Amazon Go: The Future of Retail?

Amazon GoJust last month Amazon announced their pilot Amazon Go program — a cashier-less convenience store that relies entirely on technology to guide the consumer experience. The brick and mortar convenience store is located in Seattle, Washington and is currently only open to Amazon employees. In order to shop at the store, you need an Amazon account, a smartphone, and the free Amazon Go app. Shoppers enter the store through a turnstile where they scan in their Amazon Go app. Once inside the 1,800 square foot store, customers can choose from a variety of ready-to-eat meals, grocery essentials, and a mix of locally made foods and well-known brands. After selecting items, customers simply walk out of the store and Amazon charges for the products through the app. This “Just Walk Out” technology completely removes cashiers and the checkout process. The store is outfitted with smart technology that senses when items are picked up from shelves, put back onto shelves, and keeps track of products through a virtual shopping cart. The store will open to the public in early 2017. 

Data Implications

The technology used in Amazon Go will allow Amazon to get a complete picture of the shopper experience. Virtual shopping carts essentially track shoppers as they move throughout the store. Amazon can see where consumers are first drawn to when they walk in, what their exact walking pattern is, what items they pick up or look at but don’t purchase, and what items they skip over altogether. This data coupled with the existing data from a regular Amazon account will provide the retail giant with a complete profile of each shopper.

Retail Workforce

There are currently about 3.5 million people employed as cashiers in the United States. Those jobs will not disappear, but will likely be repurposed. Will Eadie, vice president of sales and strategy at Workjam, an employee engagement platform, says, “We believe that these jobs will transform well before they are eliminated. The retail workforce is not going anywhere, so to get at the root of the problem — customer service and execution —employers need to look at how they are managing their frontline staff. By engaging employees through increased communications, drip-style training, recognition opportunities, and employee-centric scheduling practices, retailers can improve employee morale, product knowledge, and sales skills.”

Amazon Go is a cashier-less store, but not an employee-less store. Inventory still needs to be restocked and sales associates need to be available to help customers who need it. If this technology takes off, we can likely expect cashier-less stores to have Walmart-style greeters, welcoming shoppers into the store, monitoring the turnstiles, and making sure no one has a problem getting inside. Sales associates will also be available on the store floor to answer questions, offer recommendations, and provide samples. Basically, taking the same labor force and using it to create a better shopping experience.

Potential Complications Amazon Go

Amazon Go is still in test mode. We don’t yet know how accurate or reliable the billing system is. How do we know shoppers won’t be charged for items the person next to them walked out with? What is the lag time between when I put an item back on the shelf and when the technology recognizes it is back on the shelf? If you have to scan the app to walk inside the store, how does that work for families or a group of people? There will be a trial and error period, and it will take a while before this store model and technology is – or is not – completely ironed out. It will take even longer for most shoppers to feel comfortable with it.

Future of Retail

Amazon spent years developing this technology, so Amazon Go will not fade into the night. However, the adoption process throughout the industry will be extremely slow, if it even happens. A convenience store is a perfect model to test “Just Walk Out Technology.” People are in a rush to pick up breakfast before work, grab some milk on the way home, and generally trying to get in and get out with a specific item. Apparel, gift, toy, and other retail environments don’t have the same sense of urgency as a convenience store. In these environments, shopping is more of a social or leisurely activity. Shoppers are browsing, trying several options, or looking for recommendations. The cost to implement the technology won’t immediately outweigh the reward for the majority of independent retailers. Once the technology is more mainstream and affordable, it will be a more attractive option for retailers to either save on labor or shift cashier employees into a more effective sales associate role where they can interact with customers while they’re still shopping. Amazon Go is a huge win for Amazon and the development of a seamless customer experience, but it will be a long time before most consumers are “Just Walking Out.”