Amazon Go Watches Your Every Retail Move


We have all been there. We run into the grocery store for a few quick items, then we hit the checkout wall of eternity and wait. For most of us, its lost time and usually a frustrating experience that impacts our overall shopping experience in retail stores.

Now, Amazon is seeking to eliminate this experience completely, but not by shopping online. The undisputed king of web retail is opening physical grocery stores. These new stores, dubbed Amazon Go, are retail grocery stores. Amazon began testing the concept over the winter holidays for their Seattle-area employees. The store allows Amazon customers to login, shop, and leave with no checkout line. Customers login to the Amazon Go app at a turnstile entry, then every item they pick up and put into their bags or carts is automatically added to their Amazon account. When members are ready to leave they just walk out the door with their purchase.

The technology is intelligent enough to determine if a consumer picks up a product and returns it back to the shelf and removes it from the bill. When consumers leave the store, they receive an email receipt. Amazon describes the technology as a mix of AI and complex algorithms married to new sensor technology. The shopping experience all but eliminates shoplifting since all products are charged if not returned to the shelf. The customer is charged if the customer is holding the product, places it in a bag, or in their pocket. Also, no cash or credit is accepted and there is no entry into the store without an Amazon account.

Amazon Go is a tremendous opportunity to cut retail costs with its reduced staff and equipment needs, real-time inventory assessment, and integrated customer loyalty. The concept is intended to embody the promise of omni-channel retailing in one location. Members will also be offered discounts and coupons based on their shopping patterns. Amazon's behemoth of consumer data will provide insight into behavior and that could shape future sales efforts online and offline. Amazon said the stores will also realize better revenue per square foot because checkout lanes are eliminated. The stores are expected to offer pick up and go services and curbside pickup in the future.

This is not Amazon's first foray into bricks and mortar stores. It opened bookstores that are available to Amazon members and the general public. The current stores are in Seattle, San Diego, Portland, Dedham, and Chicago. New York will be added this year along with some other strategic locations. These stores are more than just retail locations they will serve as showrooms for Amazon's ever increasing tech suite from Echo, to Kindle, and Fire TV. The stores will also help to convert more people to Amazon Prime for music, shipping, and other services.

These physical stores provide Amazon with a higher operating cost model than its web-only sales since real estate and overhead costs will be added to the cost column, but its stores will feed its online business. Amazon expects to charge the same price to Prime members in the store, while non-prime shoppers will need to pay a higher price of 10-30% over the Prime price. Of course, any out of stock items are available for shipment from Amazon's online selection.

Amazon physical stores could prove a worthy opponent to existing retailers especially with price competition playing such a significant role in the purchasing process of most consumers. Amazon has not commented on how many of these physical locations will be opened ultimately. The retailer is likely waiting to evaluate in-store sales, and online flow-through. If they continue to experiment with pop-up stores as they have done during the holiday seasons, they could also impact traditional retailers with high demand items available in stores close to home.

Marrying a great customer experience with low prices may be the ultimate game changer in traditional retailing, and the biggest surprise is that that the online innovator Amazon is bringing it to locations across the county. For now, however, we will still have to wait for Amazon Go, since a technical glitch that occurs when the store has more than 20 customers inside has delayed the grocery store's commercial rollout.

What do you think, would you be interested in shopping Amazon Go in your local neighborhood? Would you use the grocery store with no checkout line? Do you feel that Amazon's client data capabilities are becoming "big brother," are you concerned about sharing more?

Maryam Donnelly, VP Marketing Services, Impact Marketing

Maryam Donnelly is Vice President of Marketing Services at Impact Marketing. She has spent more than 15 years leading marketing strategy, communications, product marketing, market research, and business development at Fortune 500 companies including Prudential Insurance, Automatic Data Processing, and Travelport (formerly Cendant). She has been a principal at Impact Marketing, a boutique marketing services company based in the New York metro area, for the past five years. Impact Marketing provides the spectrum of businesses with strategic marketing consulting services including marketing planning, marketing communications, marketing management, and analysis. Maryam holds a BBA and MBA in marketing from Hofstra University. She can be reached at maryam@feeltheimpactnow.com.

Data at Risk: The New Mobile Security Threat

Make sure your users and colleagues are aware of this security threat that could undermine the safety of their data and enterprise data.

