Will the tech behind Amazon Go redefine convenience at retail?

Discussion
Source: Amazon.com
Dec 06, 2016

The reports that Amazon.com was working on a new type of convenience store have proven true with the opening of the first Amazon Go location in downtown Seattle. The big question now is what the format will mean for Amazon’s business and rivals in the convenience channel and beyond.

The 1,800-square-foot store, which operates without checkouts, will initially serve Amazon’s customers in a beta testing phase before opening to the public sometime early next year.

Shoppers scan their Amazon Go mobile app as they enter the store. Anything they take from the store’s shelves are automatically added to their virtual shopping cart. If they put an item back, it is removed from their cart in the same fashion. When customers leave the store, Amazon automatically bills their accounts and sends a receipt to the app.

In a video, Amazon says it uses “computer vision, deep learning algorithms and sensor fusion, much like you’d find in self-driving cars” to make the Go concept work. It calls the combination “Just Walk Out Technology.”

Amazon Go features ready-to-eat meals and snacks made fresh by on-site chefs and local suppliers, in addition to essentials such as bread and milk. Customers can also pick up Amazon Meal Kits with all the ingredients needed to make a meal for two in about half-an-hour.

Although new, Amazon Go raises many questions:

  1. How quickly will Amazon ramp up the concept and how many stores will it open?
  2. How long will it take rivals to catch up with Amazon Go’s tech?
  3. Will Go’s tech work in other retail formats?
  4. Will eliminating checkout labor drop to the bottom line or will labor be deployed elsewhere? If stores are able to eliminate cashiers, what will this mean for the larger labor picture nationwide?
  5. Will the consumer insights Amazon draws from Go affect its off- and online efforts in food and other categories?
  6. How will Go’s emphasis on fresh foods and local suppliers affect the relationship between the company and large CPG brands?

DISCUSSION QUESTIONS: What do you think are the most interesting questions raised by the launch of Amazon Go for Amazon.com and its competition? What do you think are the answers to those questions?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Amazon appears committed to bringing its tech-driven efficiency to brick-and-mortar retail models that haven't advanced much beyond the UPC code."
"The largest impact on c-store or any retail Amazon (or someone else) can have is if they prove out the technology. "
"Hold onto your hat. Amazon Go is as profound as the first Wriggly gum scan."

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43 Comments on "Will the tech behind Amazon Go redefine convenience at retail?"


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Max Goldberg
Guest

The most interesting question is, will the technology work? Will customers have bills that are 99.9 percent accurate? If they do then Amazon has redefined convenience and small grocery stores, particularly for Millennials.

Lyle Bunn (Ph.D. Hon)
Guest

Absolutely. Anybody who has stood behind people in a checkout line or experienced self-checkout will welcome the true, technology-enabled checkout. I look forward to seeing lots of this at NRF. The pinch point is product labeling but RFID-printable inks are moving forward quickly and cost-effectively. Self checkout respects consumers’ time.

Dick Seesel
BrainTrust

Amazon has redefined convenience in every category they have entered (starting with their original business of shipping books). The company has raised customers’ expectations for speedy execution and has raised the bar for all of its competitors at the same time. Whether Amazon Go works or not is almost beside the point, because the company can afford to fail — but Amazon appears committed to bringing its vaunted tech-driven efficiency to brick-and-mortar retail models that haven’t advanced much beyond the UPC code. (If Amazon Go works … watch out!)

Sterling Hawkins
BrainTrust

Amazon has a habit of announcing technology and services sometimes long before they’re actually delivered. They do a really nice job of creating a buzz within the marketplace and showing investors they’re still innovating all at the same time.

Tom Dougherty
Guest

Will the brick-and-mortar shopper settle for virtual purchases? That’s the key question. A novel idea that won’t work. Shoppers will buy stuff on Amazon and wait for shipment. But they certainly won’t travel to a store and settle for anything less than immediate gratification. If Amazon can deliver it before they get home … well, it’s a winner.

Bob Phibbs
BrainTrust

For the incredibly tech-aware it looks perfect as they understand everything quickly. The devil is in the details with more SKUs and payment options for wide-scale adoption. Clearly once retail innovators experience it they will bring elements to more retailers quicker, but I doubt publicly using Amazon’s branded technology.

Tom Redd
Guest

Much of the technology they are using is already in place with many retailers — especially the shelf technology. All they are doing is installing a larger version of self-checkout deeper in the store space. Millennials will love it for a few months and then hop back to stores where the assortment is broader. I estimate that this is a no-margin or negative-margin marketing gig for Amazon. For sure not a threat for the retail norms.

Most interesting? How long can Amazon survive in their style — negative-margin stores?

