The Modern Grocer — Amazon Go and the Future of Retail
Online retailer Amazon, originally conceived as an Internet bookstore, has gone full circle when it comes to distributing its goods. The company recently opened its first brick-and-mortar bookstores, but now, it’s pursuing physical venues for other types of goods.
Enter Amazon Go, a high tech convenience store intended to pave the way for greater things in the future. The single store, located in Seattle and currently only open to Amazon employees, is intended as an experiment to see if a new model of automated convenience store would be viable.
Amazon Go promises shoppers a lack of the lines, registers, and even checkouts endemic to other grocery stores. Any shopper interested in purchasing goods is free to walk in, scan a specialized app, grab everything they need, and walk out, with their payment being processed automatically without need for their input.
The shopping experience may be simple, but there’s a lot going on behind the scenes of Amazon Go. The store makes use of machine learning and a suite of sensors to process the items that consumers take with them as they travel through the store. The store is even able to recognize when items are returned to shelves. Upon exiting, the customer’s account is automatically charged, and they are sent a list of the items that they left with.
It’s not completely automated; a sales associate will still need to be on hand to check identification for alcohol purchases and ensure that the process is running smoothly. Still, from a staffing perspective, the requirements for Amazon Go are far less stringent than a traditional grocery store.
Like other Big Data projects, the value of Amazon Go’s technology lies in its constant self improvement. Learning customer purchasing habits, allergies, and preferred ingredients could potentially lead to a fully personalized shopping experience. It’s another application of Internet of Things technology, this time in the retail sector, with the potential to expand beyond grocery stores.
The interesting implications of Amazon Go goes far beyond any physical stores that the company can open. In fact, it’s doubtful that Amazon will find much value in opening a large chain of stores, given the low profitability of grocery stores. Instead, it’s likely that the true value for Amazon isn’t the stores themselves, but the technology that they can sell to other chains, quickly spurring stores to adopt or fall behind their competitors.
While certain grocery stores have experimented with personal devices designed to aid the shopping experience, Amazon Go could shake up business models in a largely stagnant industry. Expect progress not only from Amazon, but from other companies in the coming years when it comes to automated shopping.
For now, Amazon Go means increased interest in the company; they’re certainly no strangers to experimenting with technology to improve the customer experience, as evidenced by their forays into automated delivery and IoT technology. The company will likely use the stores as an opportunity to promote and expand AmazonFresh, their grocery delivery service.
In any case, it’s worth looking at Amazon Go as a case study on the viability of machine learning in a retail setting. Keep on the lookout for more news about the Seattle store when it opens later this year.
Originally published at damianesteban.com on February 21, 2017.