs, a dysfunctional internal culture and tensions with Amazon-owned Whole Foods also contributed to the delays. Internal projections, for example, call for 280 fresh groceries by this year, but Amazon currently only has 27 such stores open.

Amazon’s vice president of physical stores, Dilip Kumar, was particularly upset by the Hong Kong supplier fiasco. In emails to his team, Kumar repeatedly expressed his frustration that he had not prepared for the supply chain issue, regardless of the sudden nature of the arrest.

“How did we not schedule this to be available when we knew we had to launch?” Kumar wrote in one of the emails seen by Insider.

“Why didn’t we order this months ago to avoid last minute issues? I don’t like playing chicken on the schedule,” another email from Kumar said.

Even with the delays, however, Amazon remains optimistic about its brick-and-mortar store business. At last year’s internal town hall meeting, CEO Andy Jassy mentioned grocery stores and brick-and-mortar stores as part of his company’s “innovations,” as Insider previously reported.

“I think the way we’re trying to reimagine the grocery experience and physical stores is very exciting,” Jassy said, according to a recording of the meeting obtained by Insider. “It’s not just a business.”

Do you work at Amazon? Do you have any advice? Contact journalist Eugene Kim via encrypted messaging apps Signal or Telegram (+1-650-942-3061) or email ([email protected]).

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