If Amazon can deliver on its Amazon Go concept store, a grocery outlet that melds artificial intelligence, an app and computer vision technology to eliminate the checkout process entirely, the fallout will be significant on multiple fronts well beyond retail.
Amazon Go is a 1,800 square foot convenience grocery store in Seattle that will open to the public in 2017. You walk in and scan an app. From there, you pick up goods and your cart is updated automatically via computer vision, sensors and deep learning and tools that have been reserved for self-driving cars.
The company lumps these various technologies into a Just Walk Out category that eliminates checkouts. After all, Amazon already has your credit card on file. The takeaways from Amazon's video are numerous so let's get started:
Cashier jobs will be automated out of existence. Let's make a few leaps. First, we'll assume Amazon Go succeeds and scales. Consumers will want checkout free experiences in other grocery stores. If you thought self-service kiosks were a threat to cashier jobs just wait until there's a checkout free experience. There are 3.5 million cashiers in the United States, according to the Bureau of Labor Statistics. The mean hourly wage is just above $10 an hour. Now if minimum wage laws kick in at $15 it won't take long for Amazon Go technology to be more widely adopted.
Amazon's competitive edge will be hard to replicate. Amazon Go is one pilot store for a reason. Scaling this technology may be difficult. If you're a grocery store chain you simply won't have the green field opportunity that Amazon has. Grocery stores will have to scan more products, create more databases and own more customer information. Does your grocery store have your credit card on file? Of course not. That reality alone is a big barrier. Another barrier: Amazon's technology is proprietary.
But Amazon Go technologies will likely be offered as a service. Sure, Amazon will get a jump on brick-and-mortar competition, but rest assured that these technologies are going to be tied into Amazon Web Services at some point. Think of it as inventory management, sensor and computer vision as a service. If not Amazon, Salesforce will likely aim to offer something similar.
Enterprises will pressure their current technology vendors over the Amazon Go concept. If I'm a retailing executive I'm calling the likes of NCR, Oracle, IBM, SAP and others in my technology stack and asking why I don't have similar tools available to me.
RFID wins. The EE Times had a good observation on the state of RFID and noted that the technology wins no matter what. EE Times noted:
The video creates expectations among consumers that they should be able to avoid check-out lines. It puts big grocery chains on notice that they need to figure out how to use RFID tags to create such stores before their competitors do.
This RFID transition is long overdue. The swap to RFID has been talked about for years and checkout free demonstrations have been numerous. Yet, retailers and tech vendors have fallen short. RFID in the supply chain has grown. The front-facing applications have been few and far between. The way RFID has been adopted highlights how enterprises have focused more on costs than customer experiences.
Amazon will need to figure out the shoplifting aspect. Amazon's video highlights customers scanning in to shop. However, Amazon doesn't show what happens if you go into the store without scanning its Amazon Go app. What are the pilferage rates at Amazon Go. Shoplifting could make or break the return on investment.
The e-commerce giant's Fire Phone actually delivered some enduring technology. Remember Amazon's ill-fated phone. I do. One feature that was interesting was Firefly, which read your pantry and other items and offered you the ability to order. Firefly was a computer vision application that melded commerce with real items. In other words, Firefly appears to be a precursor for Amazon Go.