Source: Amazon video
Amazon Go still plans to transform convenience in retail stores
It’s been nearly a year since Amazon.com opened its first Amazon Go convenience store. While the beta version of the concept, which was initially supposed to open earlier this year, took longer than expected, Amazon Go is now ready for its coming out party, Bloomberg reports.
The 1,800-square-foot store, which operates without checkouts, uses sensing technology that identifies customers who scan their Amazon Go mobile app as they enter the location. When shoppers take items from the store’s shelves, they are automatically added to their virtual shopping carts. If they put items back, they are removed from their carts. When customers leave the store, Amazon bills their accounts and sends a receipt to the app.
Amazon Go features everyday staples, such as bread and milk, as well as ready-to-eat meals and snacks made fresh by on-site chefs and local suppliers. Customers can also pick up Amazon Meal Kits with all the ingredients needed to make a meal for two in about half-an-hour.
With checkout-free stores, Amazon Go intends to eliminate one of the key customer pain points at retail. In March, The Wall Street Journal reported that Amazon had pushed back opening the location after discovering the store’s technology would malfunction if large numbers of customers were on the premises. Amazon’s management, apparently, now believes it has worked out those issues sufficiently enough to move ahead with Go’s public unveiling.
Bloomberg reports that Amazon has shifted from hiring engineers and research scientists for the project to construction managers and marketers, another sign that it is ready to roll out the concept to more locations. How quickly Amazon Go ramps up or whether its “just walk out” technology will be exported to Whole Foods is not yet clear. The Verge reports that regulators in the UK and Europe have approved a trademark request for the concept, suggesting that Amazon’s ambitions extend beyond the borders of the U.S.
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Amazon’s Cashierless Store Is Almost Ready for Prime Time – Bloomberg
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Amazon’s automated store is now smart enough to identify Pikachus – The Verge
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Amazon Delays Opening of Cashierless Store to Work Out Kinks – The Wall Street Journal
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Will the tech behind Amazon Go redefine convenience at retail? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: Will Amazon Go be a success? Does the fact that Amazon took a year to move past the beta stage make you more or less confident in the concept? Do you expect Amazon to roll out the technology behind Go to Whole Foods, as well?
Poll
BrainTrust
Mark Ryski
Founder, CEO & Author, HeadCount Corporation
Nir Manor
Retail-Tech Specialist Advisor
While the progress Amazon is making with Go is encouraging, this is still bleeding-edge technology that will take time to perfect. Consider how long it’s taken to make self-checkout work — and it still has challenges. There’s no doubt that we are seeing the future of transaction processing with Amazon Go, but I suspect the reality for the broad adoption and penetration of this type of technology is still many years away.
It is just a matter of when. Computer vision (a core technology component of Amazon Go) is dramatically improving and there are at least several other companies working on similar “just walk out” services. I’m with Mark that it’s still bleeding-edge stuff. Longer beta testing periods and smaller formats are the training grounds on the way to broader adoption of this kind of tech into places like Whole Foods and elsewhere. Once the technology is perfected, it will be quickly adopted by new formats and traditional retailers alike.
While Amazon gets all the publicity, many players are working on checkout-less technology. Whether it’s actually three months away or three years away, it is inevitable. It will be one of the big boosts to saving physical retail. I believe many consumers are neutral to positive about walking around a store and filling a cart, but I don’t know any consumers who appreciate waiting in line, unpacking their cart, having their products rebagged, etc. Give consumers the positive parts of the physical shopping experience without the negatives.
Welcome to the holiday season, when Amazon gets the most free press of any retailer ever.
Yesterday, it was once again front page NEWS that the company is lowering some more prices at Whole Foods Market. How many other retailers would love the free ad?
Now they’re rolling out more Amazon Go stores. Sure they are. No shrink issues with the “just walk out” concept. Let’s ask J.C. Penney how they did with Ron Johnson’s “no security tags” and “no receipt required for a return” policies.
I know I sound cranky about it, but as a supporter of the retail industry, it frustrates me that one company plays by completely different rules and keeps getting away with it.
The bigger story is the closing down of Amazon Fresh in some markets along with the Whole Foods buy. It tells us that stores are necessary in grocery (especially fresh). But I cannot believe for a second that the Go concept is a winner. Unless you don’t care about margin erosion caused by shrink. Then, hey … Go for it.
A cashierless store is a complex technological challenge that involves multiple tracking controls and payment technologies, so it is not surprising this exercise is taking time. However, the challenge is also related to consumer behavior and adoption, to different retail environments, formats, sizes etc.
It can be a great concept for smaller convenience stores but to satisfy the needs of shoppers in larger formats, I believe a combination of “just pick and go” with an option for the shopper to have human interaction would be a better solution; definitely in some of the markets.
Technology can support the concept, but due to human and environmental complexities it will take quite a few years until it reaches a level of maturity to become mainstream.
