Did Amazon just make the retail checkout line obsolete?
The answer is yes.
There are a plethora of questions, not to mention heaps of obstacles standing in the way of mass roll out, but Amazon Go represents a first critical step that is set to usher in the future of retail. Revolution in retail is coming and much sooner than many of us probably imagined.
Grab and go with Amazon Go
Amazon launched the first store without a checkout line in history in late 2016. For the next few months it will only be open to Amazon employees near its offices in Seattle, but if testing goes well the store will revolutionize the way that people do their shopping and spread across the country.
No baskets, no shopping carts. Items are just picked up and placed in shopping bags or carried out. The stores have no greeters to interact with customers and no floor employees whatsoever. Amazon calls this “Just walk out technology” and it lives up to its name.
Walking into the store, each customer taps one of a half dozen sleek turnstiles just inside the door. These automatically log them into the store’s network, connecting directly through and app to the Amazon Go store. The software then tracks items that customers pick up, adding them to their virtual cart on the app. If a customer puts an item back on the shelf, it’s removed from their virtual cart. Then when customers walk out of the store through those same turnstiles, their Amazon accounts are charged for their items and an receipt appears in the app. It’s that simple.
The tech that’s part of Amazon Go is stunning to say the least. It represents a leap that seems sudden but has been in the works since 2012. Inside the store there are cameras to monitor customer movements in the 1800 square foot retail space (about the size of a Gamestop). Using RFID tracking technology along with many of the innovations that have been used to power self driving cars, Amazon has created truly interaction free experience.
Inside the store, customers find convenience items and whole meals for purchase. With a futuristic look and technological integration the likes of which have never been seen, the Amazon Go store has become a sensation in the minds of the public already – and it won’t even open to the public until 2017.
Low margins benefit from fewer labor costs
Though the technology itself is fantastic from a cool factor standpoint, the driving force behind this tech is the same thing that drives pretty much everything – profit.
Retailers like Amazon run on razor thin margins. Consumer goods are highly competitive and customers make most of their decisions based largely on price. Eliminating labor costs goes a long way to driving up profits, which is a boon for any business.
Not everyone is happy about the prospect though. The president of the United Food and Commercial Workers union, Marc Perrone, has spoken out in no uncertain terms about his disdain for these innovations. Representing retail and grocery store employees, Perrone issued a statement regarding the Amazon Go store, saying “Amazon is masking its blind greed as progress,” Perrone said in a statement. “This is not about improving customer experience: It is about destroying good jobs, with no regard to the families and communities impacted. This is not the America that hard-working families want and deserve.”
Amazon responded to Perrone’s statement with one of their own, pointing out that “Amazon Go associates work in both the kitchen and the store, prepping ingredients, making breakfast, lunch and dinner items, greeting customers at the door, stocking shelves, offering product samples, and helping customers. When the store is open to the public, customers will see a great group of store associates on the floor and in the kitchen.”
The drive for a higher minimum wage is certain to be affected by technological improvements as well. As minimum wage jobs are replaced with technology, there will be a ripple effect throughout the retail industry. Brick and mortar stores have already been heavily affected by the rise in online retail options, and the move towards physical stores that are free from customer service employees will only exacerbate the issue. In fact, the move towards technology has been in part driven by the push for a higher minimum wage as companies seek to maintain profit in the face of rising labor costs.
This is only a test
Though there is widespread speculation as to what Amazon is going to do with this innovation, thus far the company insists that this is only a test. Reports of plans to open 2,000 such Amazon Go stores have been shot down by the company, who insists that this exciting development is only a baby step in the direction of checkout free retail.
The push into a wide variety of new markets has been a running theme for Amazon, who has opened brick and mortar bookstores in the Seattle area, added grocery delivery with Amazon Prime Now, brought retail into the home with the Amazon Go Button, and tested a drive thru grocery store. None of these experiments in new ways to deliver goods have hit it big yet for Amazon, but they are emblematic of the company’s willingness to test out new concepts and push the retail envelope.
This is, however, just a first step. Amazon has already registered the Amazon Go trademark in Britain. Seattle is the start, but it’s by no means the end of this venture into checkout free retail.
Amazon isn’t the only company around that’s toying with the notion of retail sales without people. McDonald’s has been testing ordering kiosks for meals for some time, with plans to expand to more checkout free services as time goes on. Target, Panera Bread, Walmart, and Kroger are all companies that are currently pushing the envelope on retail.
Concerns such as theft have yet to be completely resolved in these settings, and for Amazon Go customers there is a requirement to have a smartphone to purchase goods. The prospect is still tantalizing for retailers, and we can expect to see more retailers working to develop technologies that will eliminate the need for employees.
The future is coming for retail. With the launch of the first Amazon Go store, it’s arguably already here.