Amazon’s Register-Free Grocery Shopping Could Disrupt Retail

Amazon on Monday unveiled a prototype convenience store called “Amazon Go,” which uses mobile e-commerce, machine learning and computer vision to allow customers to make purchases without a cashier.

The 1,800 square foot concept store in Seattle uses the company’s Just Walk Out technology, which incorporates many of the same concepts found in self-driving cars, Amazon said.

Customers use the Amazon Go app to enter the store, then pluck items off the shelves. Anything a customer takes off a shelf is added to a virtual shopping cart. Items returned to the shelves automatically are removed.

When they’re finished shopping, customers just exit. Their purchases automatically are scanned and charged to their Amazon accounts, and receipts are sent to their smartphones.

The store sells breakfast, lunch, dinner and snack items freshly made by on-site chefs or provided by local kitchens and bakeries. It offers staples like bread, milk, cheeses and sweets.

Both major brands and exclusive items are available, and customers in a rush can pick up Amazon Meal Kits, which include all the ingredients to cook a meal for two in half an hour.

Self-Driving Tech

The Amazon Go store uses a combination of computer vision, deep learning algorithms and sensor fusion, which are some of the same technologies used in self-driving vehicles, the company said.

“We know there are advantages to a multichannel environment,” noted Robert Hetu, agenda manager for retail and consumer goods research at Gartner.

“In my opinion, Amazon is going to launch many stores with the goal of doing retail better through new technology,” he told the E-Commerce Times.

What so far is unknown is how the company will expand on the concept. Amazon might choose to locate the stores in gas stations — like 7-11, for example — or it could place them at shopping malls or city centers. It’s also unknown whether Amazon might allow advance online ordering from outside the store, letting customers pick up their preselected items.

Amazon is testing both in-store shopping and picking up online orders, according to Jim McGregor, principal analyst at Tirias Research.

The prototype store is currently in beta testing with Amazon employees, and it is expected to open its doors to the public in 2017.

Amazon’s Track Record

There is no reason to believe that Amazon cannot transform the convenience store with this new technology, observed David Jones, director of sales engineering at Dynatrace.

Amazon and newer e-commerce startups have pushed traditional grocers to incorporate more of these technologies into the customer experience, he told the E-Commerce Times.

“The rise of boutique online grocery delivery vendors, as well as Walmart’s entry into online grocery ordering, proves there is a market for Amazon’s grocery services,” Jones said. “Understand that this will be a competitive marketplace; we see that Meijer, Trader Joe’s and Stop and Shop are providing some of the fastest online experiences, all under 3.2 seconds, against an industry average of 5.3 seconds.”

The Amazon Go concept represents a broad threat to the retail model as we know it, because it could combine the convenience of a 7-11 store with the breadth of a Walmart, noted Rob Enderle, principal analyst at the Enderle Group.

“It defines ‘disruption,’ because it also blends online with on-premises retail to possibly provide the best of both worlds,” he told the E-Commerce Times. “As VR and mixed reality tech advances, its breadth of products could range from groceries to cars and even homes, eventually.”

Amazon has collaborated with automakers to use its technology in ways that help automate passenger cars. It began working with Ford Sync-equipped cars earlier this year, enabling the Amazon Echo and Wink to link home devices with cars in order to turn off lights, open garage doors and control security devices.

Asked whether Amazon was using any of this technology in self-driving cars or is testing online purchases with the prototype store, spokesperson Lori Richter said the company does not comment on rumors or speculation.

David Jones is a freelance writer based in Essex County, New Jersey. He has written for Reuters, Bloomberg, Crain's New York Business and The New York Times.

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