Amazon may have taken some time to get this concept to market, but its thinking is still light-years ahead of other grocers and it is actively shaping the store of the future rather than being a passive observer.
Will this take off? In some form, I expect it will. Checkout is an inefficient and wasteful part of grocery shopping and anything that reduces friction and cost will be embraced.
That said, I don’t expect to start seeing this at my local Whole Foods anytime soon. This is a longer-term development and it is still a way off from becoming mainstream.
The concept of Amazon Go is excellent, but the fear will be whether the customer gets appropriately billed. Technology is fantastic, but there are always glitches. I can see mistakes happening, and the customer may get charged for an item they put back or didn’t buy. How does that get resolved? Also customers are human, and they may innocently not recall an item they purchased and become upset with a charge that although justified they may not remember.
I think the technology is an excellent idea, but I would prefer the customer getting the purchase receipt on their mobile app before leaving the store. That said, this is still a great concept and no doubt will be the way of the future.
Amazon Go will be a success for a number of reasons. Here are two. First is that it is super convenient. They have put even more convenience into the concept of a convenience store. Second is that it’s Amazon. They have a huge base of customers and fans that love the Amazon experience online, and now in-store.
Does waiting a year scare people? Hardly. They spent a year in beta getting as close to perfection as they could get. Why should that concern anyone?
I think Amazon Go can be a success in a small-store format. Consumers will like the idea of picking up a few items and going out the door without checking out. Trying to scale the technology to larger format stores is not practical. Taking one year to figure out how to make all of the Amazon Go technologies work is not unusual and there are no causes for concern. Amazon has solved a very difficult problem.
As far as Whole Foods, Amazon is more likely to create a small store-within-a-store Amazon Go format within a Whole Foods store rather than try to implement the Go technologies in the whole store.
Exactly … small store format. LOTS less moving parts, MUCH more controllable. There is an experiment under way in China called the Moby Store. Portable bus-sized stores. No human beings. 100 percent technology. It’s predicated on the overwhelming tendency of the Chinese to pay for everything with their phone. This tech-driven model will surely emerge and evolve — sooner than later.
I was the one who brought up the flash mob problem once Amazon announced the concept. Seem like they listened. My findings were based upon my earlier computer vision studies tracking objects on surveillance videos found on YouTube where the collision and random movement of a flash mob inside a retail store was too unpredictable and unreliable. The solution still will not work with flash lights and aluminum foil to throw off cameras and RFID.
I don’t understand the folks at Amazon because they already have the solution and got it right with their delivery pick up locations and the smart lockers. Just have the customer order something and assign them a locker to pick up, no different than the grocery drive-thru pickup model.
I’m certainly not less confident. It’s totally normal for a tech-first company to stay in beta phase with a new product for a long time. In fact, I believe that Gmail — Google’s email service — was in beta for more than a decade, and well after it became popular. I expect the same to be the case for Amazon Go. It will likely stay in “beta” for a number of years to come yet. All that means is that Amazon is still refining how it works.
These type of delays are only a cause for concern when the parent company doesn’t have sufficient capital runway to invest in experimentation — when the lack of a quick result means that the company has to cut back, so that the product or service never has the breathing space to develop. That is not the case for Amazon. They have more than enough cash to continue experimenting until they are fully happy.
We all understand Amazon Go’s power and disruptive potential to the grocery industry and are eagerly waiting for this to be rolled out. Logically, for Amazon, it makes the most strategic sense for the firm to take full advantage of Whole Foods’ name, physical footprint and most importantly their brand’s reputation. There are certainly PR elements to another announcement, but the proof will come when these new concept stores are introduced.
The grocery industry is just getting a sense of how Amazon will be extending additional values to their loyal Prime members.
Perhaps the wisest go-to-market strategy for Amazon, with their Amazon Go prototypes, is to integrate these innovations into the new smaller-scale Whole Foods 365 concept stores. This will enable Amazon and Whole Foods to provide the most value and resonate with the Millennial and Generation Z time-strapped consumers.
With labor cost being one of the major costs in the c-store industry along with the pressure on wages and the shrinking labor pool, Whether from Amazon or someone else in five years we will accept this type of checkout as standard.
Also Amazon is not the only player in the game and automated stores are also being test in Japan because of the shortage of workers willing to work in the industry for what the industry can afford to pay.
Unlike many traditional retailers, Amazon is working innovatively with technology to create a new retail paradigm. That there should be glitches and delays should not be surprising. Like much of what Amazon does, the payoff here is in the future. Look at this in the same way you can look at the innovators of the 20th century, Clarence Saunders with Piggly Wiggly and Michael Cullen with the first full-fledged supermarket.
Amazon has much to lose from a poorly implemented version of this technology. In profits (shrinkage as others mentioned), poor customer experience (incorrect receipts if the tech is wonky) and all the backlash that follows those outcomes from the press or investors.
So the fact that they’ve taken some time to work further on the Just Walk Out technology signals that it may come to market as fairly mature and less prone to errors.
