Amazon has disrupted the retail industry once again, with the launch of its automatic Amazon Go format which will begin serving digitally-savvy Seattle customers in the new year.
The technology giant has created a grocery store without a checkout, which revolves completely around a consumer's mobile device. Shoppers scan their mobile device with the downloaded Amazon Go app as they walk into the store and the e-tailer's 'Just Walk Out' technology keeps track of which items they pick up. An array of proprietary technology – which Amazon is keeping pretty tight lipped about – automatically detects when products are taken from or returned to the shelves and keeps track of them in a virtual cart.
Customers simply walk out with their purchases and are charged via their Amazon account.
Malcolm Pinkerton, VP of eCommerce and digital insights at Kantar, described how this is Amazon's next physical evolution following its Click & Collect proposition and bookshops.
"It's all about understanding how consumers are behaving and using technology, and understanding the physical shopping environment and how they're using stores," he said. "Amazon uses huge amounts of data to learn about the online shopper, which they do very well, but this is about stores as well."
Pinkerton explained how Amazon concentrates on building solutions around the technology consumers already own. "This is the glue that binds all the channels together," he said. Pointing to Waitrose and Tesco's 'scan-as-you-shop' technology, both of which are now offered as a mobile app so customers can use their own device rather than picking up a hand-held scanner as they walk through the door.
"What Amazon has done perfectly is remove the pain-point of checkout," Pinkerton added.
Hugh Fletcher, digital business consultant at Salmon, noted that its recent study found 57% of UK shoppers will be ready for fully automated purchases through IoT devices within two years.
"Programmatic can therefore drive a new age of shopping that is IoT-enabled, and allow retailers to feed the modern day customer who is now accustomed to a more direct, quick and convenient method of shopping," he said. "Even if a shopping experience is in-person, not online, shoppers are constantly telling us that they want the same speed, convenience and user-friendly experience that online and mobile shopping provides."
This Amazon video showing a new "just walk out" shopping experience - I bet it will be harder, more expensive to implement than they think https://t.co/vSv29De1rm— Rory Cellan-Jones (@ruskin147) December 6, 2016
The exact technology Amazon is using to create its automatic store isn't clear – Amazon said: "We use computer vision, deep learning algorithms and sensor fusions, much liked you'd find in self-driving cars. We call it 'Just Walk Out' technology."
This could be a combination of sensors and CCTV to monitor products and their proximity to the customer's phone which has checked-in on entry. Miya Knights, head of global retail technology practice at Planet Retail, suggested the store will marry its machine learning about stock levels, footfall and purchase intent with pressure and optical sensor technology embedded in shelves.
"They call it 'computer vision', but normally it is described as video analytics with artificial intelligence layered on top – so video analytics on steroids," she said, noting how the products themselves may be embedded with RFID tags or Bluetooth technology to alert the system when items are removed or replaced.
"The pressure is on retailers now to respond," she continued. "The checkout has been sorely neglected part of the whole store experience – retailers ask for your loyalty card as you leave the store, what's that about?"
Knights likened Amazon Go to Apple's removal of the checkout with its mobile point of sale (POS). "Suddenly consumers' and retailers' imaginations were opened to the art of what is possible and demanded it."
But she said the automated checkout showcased by Amazon will only be appropriate in some use cases with the right types of customers. "This is not necessarily the dawn of the checkout-less store, because stores have to still be able to accept cash payments and lots of different types of shoppers on lots of different types of missions," she said. "Amazon has created a closed loop system where you have to have an app to get into the store. But where this format is suitable retailers should move and invest quickly. It's an evolution not revolution."
Pinkerton described how other retailers have tried to speed up or remove the checkout – Tesco with its PayQwiq app, Sainsbury's trialed a concept to use mobile devices to skip the queues in 2014, while there are even completely staff-less stores in Sweden. "But the amount of investment that's required and the level of technology and innovation means Amazon has got there first – but it's very important to remember Amazon is combining its technology business, including Amazon Web Services."
Looking forward, he suggested Amazon could white-label its proprietary technology to other retailers. "We've got to start thinking of them as an ecosystem and an enabler of commerce."