Amazon is making tremendous headlines with the opening of Amazon Go, a cashierless convenience store (1,800 square feet) in Seattle. Amazon has made several failed attempts while testing internally for over a year and a half. The first of its kind, the automated convenience store fulfilled its promises of “no lines, no checkouts, no registers.”
Available to Amazon Prime members, customers can just walk in, pick up some items, and walk out of the store. The Amazon Go store has a number of cameras and sensors to detect when people walk into the store and when items are removed from shelves. Prime members must scan their phones at the kiosk once they enter the store via the Amazon Go app to be registered. Once the customer walks out with their items in hand, their Amazon account is automatically charged.
“I think this is surely revolutionary the way the store is conceptualized,” said Anil Sangesapu, Senior Director of Product at Skava. “First thoughts of mine were around the technology that made this happen. Starting from how the app gives you a virtual cart as the shopper enters the store, to having every camera (and handoff) track your every move. Think about picking multiple items using both of your hands at the same time while walking down the aisle. That doesn’t sound like an easy problem to solve and get it right 100% of the time.”
Does this actually work?
We’ve had some great innovations that have come and gone, such as Google Glasses and Apple TV. In theory, these were great inventions, but not adoptable for retail success.
Will Amazon Go only get its 15 seconds of fame, or will it be an adoptable success that actually works?
“The ‘does it work?’ question is crucial — if people feel like it works flawlessly, I think they’ll adopt it,” said Dave Barrowman, VP and Head of Innovation at Skava. “It certainly seems better than the existing self-checkout systems (‘unexpected item in bagging area!’). And I’d guess it will eventually become much cheaper and easier to operate than an RFID-based approach,” he adds. “If it doesn’t work flawlessly, or seems like more of a pain, then people will lose faith (‘hey, you charged me for something I put back on the shelf!’).”
Amazon Go works for the time being. It’s trying to solve one of the many complaints made by in-store shoppers: waiting in line. The survey below by Mood Media shows that waiting in line is the top frustration with in-store shoppers.
Amazon Go is not completely machine run. There may not be cashiers, but there are staff assistants available to answer any questions, check your ID (only if you’re purchasing alcohol), restock items, and more.
Nick Velloff, VP of Product Experience at Skava, has a much more simple take on it.
“I see it more like self driving cars. You had to build it and gather data to figure it out. They’re likely just fine (it’s Amazon) with any level of loss to train the system. A bit along the lines of the data being the only important thing,” he said.
Accidental or intentional shoplifting?
Another question comes to mind: is this an open opportunity for shoplifters? Not necessarily. Amazon is known for its impeccable customer service. If they make a mistake, they know how to solve it and make customers happy at the end. So, if someone accidentally takes an item without getting charged, it’s on Amazon. According to The Verge, a CNBC tech correspondent Deirdre Bosa accidentally left the store without being charged for one cup of yogurt. After tweeting about the error, Amazon Go VP Gianna Puerini told CNBC, “first and foremost, enjoy the yogurt on us.”
Accidental shoplifting might happen on occasion, but it shows that Amazon has so much confidence in its system that there is no protocol for missing items, or when customers accidentally leave without paying for an item. There are no notifications or alerts for the customer that an item was unpaid for.
Then, there are those who actually tried to shoplift. The New York Times’ Nick Wingfield wanted to check out the store to see what it was all about. He attempted to cheat the system by taking a four pack of vanilla soda without paying. His attempt failed. Wingfield tried to cover up the product label with plastic, but as he left the store, an electronic receipt was sent to him that included the charge for the four pack of soda.
Amazon’s intricate system might not have protocols for missing items, but Wingfield’s attempts shows that its technology is robust and intelligent.
A new era for brick and mortars?
With more than 5,000 retail stores shutting down in 2017, there’s a chance that brick and mortars will look to implement a similar technology as Amazon Go, to help bring back their store shoppers. We’re curious to see where else this can be deployed for it to actually be widely successful; pop up stores, airports, smaller convenience stores like 7-Eleven, and more.
“I think every retailer out there has to be watching closely. Anything which binds people more closely to the beast is scary to brick and mortar,” said David Levine, Platform Architect at Skava.
Adopting something similar in larger retail stores seems like a much more challenging use case.
“Consider apparel — the cameras will be unable to determine specific sizes, which is critical from an inventory point of view, and, unless they ensure that items are always returned to the correct location, they won’t be able to distinguish between the $200 pair of jeans and the $50 pair,” said Barrowman.
By limiting themselves to only packaged goods, Amazon has largely avoided this problem, says Barrowman. It’s also the case that theft of small, lower value products is more acceptable. Amazon Go may have built their business model on some sort of loss rate. Barrowman guesses that the loss rate is higher than many retailers could even tolerate.
“I expect they’ll go to a more traditional RFID or similar tagging model for higher value stuff,” adds Levine. “You can afford to put a tag on anything expensive, so they’re not interested in that today. It’s the ‘high volume, low cost, very similar items’ which is more difficult. If they can do that without tagging items physically, the rest is easy.”
Whole Foods, on the other hand, could possibly be the next target for Amazon Go. While the store space is much larger, Amazon will probably need to do more internal testing to be successful at a larger grocery store.
Amazon Go is giving the store experience a facelift. This might even convert existing Amazon customers to Amazon Prime members or acquire new customers. Potentially, Amazon will continue to make improvements to its technology to either make it better, or add more security features to avoid accidental theft. Amazon Go might be the first of its kind now, but its competitors are already searching for ways to keep up, or courageously, try to beat.