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Do You Want Robots With That?

By Asit Sharma – Updated Apr 11, 2019 at 6:09AM

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Robots probably won’t replace line cooks anytime soon, but the Golden Arches are arching closer to AI-powered restaurants.

McDonald's (MCD 0.39%) is edging into the AI future. Last week, the fast-food stalwart and french fry dynamo acquired Dynamic Yield, a small decision logic tech company. Why? To help beef up its menus, and maybe glean some insights that only AI could tell us.

In this week on Industry Focus, host Jason Moser and Motley Fool analyst Asit Sharma explain the acquisition, what this means for McDonald's and its peers, and what to look for in the future of Mickey D's. Also, Jason talks with fellow Fool Aaron Timmons about his time working for (AMZN -8.43%). Tune in for a firsthand account of the working culture at The Everything Store, the use and future of robots in fulfillment centers, and more.

A full transcript follows the video.

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This video was recorded on April 2, 2019.

Jason Moser: Welcome to Industry Focus, the podcast that dives into a different sector of the stock market each day. It's Tuesday, April 2, and we're talking Consumer Goods. I'm your host, Jason Moser, and on today's show we'll talk about McDonald's latest acquisition, a little bit more of a tech-related acquisition, actually. Whole Foods is cutting prices again. But we begin today with a new installment of Between Two Fools

As a member of Services here at The Motley Fool, Aaron Timmons enjoys spending time looking for that next great stock idea. What you probably don't know is that Aaron also spent seven and a half years working at, ultimately serving as a lead operator or a fulfillment center helping deploy the company's Kiva robot technology. I recently sat down with Aaron to talk about what it's like to work at Amazon, how the company is bringing robots and humans together, and a lot more.

Aaron, for our listeners, right from the very beginning here, how did you end up at Amazon? What was your process for actually selecting Amazon for employment in 2011?

Aaron Timmons: Thanks for asking, Jason! For me, there was nothing like the Great Recession to cause me to take stock of my life. 

Moser: [laughs] I think we all did that!

Timmons: Fair enough! I knew that eventually, I wanted to be an entrepreneur, but I wasn't quite ready for that yet, and I didn't feel like I had all the tools in my toolkit. The main thing that I felt like I was missing was culture. I didn't know how to create a winning culture. With that as the backdrop, I was looking to join a great business with a great culture. Deciding that probably the best way to go about that was to put my mouth where my money was, I went to my Motley Fool scorecard. I said, "If this is a list of great businesses that I feel like have bright futures, this would be the place for me to start." So I went line by line through my Motley Fool scorecard and was asking two questions. First one was, is this truly a great business that has a great culture, a history of winning and a future that I can get behind? By the way, anything didn't pass that test was not in my scorecard for much longer after that evaluation. And then No. 2 is turned out to be a more difficult question for me: would this business hire somebody with my background?

After that review, I ended up applying to Amazon, and, naturally The Motley Fool, because I realized that the name of the banner splashed across the top of my scorecard was actually a good fit as well. 

Moser: It qualified.

Timmons: It qualified, it did. So I applied at both. One of them offered me an all-expenses paid trip to Alexandria, Virginia for a fantastic interview experience, and the other one offered me a job. So, with that I headed Phoenix, Arizona to work in an Amazon fulfillment center. 

Moser: Understandable. So, the fulfillment center, now, this is really fascinating to me. I don't know that I've ever spoken with anyone who actually has worked in one of these fulfillment centers. That's what piqued my interest initially when we started talking. You were actually running the fulfillment center, right? 

Timmons: Not initially. I had to work my way up. I actually was with Amazon from 2011, seven and a half years. Over the course of those seven and a half years, I eventually was fortunate enough to be in a position where I got to be the lead operator in an Amazon work facility, where the Kiva technology had been deployed. 

