About a year later than it intended, Amazon.com Inc. on Monday opened to the public an 1,800-square-foot convenience store in Seattle that promises to streamline physical shopping and payment as the company has for decades smoothed out the wrinkles in e-commerce. Along with Amazon’s $13.7 billion acquisition last year of the 470-store Whole Foods grocery chain, the automated c-store represents a key part of the online retailing giant’s gambit to capture a significant share of brick-and-mortar sales.
Called Amazon Go, the tech-laden store has been undergoing tests by Amazon employees for months as the company worked to iron out the kinks in a system that must track multiple customers moving about in various places. “It’s very tricky to do,” Amazon watcher Joe Kleinwaechter, vice president of innovation and design at Worldpay Inc. and an electrical engineer by training, told Digital Transactions magazine for a story about Amazon appearing in the February issue. Amazon, he says, restricted Amazon Go to company employees “to get the experience right.”
Shoppers who download the Go app enter the store by showing a barcode on their screen. Once inside, they are tracked by cameras and sensors that detect what they put in their shopping baskets and what they put back. Once they’re done, shoppers simply exit the store, with their purchase charged to their Amazon account. Amazon has attached a name to the experience: “Just Walk Out Shopping.”
“We asked ourselves: what if we could create a shopping experience with no lines and no checkout? Could we push the boundaries of computer vision and machine learning to create a store where customers could simply take what they want and go? Our answer to those questions is Amazon Go and Just Walk Out Shopping,” the company says on a Web page explaining Amazon Go.
Amazon is mum about how many Go stores it might open next, how the shopping data the technology gleans might be used, and whether the concept might be licensed to outsiders, much as the 23-year-old company has made its Amazon Web Services technology available to online merchants and other third parties over the years.
For one thing, if Go wins widespread adoption, traditional payment behavior seems likely to wither along with traditional in-store checkouts. “This means a lot. It is now inevitable that the payment experience will eventually disappear,” says Rick Oglesby, principal at AZ Payments Group, a Mesa, Ariz.-based consultancy. The lingering question is how long this process might take. “Amazon Go will show us if that’s in the short-term future, or if it’s just too soon,” he says.
Some observers see big potential for transactions in brick-and-mortar sales, starting in the grocery market, particularly if the Go concept can be fitted to Whole Foods stores. “Amazon last year had $1.5 billion in grocery sales. They’re full on in grocery,” notes Kleinwaechter.
Others caution not to lose sight of the potential data gold mine Go’s technology could generate. Using Go’s sensors and machine learning, Amazon could set up to sell “contextual” marketing data to food brands that could predict what customers are likely to buy, says Richard Crone, principal at Santa Clara, Calif.-based Crone Consulting.
Armed with that information, brands could send real-time offers in the aisle to influence buyers, he says. Since customers by definition have smart phones, “Amazon Go just magnifies this idea,” says Crone.