Amazon Go: The impact on human jobs, retail innovation, Amazon's bottom line

Amazon Go has had a big splash, but now it's time to ponder the big picture and what it means for business, innovation and automation.

What it's like to shop at an Amazon Go store

Amazon Go, a cashier- and cash-free shopping experience from Amazon, has garnered headlines, some consternation and a lot of oohs and ahhs from the tech press.

But now the access journalism, tours and fun facts have passed and it's time to look at the fallout, the impact on business, and how Amazon Go can ultimately add to Amazon's bottom line.

Obviously, Amazon Go deserves some play. After all, it's downright bizarre how lines for Amazon Go can go around the block all so folks can have a shopping experience without a line.

Also: What it's like inside Amazon's futuristic, automated store (CNET) | Shopping at Amazon Go is really freakin' fast (Video) | Amazon Go launches: The automated retail revolution begins (TechRepublic) | Here comes the future of retail (again) brought to you by tech vendors | Robot fired from grocery store for utter incompetence

Take a look at our video up top for a quick tour of the moving parts.


The human factors

  • How many humans are needed to iron out the inevitable issues? Watch any self-checkout row at a grocery store and you see the limits of automation -- and the ability of people to navigate technology. Generally speaking, any person with more than four items at a self-checkout area stumbles and requires help. At Amazon Go, there will inevitably be similar issues -- even though the approach where you simply walk out with goods may eliminate some friction. Read more: AI and jobs: Where humans are better than algorithms, and vice versa | Five tech jobs that AI and automation will make radically more efficient
  • What happens when things get complicated? For now, the Amazon Go app enables you to ask for a refund without returns and no questions asked. That approach is fine for a beta, but should Amazon Go scale it's a margin hit and then some.
  • Privacy. Amazon Go is largely powered by a surveillance system. Obviously, this surveillance is necessary to prevent theft, verify purchases and ultimately figure out who you are. Given the lines that flow around the block at the first Amazon Go in Seattle, these potential privacy issues don't matter much.
  • The digital/economic divide. One of the big headlines on launch day for Amazon Go was that the store doesn't take food stamps. The reason for that is obvious: Food stamps are a more complicated transaction and you can't use them to plug into an app-controlled payment system. At scale, Amazon Go will ultimately be seen as anti-poor.
  • Jobs. Amazon Go is nuking the concept of cashiers and if the rest of retail follows (likely to some degree) many jobs will be lost. Amazon Go will be one more anecdote to the ongoing discussion around how automation, technology and artificial intelligence are killing jobs over time.

Impact on retail

  • Can Whole Foods go cashier free?You can't help but look at Amazon Go and wonder how much of this technology will wind up in Whole Foods. Keep in mind, that Amazon associates are in the store to help customers and make food. These higher value tasks are already at Whole Foods. What's unclear is whether the Amazon Go technology can apply at scale to Whole Foods. We'll find out as the Amazon Go beta plays out. Read more: How to automate the enterprise: Your guide to getting started
  • Other retailers will have to fast follow Amazon Go. Amazon Go took four years of technology tweaking to get right and it's unclear how much of Amazon's approach is proprietary. Rest assured that other convenience-based retailers -- CVS, Walgreens, 7-Eleven and Wawa -- need to take note and figure out how humans differentiate them. For a convenience store like 7-Eleven, the best bet is to crib some of the approaches used in Japan's 7-Eleven outlets. Little of that technology has made it to the US. Read more: Amazon doesn't sweat competitors, but every other company needs to answer the Amazon question

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  • Sensor proliferation in retail. Amazon Go relies on technologies such as sensors, deep learning and other new technologies. The proof-of-concept store from Amazon will likely give retailers more of a reason to accelerate Internet of things projects that were primarily focused on supply chain and distribution. Read more: What is the IoT? Everything you need to know about the Internet of Things right now

Impact on Amazon

  • Amazon Go and Prime. All you need today for Amazon Go is an Amazon account. In the future and at scale, rest assured that the Amazon Go approach will be tied to Prime somehow. For what it's worth, Amazon is estimated to garner an additional $300 million in revenue from its monthly price increase from $11 a month to $13 a month, according to Cowen analyst John Blackledge. By linking a concept like Amazon Go to Prime, Amazon may alter its household income Prime subscriber mix. Here's what it looks like today.

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