Moser: Ah, yes, the Kiva technology, the robots. So, you work your way up into the Amazon fulfillment center. Tell me a little bit about the day-to-day. As you got to that position, where you were helping run this fulfillment center, taking on more responsibility, what is it like, the day-to-day in one of those fulfillment centers? 

Timmons: Jason, I've had the pleasure of working in manufacturing industries and then in Amazon. So I would say that the day-to-day responsibilities, the tasks on the plate, look and feel a lot different than, I would say, a lot of similar types of companies or similar industries. However, because of the culture of Amazon and because of the customer obsession of the business, the focus areas and the things that we strove to be excellent at, look different. We had such a surgical, precise approach to the execution within operations. 

When we were planning for the peak season or the holiday season, we would spend weeks poring over it, making sure that the entire team knew exactly what was expected of them, how they were going to execute, and what the contingency plans were. 

The other significant factor, in terms of running a facility, is the dependencies between the different processes in the fulfillment center. It's hard for most people to get their minds wrapped around. One easy way to demonstrate that, if we had an issue where Amazon packages were getting put onto a trailer -- so, the truck that's going to ultimately go to a FedEx or UPS -- if we had an issue there and we had to stop that area, we had about seven minutes, Jason, before that stoppage would back its way all the way up to our team members that were taking inventory out of shelves. That was how closely coupled everything was throughout the value stream. 

Moser: I want to talk a minute about the Kiva robotics technology. We talk about these fulfillment centers and how everyone depends on each other to make sure this machine keeps well-oiled and running smoothly. Did you find, as time went on, did it seem like they became more and more automated? Are we going to hit a point in time here in the next 10 years where these centers are basically fully automated, and more or less not reliant on people at all? 

Timmons: I think that's a fair question. I have to get a little philosophical on you and tell you that it really goes back to Amazon's mission to be Earth's most customer-centric company. So, in order to get to that point, I will tell you that Amazon's going to leverage technology and automation everywhere that it allows them to remove costs, as long as they're not compromising an inch on customer obsession and customer experience. If that technology is going to negatively impact customers in any way, they're just not going to do it. 

Moser: Yeah, that's understandable. The follow-on question there, from your experience, who runs centers better, people or robots? 

Timmons: You kind of have to separate, where do you incorporate the automation? There's a lot to that question, to be frank. I had the pleasure of getting to see our software technologies mature drastically while I was there. I worked a couple of different positions during my time there. One of them was an opportunity I had to work on a technology team that really served as the bridge between operations software and our physical design engineers. That triangle that figures out where the future is headed, then makes sure that the building is supported, the operators know how to use it, and the software works to function correctly. In that circle, we pressed hard into automation for decision-making. It was more of the managerial automation. 

On the other side of that spectrum, you have the actual physical processes. When your subtitle is The Everything Store, the number of items, the shape, size, weight characteristics of those items, vary so much that you get to the point where the technology is just not there to automate the manipulation, the picking up, the putting down, the handling of those items, as effectively as people who are uniquely designed by our creator to do. It just doesn't work when you're talking things that vary so widely. You can do some technology automation. I operated a facility for Amazon that had over 15 miles of conveyors.

Moser: Wow, 15 miles!

Timmons: There were thousands and thousands of robots. We had a tremendous amount of automation, but most of it was to supplement or complement what our associates were doing. It was a highly automated facility, but the technology and the people worked in tandem. It wasn't replacing people, it was helping them to be more efficient. 

Moser: Yeah, making it better, complementing the system. I mean, I think that's a great point there. We talk about this future where things are becoming more and more automated, whether it's cars or Amazon fulfillment centers or restaurants or whatever it is. At the end of the day, though, you do need people. There is good old-fashioned human judgment and capability that is irreplaceable in many ways. It sounds like in your job, that really was no exception. 

Pivoting a little bit from the actual day-to-day processes and whatnot that went on at your work, I want to ask you a little bit about working in Amazon. We've seen headlines and stories over the past couple of years, it's a high-pressure environment. There's all sorts of different perspectives on working at Amazon. Some good, some bad, some in-between. I understand, everybody's got an opinion about this. But given that you were there, you were working there, and it sounds like you were working in a pretty high-pressure job, what was your experience working at Amazon? Did you like it? What was the culture like there? 