It’s been mentioned already that this is bleeding-edge technology. As such there will still be more bumps in the road I am sure, as Amazon Go turns live. It does not make me think it will be less successful as Amazon has the financial muscle to push through where other retailers’ financial model would not allow. This said, what comes out of the “sausage machine” at the end of the day may well not be the entirety of the Amazon Go concept. Some aspects will be more successful and these will be the parts that become transformational and monetized and start appearing in other retailers over the coming years either via Amazon direct or through some intermediaries to make it more palatable.
It had to come to this. But no brick-and-mortar retailer would consider giving up that final forced stop of shoppers in hopes they can sell them something more while they are waiting in line to pay — and plenty of suppliers are willing to pay for this “one more crack,” at the shopper. I know, I know! There was a fair amount of technology development necessary to make this all feasible.
And then there is the issue of what will happen with the “fifth wall.” That wall facing the checkout that creates other significant commercial possibilities. But then we are well down the road to “Selling Like Amazon… in Bricks & Mortar Stores!“.”
The success or failure of Amazon Go will depend on how effective their sensing technology protect against shrink. It has to be flawless or merchandise will walk out of the store and take margin with it! The extra time Amazon took to perfect this gives a sense that they’ve achieved a particular performance metric they needed to trust that the technology won’t break under high traffic numbers in the store. If all that works, then Amazon may have a big winner with this concept. I expect more Amazon Go stores to be rolled out before we see this adapted to Whole Foods — let the smaller footprint stores prove out the concept and technology. Once you put it in a Whole Foods, the scale question becomes much greater!
The future is kind of here … For the on-the-run grab-and-go shopper Amazon Go should score big points, for the price-savvy shopper I expect them to go elsewhere.
There will always be issues with tech at retail and what Amazon has learned in a year would probably have taken a traditional grocer 10 years, and that is not to insult grocers, it’s just the R&D around this type of innovation is lacking across the industry.
I’m curious to see how this technology would do in a grocer like Whole Foods or a Kroger where there are over 20,000 SKUs and everything is spread out, fortunately, I have a feeling I won’t have to wait long.
I hope this catches on — as mentioned above, checkout lines are always at the top of the list of shoppers’ pain points and this tech alleviates that.
I shop on Amazon for the convenience. If they have in fact solved their technical issues, this would be a big win for consumers in a hurry to pick up their Amazon Meal Kit and rush home to watch the latest shows on Amazon Prime. The long-term impact of having one company dominating in so many areas is a lot less clear.
Can’t agree more!!!
Amazon is capturing and disrupting every part of our life, whether it is shopping, entertainment, business, etc. Even heard they are coming to pharma area. Seems like Jeff Bezos is the next Alexander on an expedition to conquer the world!
I think Amazon Go will succeed. But, if it doesn’t, watch the e-tailing giant morph the concept into something that does work. They are relentless and don’t care about the process — online or in-store.
The question of whether or not Amazon Go will be a success is off-focus. The question should be: “When and where will it be a success?” My guess as to why it took a year to advance is the Whole Foods acquisition. So yes, I’m looking forward to seeing some version of it in those outlets soon.
Alibaba has opened several Bingo Box stores in China (50?) that are essentially the same thing as Amazon Go, maybe even a little better (scan and go with app, no check out) so something along these lines is definitely in the future of convenience stores. It’s just a matter of time. An overlooked factor is that it was very smart of Amazon to beta test with employees as they’re much less likely to get upset about small things and give honest feedback. So you’d think this is going to be good!
Makes you wonder why someone like 7-11 hasn’t tried a scan and go store, doesn’t it? Maybe they’re just waiting for Amazon to get the bugs out then test it themselves, but boy, this is not the age of “wait and see.” It’s the age of fail fast. Let’s go! (pun intended.)
This is another in a series of grand Amazon announcements. The next will be that they are beta testing in a non-specifically constructed store. Maybe a few years from now we hear about systems that will work well in larger formats with more shoppers, random weigh items — you know the places people shop and the things they buy.
Yes, I definitely believe that Amazon Go will be a success, and the fact that the beta stage lasted longer than what was expected, to me, is a sign that the company is doing all that it can to get this concept right. Well worth the effort and wait as this retail technology is a game changer. Seems like a given that the Whole Foods play is for the real estate. Easier to upgrade the portfolio of Whole Foods sites to various levels of the Amazon Go technology platform than to invest the time and money to build out all new locations first.
With this concept, Amazon Go is already disrupting the retail space. While on one hand Amazon is taking a lead on customer experience, traditional retailers are still struggling to tackle Amazon without focus on customers. This is keeping Amazon ahead in the race.
Considering Amazon Go, it’s an intelligent move as Amazon has accurately identified the major pain point customers have while they shop in a brick & mortar store, i.e. standing in long queues for billing. The only constraint/challenge is how will Amazon will keep up with the technology and protect any shop lifting or wrong billing as the complete process is human free.