Written by Michael K. Spencer
It was a big month for Amazon in September, 2018. Amazon has become the 2nd company to hit the $1 Trillion dollar market cap. This is significant since Amazon, according MKM Partners, could reach a whopping $2.4 Trillion valuation by 2024.
AmazonGo is billed as the cashierless stores of the future and Amazon is ready to expand them to new locations. The latest location is its third overall and third in Seattle, where it’s headquartered. The 2,100 square foot store sits on the corner of Boren Ave. and Thomas St. and is its largest yet.
While expansion to San Francisco and Chicago remains imminent, Cate Trotter of Insider Trends recently did an article on these new, more automated kinds of stores. The AmazonGo concept has been embraced by many retailers across the world with various initiatives from smart kiosks, to what appear to be more like vending machines that operate on AI, to mobile stores ; the idea of more seamless retail and customer experiences is growing.
A report on Kiosk and Retail by USA Technologies and PYMNTS.com predicts that the interactive kiosk sector in the US will be worth more than $1 billion by 2020. AmazonGo isn’t at Alibaba’s level in China for retail experiences, but it certainly does re-conceive how the physical stores work for convenience. While E-commerce is growing faster in China, in the U.S. even the likes of JD.crew have started selling on Amazon.
Amazon is Fueling Retail Innovation
The Amazon Prime value is incredible and is beginning to scale into entertainment (Prime Video), AI (Alexa), Grocery (WholeFoods) and many other segments. There’s been talk about Alexa Smart Glasses and an Amazon home robot, both likely to appear before 2021. However for physical retail experiences, AmazonGo may be the most tested and innovative feature in the evolution of retail we’ve seen for quite some time.
Amazon’s profitability of AWS, Alexa, and future advertising revenue means it will be able to perfect in-store technology. Walmart is testing a new feature called Spark delivery, that uses crowdsourcing to find drivers to make grocery deliveries and will include a partnership with Delivery Drivers, which manages such workers, because the race to automated grocery delivery is also fairly lucrative. JD.com, Kroger, and many others are all looking at this service very carefully.
AmazonGo has been slow to expand its cashierless grab-and-go experience. However, the concept is clear—this is using LiDAR and other technologies to create a faster experience that is uniquely made for urban shoppers. The point of sale is, for all intents and purposes, virtual. Checkout is completely eliminated, there’s only a kind of mobile check-in with QR codes.
In the evolution of what physical stores might become, there are lessons for brick-and-mortar retailers to look into:
- Auchan Minute
- JD.com’s “X” chain
- Alibaba’s TaoCafe
- The robotic CafeX
- Stockwell (Bodega)
- Moby Mart
The Future Store is Late, but is Arriving in the 2020s
For the future of commerce, the marketplace, and the local store, these are not isolated incidents. These represent a trend towards increased retail automation, logistics, and consumer fulfillment that will change how GenZ interacts with stores, restaurants, and the future of mobile in-store as well. 5G mobile, the IoT and blockchain will all power the smart store in new creative ways.
Just as point of sale is evolving, our entire concept of what a “store” is, could change considerably in the next decade. According to Nielson and many retail analysts, we’ll be doing 70% of our grocery shopping online by 2024. In China, Meituan is about to go IPO in Hong Kong, it’s one of the leaders in “O2O”—online to offline—and represents the ultimate in convenience for consumers, though it’s burning cash.
As impressive as Amazon is to the future of convenience and giving consumers various “upgrades” in customer experience and fulfillment, a lot of the interesting stuff in retail is happening in China, where mobile penetration and eCommerce are both higher and where there are more total consumers and digital natives.
- 7-Eleven Signature
- Suning Biu
- Alibaba’s “smile to pay”
- Alibaba’s Hema supermarket
It turns out having a cashless society with QR codes and an app-of-everything (WeChat) is a huge advantage for China in terms of retail innovation. China’s integration of facial recognition is also very advanced in retail, financial and services generally.
AmazonGo might be just the tip of the iceberg in how physical retail innovation occurs globally. The future of automation in retail is occurring not just in eCommerce, but in restaurants, grocery, cafes, local stores, convenience stores, and syncing with the values of the new consumer.
The Future of AmazonGo
The further expansion in Seattle makes sense as the newest store reportedly is the largest Amazon Go location yet, at about 2,100 square feet, according to the Seattle Times story.
AmazonGo tech, perfected in Seattle, does not stay in Seattle. An AmazonGo store is heading to New York. Here’s how it works:
- When entering the grocery stores, shoppers scan their phone using the Amazon Go app. (The virtual POS is essentially sign-in only)
- As you shop, cameras, LiDAR, and motion sensors track what you pick up from (and put back on) shelves.
- You can “grab and go” with just-walk-out technology. There are no lines, checkout, or cashiers to worry about.
- There’s less staff and typically no grocery carts or baskets. Shoppers are encouraged to use their own bags.
AmazonGo is rumored to launch in places such as New York, San Francisco, and Chicago first, before spreading to more cities. So if Seattle was phase one, this is phase two.
Considering how long AmazonGo’s concept was in R&D and testing, this is a pretty huge deal. Amazon’s footprint in brick-and-mortar stores is still pretty small even with the Whole Foods acquisition. Nothing compared to its rival in China, Alibaba, or even JD.com.
However, AmazonGo is the torch bearer for being a prototype of the “smart store”. As such, many physical retailers are watching closely to see what Amazon accomplishes with AmazonGo and how consumers will respond. Surely it’s an upgrade in what we might term convenience and customer experience in-store. With 7-Eleven integrating Apple Pay recently, it’s only a matter of time before Amazon becomes more aggressive in its brick-and-mortar strategy.
As for AmazonGo in NYC, Amazon is seeking members for its staff and roles such as:
- Store Manager
- Assistant Manager
- Trading Lead Associate
- Prep Ingredients Associate
- Shelves Stocking Associate
- Customer Success and Help Associate
- Food Prep Associate
- Security Associate
It’s important to note, these stores won’t need as many regular staff due to their unique technology.
Seattle, New York, San Francisco, and Chicago seem to be the early birds to enjoy semi-automated AmazonGo shopping experiences in 2018 and early 2019. While Amazon is expected to choose Washington D.C. as its next HQ site, it appears to be in no hurry to launch AmazonGo too quickly.
Later in September it was rumored Amazon will open 3,000 AmazonGo stores by 2021. Amazon also opened an Amazon 4-Star store in New York.