Timmons: It's a fair question. I've received that question hundreds of times. People are very curious about this. They want to know about drones and they want to know about the culture. These are the two things I get asked about the most. I would say this. Amazon is a very unique culture. It's a culture for winners. It's a culture of winners. There's really little tolerance for folks that are not team players, that don't want to function and think like owners. Certainly a culture that doesn't tolerate those that don't carry their weight. To be honest, Jason, in many ways, that's really refreshing. And that, unfortunately, does mean it's a culture that's not for everybody, like you pointed out.

I'll say this. When I joined the company, I realized pretty quickly that I was surrounded by a group of people that were the kinds of individuals that I wanted my interest aligned with. I felt very good about my investment in Amazon when I joined the Amazon. I mentioned it was on my scorecard. I already owned shares, then I became an employee. I felt magnitudes more positive about the direction of the company and about the future value of that investment after I realized the caliber of individuals that I was working around.

Another key component of culture that I'd emphasize is, I experienced something there -- when I set out to get that well-rounded toolkit and understand how to create a winning culture, I experience something at Amazon that was, I think, really paramount for being able to create that. That was this congruence between Amazon's leadership principles that were written on posters, hanging on the walls, and the day-to-day expectations of myself as an employee, and then the language that I used to give feedback and I also received my feedback of how I was performing, because those were always framed in terms of leadership principles. It was very congruent. And I'd never experienced that before. Because it was so congruent, it gave everyone a clear understanding of the expectations, a common vocabulary for development, and a much clearer picture of the true north. From my vantage point, the impact of that cannot be understated. I think that's one of the secret sauces that doesn't get talked about very much in investing circles or on Wall Street, is that true north is that everybody's able to march to.

Moser: You've made me feel a lot better about still owning my shares of Amazon. It's worth reiterating to listeners, you retired from the company this past November. With that in mind, do you still own your Amazon shares? 

Timmons: I do! Absolutely!

Moser: Good man! You're following our Motley Fool advice. I think it's a buy in virtually every service that we run. OK, Aaron, I want to get to a book recommendation here. We always love to ask our interviewees for a book recommendation. Before we get there, I tell you what, I was scratching my head trying to visualize this in my head. You have a pretty funny story that involves Jeff Bezos and touring through a fulfillment center in Phoenix. Tell us that story really quickly, please. 

Timmons: Oh, wow! Well, I guess he can't fire me now.

Moser: You got closer to him than most of us ever will!

Timmons: That's fair. I was a part of a very scrappy age of Amazon. Really had my entrepreneurial mindset. Slight tangent, one of my books that was really beneficial to help give me a better understanding of what I was a part of was when I read The Innovator's Dilemma, and that book talked about how an organization keeps that start-up mentality and fosters innovative growth into new technologies in the midst of a much larger organization, tangentially around that larger organization, that core nucleus, and supporting it. Well, I was a part of one of those start-up teams. I was, we'll just say, reappropriating some resources from one facility to another. I had located this cart. I needed to move about 10 or 20 of these things from one building to another. I had secured capacity on a truck that I was going to put these on to, not any extra cost, going to the destination building. But I didn't meet anybody in the facility I was in to know about it. Again, very scrappy, bootstraps entrepreneurial environment. 

So I'm pushing these carts through some aisles, out of the line of sight of most people. And I'm pushing this cart through this aisle, and I come around the corner, and there is an entourage, 20, 25 people. And at the head of that group, not more than 10, 15 feet from me, is Jeff. And he's with the executives from Kiva. This was shortly after the acquisition had gone through. And here I am, trying to keep a low profile. I don't want anybody to see that I'm over here pushing these carts to put on this trailer. I'm just trying to keep it low key. And the CEO of the company walks around the corner. So my plan didn't go so well. 

