Amazon Go Transforms Brick and Mortar Business Model

Amazon Go Transforms Brick and Mortar Business Model

By Heidi Reidel

The last two decades have seen a greater period of technological advancement than any in the history of mankind. Amazon has been part of that drastic change, almost single-handedly putting bookstores out of business and converting book lovers to ebooks. After conquering the book world, Amazon began to step on the heels of businesses like eBay and Netflix, gaining momentum with every venture. Now, Amazon has begun dabbling in the grocery business, potentially revolutionizing the shopping experience.

Introducing Amazon Go

Amazon’s latest business venture is Amazon Go, a brick and mortar Amazon store paired with an app that eliminates lines, cashiers, and the entire checkout experience altogether. The shopper simply opens their Amazon Go app, scans the barcode on the way in, and shops, no further use of their phone needed. Through computer vision, sensor fusion, and deep learning, the app is able to track when the shopper removes something from the shelf (or returns it) and automatically charges their account upon exiting the store. The store will mostly offer grocery staples (i.e. bread, cheese, etc), ready-to-eat meal and snack options, and Amazon Meal Kits, which will include ingredients to cook a simple meal for two in under 30 minutes. The selection won’t be as extensive as your local market by any means, but it appeals to the convenience culture of today’s busy, no-wait society.

Cutting Out the Middleman

The biggest criticism the technology of Amazon Go has faced thus far is its presumed effect on the job market and minimum wage. No checkout means no cashiers, and while that caters to the consumer’s impatience with lines and human error, this may impact one of the highest employed occupations in today’s workforce. At a time when these lower level jobs are already becoming scarce, this is stirring up some controversy.

Of course these stores won’t be devoid of flesh and bone employees. Amazon promises on-site chefs who will be making some of the food and surely there will be other employees to keep the facility running smoothly. Shoppers certainly won’t be left to their own devices in a robot-run store; Amazon Go will replenish some of the jobs they phase out, however, many of these jobs will be more tech-focused and will require staff members with higher education, leaving these minimum wage jobs to dissipate. The call for a $15 minimum wage is becoming more futile as companies solve these rising costs by replacing them with technology.

Impacting Rival Businesses

There may be worry that Amazon will do to other grocery stores what it did to Borders, but rivals are already attempting to stay ahead of the game. In recent years, Kroger and Walmart have been stepping up their e-commerce and digital initiatives. Self-checkout has already become popularized in most marketplaces, yet if Amazon Go takes off, competitors may need to devote more time to technological advancement to keep up.

Kroger’s CFO, Mike Schlotman, appears unconcerned about the competition. At a Barclay’s investor conference, he cited that wait times have been reduced in the last few years. Kroger is also testing technology called Scan-Bag-Go where shoppers can scan and bag items as they shop using a scanning device or their iPhone. Walmart is using an almost identical system called Scan & Go that is available to their Sam’s Club members.

Technology of Amazon Go and Loss Prevention

Amazon has been fairly vague about the technology that will be involved in the Amazon Go process and critics suspect that theft will be a problem as it has proved to be with self-checkout. Amazon’s system, however, appears to be airtight.

To start, Amazon already has access to the customer’s account, so there’s no opting out once it’s been confirmed an item has been taken from the premises. Once the shopper enters with their barcode, surveillance identifies them and monitors them as they roam the store. Microphones also track shopper whereabouts. A combination of cameras, infrared, and pressure and load sensors detect when items are taken and when they are put back. All of this technology allows the store to be monitored at a methodical level. Amazon also monitors purchase history to improve accuracy if all else fails.

No system is foolproof and Amazon assures they are far from a mass opening. Testing and perfecting the system may take years. With anxiety over minimum wage jobs and the perceived “robot takeover,” the technology of Amazon Go is proving to be as controversial as it is exciting.

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