Amazon is at it again. Having turned the world of shopping on its head with its “everything store” for more than two decades, the company is now looking to disrupt offline retail too — by using advanced technology to remove the need for staff in our shops and stores.
The new concept, announced this week and opening as a real shop in early 2017, will see shoppers scan their smartphone upon entering the shop and then simply fill their bags, baskets or trolleys with whatever they like, before just walking out.
Your Amazon account is automatically updated with your purchases and an invoice sent to your smartphone.
The use of buzzwords like deep learning algorithms, sensor fusion and computer vision hide the fact that Amazon hasn’t really detailed how any of the technology actually works, but it doesn’t need to — all it needs to do is show that it works.
The biggest initial impact of this technology is obviously on the huge number of people employed in retail stores around the world, with the need for checkout staff virtually evaporating overnight.
Getting the technology to work is only the first step in changing the way we shop. Companies like Amazon will also have to convince shoppers that this is the future. Decades of ingrained habits mean we all have an idea in our heads about how the shopping experience works, and changing that is not going to be easy.
Many people will simply not be comfortable just walking out of a shop without having paid. Others will worry about the security and privacy implications of having their shopping habits monitored so closely (though in reality this already happens through loyalty cards but we just don’t realise it).
But if Amazon can offer lower priced goods as a result of the savings it makes by eradicating checkout staff, then people will quickly change their habits — as Amazon has demonstrated so successfully over the last 20 years with its online store.
Consider that wages account for around 45 percent of a store’s non-product costs (around 13.5 percent overall) and it is clear that Amazon will have a huge advantage over traditional stores employing people to do what Amazon is getting technology to do.
“Amazon Go not only has a customer experience advantage relative to a traditional store but a cost advantage as well,” Ben Thompson, technology analyst said.”It's another dominant strategy that extends the frontier of competition to a place competitors can't touch.”
It’s not just the shops themselves which are being disrupted, the whole retail chain is being transformed by technology. Robots are replacing forklift drivers in warehouses, self-driving trucks are threatening the jobs of millions of truck drivers around the world, and now sensors and algorithms threatening to replace checkout staff in stores of all sizes.
The change won’t happen overnight, the technology involved is still experimental and only companies with deep pockets like Amazon can afford to test out the experience today. But things change quickly and already retail giants like Walmart and Whole Foods are testing some of this technology.
Some of this technology is already creeping into stores: Smart shelves which make stocktaking automatic; automated back office systems which do the ordering for you; and smart trolleys to keep track of what you’ve bought in real time.
This week we saw the roll out of Android Pay in Ireland which allows people pay for purchases just by tapping their smartphone at the checkout. The way we shop is certainly changing and Amazon is among the companies pushing boundaries further than anyone else, and it is only getting started.
“This is just the beginning,” Tom Caporaso, CEO of Clarus Commerce told GeekWire. “Moore’s Law says that computing power doubles every 18 to 24 months, and if that law holds, automation will creep into more and more corners of our life, including shopping, employment and more. Governments will need to start studying the coming technological wave and take steps to ensure that their citizens’ needs will be addressed as employment opportunities fall.”