​Moser: Well, let me just tell you, I think I speak for all shareholders of Amazon, we're very glad that you didn't run over Jeff Bezos.

Timmons: Fair enough.

Moser: It sounds like, disaster thankfully averted. Aaron, this has been great! Real quick, I want to wrap this up with you. We're big readers here at The Fool. We always love to get new book recommendations from listeners and interviewees and members. You have a book recommendation for us?

Timmons: I do, Jason. I have one that's a little off the beaten path. Got a book by a gentleman named Hugh Hewitt. It's called In But Not Of and it's a book that really gave me a practical application for how to pursue my desire to influence the world. It's a good book to give inspiration, permission to be ambitious. 

Moser: All right. Good stuff! We'll leave it there. Aaron Timmons, thanks so much for taking the time! Really enjoyed talking to you! We'll talk again soon!

Timmons: Absolutely, Jason! It's been my pleasure!

Moser: Joining me in the studio via Skype as usual, Mr. Asit Sharma. Asit, how's everything going? 

Asit Sharma: I'm going to put aside my go-to word, which is awesome, Jason, and I'm going to say today, I'm doing fantastic! How are you? 

Moser: Awesome, fantastic, maybe I should say... I'm just going to go with really well. I could always be a little bit better, but I could always be a little bit worse. And you know what? You could complain, but nobody wants to hear it. You just have to keep on moving forward. 

Sharma: Fair enough, my friend. 

Moser: I wish that we were sitting here talking about how our teams might have progressed a little bit further through the NCAA basketball tournament. I'm not going to dig too much into that. Obviously, we wish we would have had a little bit of a better showing. But just to be in the tournament, to be able to watch some games, that was fun. I guess there's always next year, right? 

Sharma: Absolutely! It's always an achievement just to make the tournaments. It's great to progress. We had fun watching our teams. I had fun watching your Wofford Terriers, their dynamic. And I did see your tweet insisting, what if Zion Williamson had attended Wofford? For those of you who followed Jason's advice to google this relationship up at the end of our last episode. I was thinking, that team probably would have had a much better chance of taking the whole dance than Duke or Wofford. Anyway.

​Moser: ​Anyway.

​Sharma: ​ Next year.

Moser: Next year. Well, let's talk about consumer goods. Let's talk about investing. Talk about how we can help our listeners make some money investing in consumer goods. 

First up today, we wanted to talk a little bit about McDonald's, the Golden Arches. They recently made an acquisition, a company called Dynamic Yield. If you're thinking that doesn't sound like a restaurant company, then you are not too far off. It doesn't really sound like a restaurant company. It's a bit more of a tech company. They use AI to deliver better customer experiences. Asit, how about break this deal down for our listeners? 

Sharma: Sure. Dynamic Yield is a small company based in Tel Aviv. It has some $80 million of venture capital already invested in it. It has clients. It's an operating company that delivers decision logic technology to retailers. What this is, essentially it's, as you mentioned, Jason, it's using artificial intelligence and also machine learning to provide insights. 

McDonald's is going to use this technology to replace their vaunted human version of this technology, which is the upsell. Would you like fries with that burger? Which has been the go-to upsell technology for McDonald's, probably for the last three decades. This small company is going to help McDonald's churn data based on a number of factors. Where it will be focused initially is the drive-thru. As many people who have invested in McDonald's probably already know, the company drives the majority of its revenue from the drive-thru. We've seen McDonald's go through the cycle of replacing static menu boards with digital menu boards, where they have more control over what the customer sees. This is the next step in that evolution. 

The company, Dynamic Yield, is going to use algorithms and machine learning to analyze not only past ordering patterns from a particular location -- this has been tested for the last year or so in a location in Miami. It's going to incorporate real-time data like weather, which will help it suggest add-on items to consumers who are coming through that drive-thru. 

Jason, back to you. What are your initial thoughts on this out-of-the-box investment for McDonald's? 