Ori Marom
Guest

As long as they can grow by 30 percent each year. 🙂

Meaghan Brophy
BrainTrust
Meaghan Brophy
Senior Retail Writer
5 years 6 months ago

Absolutely. Many of Amazon’s endeavors start out at a loss so that they can gain control of that market in the long run. For example, Amazon originally sold Kindles at a loss to gain control of the e-book market. And it worked. Not sure if Amazon Go is operating at a loss or not, but we can bet that there is a long-term plan behind it.

Ben Ball
Guest

Always remember Jeff Bezos’ Golden Rule: Automate every possible process — invest expensive human capital in only the most complex tasks. And remember the implied “Rule #2” of the Amazon business model — only seek profitability after superior consumer experience yields scale. With the resources at his disposal and the discipline with which he marshals them, I never count Bezos out.

Ori Marom
Guest

I think that Amazon Go is no less than a game-changer for the entire retail industry, well beyond the FMCG sector.

Avoiding checkout lines without inconvenient and error-prone usage of handheld scanners is likely to be a welcome improvement in the eyes of shoppers and retailers alike. The technology is proprietary and non-trivial to implement, putting competitors far behind Amazon.

Last month, Amazon opened a football field-sized showroom in central Beijing that allows Chinese customers to order items online by scanning bar codes with their phones. No in-store inventory. I expect that the next step by Amazon would be opening a similar department store-like concept in the U.S.

Well done! I think that the industry needs THAT kind of vision.

Mark Ryski
BrainTrust

This is what the future of convenience/self-serve retailing looks like. Transaction friction caused by long checkout lines or malfunctioning self-checkout technology is the bane of shoppers – Amazon Go has the potential to truly solve this problem. However, like all technology, there are concerns. Beyond the list of good questions listed I would add, how accurate is the technology? No data capture system is perfect, so understanding accuracy is important. Also, what does it cost to deploy and maintain this technology? And finally, how secure is it — can the system be hacked or subverted? While many questions will be raised, I believe the benefits to consumers of a system like this will far outweigh risks.

Doug Garnett
BrainTrust
Doug Garnett
President, Protonik
5 years 6 months ago

Amazon Go’s technology is brilliant PR. Reading the headlines, it has masked the far more substantive story — that Amazon is doubling down on physical retail. Clearly, Amazon is envisioning more of a physical store future than expected between Amazon Go and the bookstores I nicknamed “Barnes & Amazon” after visiting the one they opened near me.

The technology is certainly interesting. Time will tell whether it’s as big a deal as they want us to believe. I simply recommend a watch and wait approach on the technology — but pay attention to Amazon’s need for physical retail.

Charles Dimov
Guest

Let’s face it. Amazon Go will quickly migrate from fresh food to any and all retail goods (CPG, electronics, fashion, furniture, you name it). It introduces many paradigm shifts that retailers will all need to jump on fast.

Amazon Go is based on technology to make it work. No doubt we will see RFID and other IoT technologies helping retailers mimic Amazon’s capabilities. Beyond that we also need to start thinking about retail technology that acts as a centralized system of record for the customer, tracking purchases, orders (when they don’t pickup in person), likelihood of returning items, etc.

Do you see the end of loyalty cards and apps? For premium customers, might the system flag other items of interest? Are we one step closer to the retail and marketing world of Minority Report? Exciting times!

Paula Rosenblum
BrainTrust

Not to be too grinchy here, but am I the only one who notices that Amazon makes provocative announcements during the holiday seasons (that ultimately never happen)? Great free PR. One year it was drones on 60 Minutes, one year the company took a storefront on 34th Street in Manhattan and did nothing with it after we all discussed it for weeks.

So I’m calling “baloney!” We’ve given too much free press to too many.

Bob Phibbs
BrainTrust

Great reminder Paula!

Ben Ball
Guest

The drones aren’t dead, Paula.

Adrian Weidmann
BrainTrust

Retail is a consignment business! Amazon Go IS the future (the very near future) of brick-and-mortar retail. Full stop! The technology exists today to implement this workflow. I have been working with a technology and business process startup that has developed an in-store merchandising solution that enables a brand (and retailer) to conduct a consignment business with 100 percent accuracy and transparency.

In order for the physical store to remain relevant, the store needs to consistently and regularly feature new products that are being introduced by many new, small companies. The only way to make this feasible is to present these options to shoppers through a consignment arrangement. It’s good for both the retailer (real estate) and the brand (access to an audience). This approach also addresses all of the costs and challenges with inventory and supply chain management. Most retailers expect the brands to police this themselves anyway.

Richard J. George, Ph.D.
BrainTrust

This is simply another extension of Amazon’s customer-serving/delivery options. At the end of the day, Amazon is a fine-tuned distribution company, constantly experimenting with new delivery methods. Amazon Go is the Uber equivalent for food retail shopping. Obviously, all food retailing channels need to take notice, including the c-store channel whose hold on convenience shopping is being challenged.