Amazon Go Watches Your Every Retail Move

Amazon Go does away with check out lines, but it tracks you in the physical store and knows what you pick up and put back. Here's how it works.


Re: Tech firms out of their depth
  • 5/5/2017 10:59:14 AM
NO RATINGS

While innovations in shopping may save consumers money or time, you can be sure that the primary goal is for the business to save time and money. Benefits to the consumer may not necessarily follow each novel business innovation.

Re: Tech firms out of their depth
  • 5/1/2017 9:48:13 PM
NO RATINGS

..

Kq4ym writes "I'm a bit skeptical that Amazon's proposed shopping experience will go big time."

Me too. I could see this maybe – BIG maybe – working for a Best Buy or similar type of retail store, especially with a parallel online presence.

But groceries? When you select fingerling potatoes, mushrooms, or grapes, will they fit sensors on every single potato, mushroom, or grape? Some items currently are charged per item (3 lemons for a dollar) and some are charged by the pound.

Shoppers (like me) also like to pick out exactly the veggies etc. they want from a freely accessible assortment, which would be a challenge for a system dependent on pre-packaging.

There are other challenges. This can get complicated.

..

Re: Tech firms out of their depth
  • 4/30/2017 5:59:20 PM
NO RATINGS

I'm with you -- I wouldn't pay extra for the experience. Streamlining the shopping experience could save consumers money. Retailers have considered this, I'm sure. I wonder what impulse buys will look like in the future. Will you get a push notification instead of see an endcap display?

Re: Tech firms out of their depth
  • 4/30/2017 1:02:35 PM
NO RATINGS

'The innovation I am certain will experience problems', needless to say that is a given and any rollout experience some degree of unforeseen challenges and glitches that have to be overcomed. I have yet seen a rollout that went flawlessly.

Re: Tech firms out of their depth
  • 4/27/2017 4:49:23 PM
NO RATINGS

I'm a bit skeptical that Amazon's proposed shopping experience will go big time. It's certainly novel and folks will certainly shop to experience it at least a few times. But, it seems to me it's not going to be an inexpensive set up although eventually maybe it would save retailers money if the public goes for it. I know I personally resist the self-check out stands at retailers and if checking out were made flawless and simple I'd go for it but wouldn't pay extra for it.

Re: Tech firms out of their depth
  • 4/26/2017 12:37:19 PM
NO RATINGS

Amazon I am certain will overcome their technical glitch it's only a matter of time. The innovation I am certain will experience problems as they mature but it will not stop progress.

Re: email my receipt
  • 4/26/2017 11:48:09 AM
NO RATINGS

Thanks PC !   Checking it out today !

Re: Tech firms out of their depth
  • 4/26/2017 8:43:14 AM
NO RATINGS

I suspect that Amazon Go hit these issues because they took their warehouse knowledge and tried to apply it to shopping.  Instead of employees picking items from shelves they assumed that shoppers would act the same way that they have trained their employees to pick items.  I see the future of grocery stores going in a different direction than contactless payment and physical shopping.  I think what we'll see are smaller interior spaces for shoppers and larger areas for warehousing.  Online ordering and pick up or same day delivery will take the place of walking the aisles and placing items into a cart.  We'll have areas that look like cab stands for shoppers to receive and load their groceries after making payments online.

Google did something similar thinking that they had negotiated so many communications deals and had expertise in fields very close to the telcos and they assumed that they could translate those in house skills into a business. 

 

Re: email my receipt
  • 4/25/2017 4:01:33 PM
NO RATINGS

PC, Jeff's message is not new, just being preached from a different angle. The focal point of the message is to stay hungry. That is one of the most uttered advise shared amongst entrepreneurs and the most difficult to practice. How do you stay hungry when you have been feed richly? 

Re: Tech firms out of their depth
  • 4/25/2017 3:52:31 PM
NO RATINGS

Lyndon, your depiction of Google's venture does highlight a poor stratigical business decision on its face. however, Google operates in a different realm than most. Flooded with cash and fixated with getting to whatever and wherever quickly, swallowing anything and everything along the way, only pausing to digest later. We are talking about an entity never before seen and operates in many ways unconventionally mostly because it can afford to. Google much like the VCs suffer way more project failures than successes, but the end game is a huge win.

Page 1 / 3   >   >>
INFORMATION RESOURCES
ANALYTICS IN ACTION
CARTERTOONS
VIEW ALL +
QUICK POLL
VIEW ALL +