Moser: Back to the interview we had at the beginning of the show with Aaron, we talked a lot about robots working with humans in perfect harmony and complementing each other. It seems like more markets, more industries are going this way, figuring out ways to incorporate technology into their models to make the experience better. 

I think about the Panera across the street here from Fool HQ. I'll swing by there sometimes to grab a little lunch. The kiosks there in the store are usually pretty intuitive in trying to upsell me something to go with a salad, whether I want a drink or a cookie for dessert or wherever. So I would imagine over time, McDonald's is certainly trying to rely less on people and more on technology. If you think about it, these stores probably at the end of the day could be run by computers, with just one person overseeing them. I think it makes sense. 

I don't know. I'm not the biggest fast food guy in the world. I don't ever really go to McDonald's. But I feel like maybe it would be worth going to one sometime just to see what the experience is like now. I think the last time I went to McDonald's was probably 20 or 30 years ago, maybe even longer. 

Sharma: I think I've admitted this on this show a couple of years ago, but I never really kicked the McDonald's habit. I've become a much healthier person. I still succumb and sometimes on the sly -- I mean, I end up telling my wife, "Yeah, I took the kids to McDonald's after school." [laughs] "I didn't take them for that healthy snack." I'll still do that. 

What's interesting to me about this deal -- if you get a chance, listeners, there's a great Wired article which summarizes this deal and provides some insights. Wired got a brief exclusive interview with McDonald's CEO, Steve Easterbrook. I want to read a quick quote. Easterbrook said, "How do you transition from mass marketing to mass personalization? To do that, you've really got to unlock the data within that ecosystem in a way that's useful to a customer." That really resonated with me as for what the potential of this might be, although it's going to take, let's admit, a few years before you might see something in an earnings report from McDonald's that says, "Because of this technology, we gained a few points of margin."

But what's interesting is machine learning applied to big data. I'm a fan of this. This is something that's mentioned in the Wired article. Sometimes the insights that artificial intelligence gleans from data is totally counterintuitive to how human insight works. I want to give a really brief example. If any of you play chess out there -- and even if you don't, I think it will be easy enough to follow -- Google has a program called Deepmind AlphaZero. This is a chess engine which basically taught itself how to play in about four hours, and then proceed to play a million games against itself. This natural learning, machine learning type engine then faced off against the reigning chess engine, which is a brute force engine which basically calculates how to play based on analyzing a lot of moves much faster than a human could calculate. So, on the one side, this natural learning, machine learning engine; on the other side, sheer like calculating 10, 20, 50 moves down. They pitted the two machines against each other. What was interesting is that AlphaZero, the program that Google developed, had some insights which were counterintuitive in an amazing way, even to grandmasters. For example, we have this principle in chess that you should protect your king at the beginning of the game. AlphaZero showed a willingness to leave its king out in the open if it meant it could move some other pieces more aggressively. Stuff that a human would just not do. 

I think when you apply this to what McDonald's is doing, this won't happen overnight, it's not going to be something that totally upends their business model, but I think they're going to glean some small insights. Just dreaming up an example, which is completely random, it might suggest, "Offer a customer a hot fudge sundae on the coldest day of the year," something that a human manager wouldn't say. "Hey, offer people hot cocoa," is what the human manager would say. But we can expect some of these to happen, some of these insights to emerge, and McDonald's to capitalize on it now.

Just to close, we can move on quickly and I can push it back to you, Jason. McDonald's says that they're going to eventually apply this to those interactive kiosks in the restaurants and also their mobile ordering app. It's really a larger-scale exercise that it's getting out of this $300 million investment. It's just something for shareholders to follow along for the next couple of years. It should be fun. 

Moser: I'm all for those kiosks. I'm all for using technology to make the experience better, ordering from the store. I've got to call myself out here a little bit because I maybe wasn't being totally honest when I said that I don't really eat fast food much. There is one that... I'll tell you, the worst thing that probably could have ever happened, they opened up a Chick-fil-A five minutes from our house. Chick-fil-A is one of those ones where we will go by there on occasion for a quick dinner or something like that. 

