How Amazon Go is reinventing retail and its possible impact on self checkout kiosks
By Michael Kasavana, the National Automatic Merchandising Association endowed professor emeritus, The School of Hospitality Business at Michigan State University
Recently, Amazon introduced what many industry observers are calling a "game changer," entitled Amazon Go. Amazon's newest concept enables shoppers to enjoy the maximum convenience of shopping without the need to stop and check out.
This process, also referred to as "walkout shopping," saves both the store and its shoppers time and money. Despite the fact that the potential impact of automated self checkout is still being tested and perfected, Amazon has devised a new scheme that allows shoppers to grab and go without stopping to scan or pay.
The long-term implications are hard to predict, but this is a development that could revolutionize much of retailing as we know it, including some kiosk industry segments.
Simply stated, the Amazon store has no cash register or payment kiosk. Instead, shoppers scan themselves into the store using the free Amazon Go app, shop as normal, remove items from a store shelf, place items in a shopping bag and leave the store. The items are in turn billed to an authorized Amazon.com account accompanied by a detailed email receipt.
Although considered a disruptive technology for retail staffing, Amazon Go may impact the need for self checkout kiosks. Just as Uber and Lyft have managed to derail the taxi and rental car industries, Amazon hopes Amazon Go will similarly disrupt the way consumers interact with retail operations.
No one enjoys standing in line at the checkout station of a retail store, be it self checkout or cashier attended. Amazon Go eliminates lines by implementing a revolutionary application that records purchases based on shelf removal and placement into a specialized shopping bag. Amazon is creating the world’s most advanced shopping technology so a consumer never has to wait in line. With the application’s "Just Walk Out Shopping" experience, the consumer turns on an Amazon Go app, enters an Amazon store, removes desired products from shelves and departs. No lines, no checkout, no hassles.
Fearful that cashiering and bagger jobs will be reduced or eliminated, Amazon Go is already anticipating a potential grocery store employee revolt. Despite doomsday concerns for retail workers, human employees remain at the core of the retail shopping experience.
Industry practitioners believe that it is common for technology at first blush to be perceived as destroying jobs. But in the long run, often more jobs are created than lost. Researchers predict that by 2019, the U.S. government will begin implementing robotic-specific regulations to preserve jobs.
How it works
Four years ago, Amazon set out to create a shopping experience with no lines and no checkout procedure. Rather than forcing a change in how consumers shop for meat, produce and dairy products, Amazon has opted to create a different physical store experience.
The technology that powers Amazon Go, also termed "Walk Out Shopping," is similar to the advanced computer vision and artificial intelligence used in self-driving cars. It is the application of sophisticated artificial intelligence, machine learning and related developments that supports a store where customers take what they want and leave.
Amazon Go has no registers. Instead, shoppers (for now, Amazon employees) scan into the store with their free Amazon Go app, shop as normal, and leave the store with snacks and packaged meals billed to their Amazon.com account. Hence, in order to use Amazon Go, a consumer has to have an Amazon account, a smart phone, and a downloaded version of the Amazon Go app.
Not long ago, Home Depot, CVS, Wal-Mart and other firms began implementing self checkout. Part of the challenge was to get consumers to place purchased products in a proper scan position so that the packaging could be priced, recorded and directed to a weight-sensitive bagging area.
Despite receiving mixed reviews, self-checkout has reduced the number of shoppers preferring traditional cashier settlement.
Beta testing begins
While it may not completely eliminate cashiers, Amazon's model could help eliminate some of the ambiguities inherent in a self-checkout scheme, such as inventory loss due to miscounting or theft.
The Amazon Go grocery store opened in Seattle, Washington in December 2016 at 2131 7th Avenue at the corner of 7th Avenue and Blanchard Street. Currently, the store is restricted to Amazon employees. This is slated to change in early 2017 when the Amazon Go store will be open to the public. Amazon has denied reports that it plans to open 2,000 Amazon Go stores in the next several years.
While few details have emerged as to how Amazon Go actually powers the shopping experience, it appears tied to a combination of the Amazon Go application at a turnstile entrance/exit and in-store sensors capable of operating in a cashier-less, counter-less checkout environment.
Unlike other shopping experiences, Amazon Go doesn't require shoppers to individually scan each item. Rather, the app uses artificial intelligence and computer vision to identify shoppers and to sense what they are buying (removing it from a shelf and placing it in a shopping bag).
Impact on payment kiosks?
Because there is no self checkout, Amazon Go could impact self checkout kiosks.
The micro market industry, which has been expanding at a healthy clip since 2008, could be impacted by Amazon Go.
A micro market is a self-contained store in a location without an employee to monitor it. It includes freestanding storage, such as shelves that hold product, and a self-checkout kiosk. The customer scans their package and pays at the self-checkout kiosk. The micro market offers significantly more variety than a vending machine bank and is more convenient.
Amazon Go accomplishes much of the same purpose as a micro market with fewer steps on the part of the consumer.
Amazon has become the largest retailer by market cap (currently claiming a 300 million customer base) by capturing a very small percentage of overall retail sales in a variety of categories.
Key takeaways for Amazon Go:
- Amazon Go has no registers; shoppers scan into the store with a free app, shop as normal, and leave the store with the items billed to an Amazon account.
- Despite the fact that Amazon's new shopping experiment is already prompting doomsday headlines for retail workers, human employees are still key to the retail experience.
- Industry observers claim that Amazon Go isn’t only disrupting grocery shopping. It may be reinventing the entire retail category.
(Image courtesy of iStock.com)