What I have noticed there at the Chick-fil-A, and I think about this in relation to what a lot of these other stores are doing, and maybe Chick-fil-A is playing a little bit of a different game. They're not going to have as many stores as a McDonald's. They're not a publicly traded company. They don't have to answer to shareholders. They just get to do their own thing. But what I noticed at Chick-fil-A is, they don't really incorporate much in the way of technology there. When things start getting really busy, they double down on more people. They have a two-line drive-thru. They'll get people outside of the window to meet you halfway to the window to ring up your transaction to try to make that customer service experience better, faster. They have a pretty simple offering when it comes to food -- chicken, fries, fruit and some drinks. Man, they had this key lime frozen lemonade, which is really good. It's just a seasonal offering. But, yeah, I mean, it's just interesting to see. That probably is a little bit of the difference there. You've got a company that has to answer to shareholders vs. a company that doesn't, so they get to play their own game where that's concerned. 

But yeah, either way, I think that Steve Easterbrook, the CEO of McDonald's, really deserves a round of applause for what he's been able to do with this business and turning it around, following what he saw as this vision of turning this company into a modern, progressive burger company, is what he always kept calling it. And that really is what they've become. 

Sharma: Yeah, I agree. They really followed through with that. A last point, because you brought up a great example in my mind. I really like what you said about Chick-fil-A. They have such a good product. They can just focus on throughput. It reminds me of Chipotle before it had the business decline, and of course resurgence now. Back in the day, when Chipotle first started out, that's what they were obsessed with, too. Chick-fil-A is just pushing as much throughput as they could. If you have the customers, you have the product, focus on that. That was the McDonald's of the '50s, the '60s, the '70s. Now, McDonald's is a more mature company fending off competition. It almost has to go to these new technologies to keep squeezing out some more juice out of those profit margins and attract the customer traffic. 

Moser: Absolutely. Speaking of food and technology, Whole Foods, which as most listeners will probably know, was recently acquired by Amazon. Whole Foods is cutting prices again in their grocery stores. Asit, I saw this article last night. I saw the news break on Twitter that this was happening. I have to say, I wasn't personally surprised from it. I think when Whole Foods was acquired by Amazon, my thinking was that Amazon was going to use this opportunity to really flex that pricing muscle, so to speak. I don't mean pricing power and raising prices, I mean Amazon focusing on lowering prices and being as customer-centric as possible. So I'm not terribly surprised by this news. What about you? Were you surprised by this news at all? 

Sharma: Not really, but maybe surprised by where the price cuts are going to be. This starts tomorrow. Whole Foods says it's slashing prices on hundreds of items, but most all of them are produce items. They're going to save customers an average of 20% on these different produce items. I have few examples that I culled from the press release. If you like mangoes, large mangoes are $1 each. 

Moser: I love mangoes! They're great!

Sharma: I've got family down in Florida. They're probably going to head there tomorrow and grab that. Exclusive deals for Prime members. They have about 150 Prime member deals a week. That is, if you have the Amazon Prime membership, you go into the Whole Foods, give them your phone number or account number, and you get an extra discount. They'll double that to 300. An example from the press release is, you'll be able to buy organic asparagus for $3 a pound, which will save you $2 a pound; or spiral sliced ham for $4 a pound, a savings of 33%. 

By going back to maybe what's a little surprising to me is that it's focused toward the green items. This is something that Whole Foods started before it was acquired from Amazon. They realized that their handling of inventory wasn't optimal. They grew organically, then had some smaller acquisitions, and grew so fast that Whole Foods never paid a lot of attention to how it managed its labor most efficiently, how it handled inventory items. It used to have a lot of shrinkage. So they already were applying technology to this area of the store before the acquisition. I guess it can only help if you're bought by and they've got so many logistics experts, as we just heard in your interview. They have such an acumen for making things more efficient. I believe this partially reflects the fact that they have been able to reduce the shrinkage -- that's spoilage -- of the produce. They have some innate or inherent margin there that they can give back up. 

I think the other thing it also speaks to is this desire on Amazon's part to bring a lot of traffic into the stores and sell those Prime memberships. The Prime membership, obviously, this overarching moneymaker for Amazon. We see that they can use these stores to sell these memberships. They have a special offer starting tomorrow. If you're not a Prime customer through the end of this month, from tomorrow through the end of the month, you can try prime free for 30 days and you'll get a $10 off coupon for an order of $20 or more. This is the second leg. Yes, let's bring in more people to Whole Foods, but let's also sell those memberships.

Moser: Yeah. I think you made a really good point there in driving traffic. That really is the point of the grocery business. It's a low-margin business, no matter who you are. Really, the key is to bring as many people into that store as you possibly can and let them buy stuff. Not very often where you can sit there and just raise prices at will in a grocery store and keep your traffic levels up. Pricing is the easiest lever to pull, get more people in there, folks who aren't Prime members will get some exposure to that.

I think also, Amazon looks at, there's another example out there perhaps in Kroger. Kroger, which is a publicly traded company. They also own Harris Teeter, which is the higher-end version of Kroger, so to speak. When they bought Harris Teeter, they kept that Harris Teeter brand. So now you've got this big, 2,500-plus grocery store base around the country of Krogers and Harris Teeters, catering to customers of all price points. When we saw that news that Amazon was going to start opening up grocery stores under their name, not the Whole Foods name -- so, I think we can assume that Amazon stores would be a little bit more value-oriented. That will give them that value-oriented offering and higher-end offering with Whole Foods with the ultimate goal of just driving as much traffic in there as possible. Because, yeah, the Prime memberships are what really drive this business. It's all about buying more stuff from Amazon at the end of the day, whether it's on, or in a Whole Foods, or perhaps another Amazon grocery store. 

Sharma: Yeah, for sure. We've seen that Amazon Go, which is their really tech-laden concept, and this announcement that you mentioned. We heard in March that they're planning to have, they already have some leases signed, stores in their own name. That might be the next step up toward a more traditional grocery store. I like that analogy. I live in Raleigh, North Carolina. This is the home base for Harris Teeter, North Carolina. And we've got Kroger here, too, although they actually moved out of our metropolitan area because of some fierce grocery competition from other chains. It's a whole 'nother segment we can talk about, maybe in the future. 

I think that's a great model. I think Amazon can profit by that. They're already setting out some hooks for this, Jason. There's 16 metropolitan areas where they've extended free delivery for Whole Foods shoppers if you're a member of Prime and you take advantage of the Prime service. Prime Now also lets you have either delivery or pickup. I personally have seen a lot more of these dedicated shoppers who are pulling together orders for customers who have ordered deliver through their Prime memberships. I think that that's going to be extended to this new branded store. 

The overarching principle here is one of experimentation. They're using Whole Foods for a series of experiments, with discounting, with delivery. I think they're going to transfer that to this new brand, as well. But you're absolutely right. They'll have a nice upper-margin, higher-scale concept. They will have maybe a more conventional concept. They've got the Amazon Go store, which I'm sure they're going to continue to expand as well. 

Moser: OK, we'll leave it there for the week. Asit, it's been a pleasure talking with you! Always enjoy when we get to do the show together! Look forward to the next time we get to jump in the studio!

Sharma: Same here! This was fun! Everyone, have a great week!

Moser: As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Today's show was produced by Austin Morgan. For Asit Sharma and Aaron Timmons, I'm Jason Moser. Thanks for listening! And we'll see you next week!

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Asit Sharma has no position in any of the stocks mentioned. Jason Moser has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Chipotle Mexican Grill, FedEx, and Twitter. The Motley Fool has a disclosure policy.

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