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Amazon Go: Retail Revolution or Simple Evolution?

Amazon Go: Retail Revolution or Simple Evolution?
Friday March 16 2018

Rob Griffiths, division manager at BMc Equip, looks at Amazon Go’s checkout-free grocery store, and asks whether it’s really the start of a revolution, or a simple show of Amazon’s financial pull

While the majority of retailers are scrambling to promote ecommerce while reducing overheads as much as possible - and renouncing their retail space in the process - online retail giant Amazon is taking a different tack. 

Of course, with Amazon having already captured the ecommerce market, it was only a matter of time before they looked to avenues they hadn’t yet exploited. With technology, media, beauty and almost every other consumable good already cracked, it makes sense that Amazon might now look to dominate the grocery industry, and maintain its position in the offline market. 
 
This move is not entirely out of the blue. The recent emergence of various Amazon concession stores and the company’s acquisition of Whole Foods have indicated that Amazon would be moving in a more bricks-and-mortar direction in the near future, and now we see the early steps being taken on this route.

Technological innovation 
 
Amazon’s focus is on cost reduction - after all, you don’t have to be the cream of the crop if you are always able to undercut your competition. The appearance of Walmart on the American grocery landscape, and the subsequent death of independent trade in the small-town US, demonstrated this method successfully. 

Being ahead of technological innovation is the USP Amazon really has to sustain in order to stay at the top of the retailer pile, and be able to continue undercutting competition. Of course, when establishing a physical presence on the high street, a lot of the costs involved are non-negotiable and not much can be done to lower them, meaning that the retailer is likely to cut costs on the labour and staffing end, especially in the face of rising minimum wage. This is where AI technology comes into the picture.
 
But is this as revolutionary as it may seem, or just a simple step of evolution? From cash and cheques emerged credit cards; although the self-checkout has been problematic since its inception, it has survived and expanded; now contactless and payment apps are leading the way. 

Evolutionary process 

Each of these transitions has evolved the physical world of retail, so is this latest step of Amazon’s, of checkout-free shops, really such a mould-breaker? I’d wager it is not - after all, the checkout has not actually gone away. 

The method of checkout may have changed, and this can make the purchase process quicker and less intrusive, but this is just part of the evolutionary process. The crux of the matter is that Amazon reduces staff and costs in the process while maintaining their pioneering image.
 
I feel that the more intriguing element of this movie is the technology behind it. For a while now, RFID has been considered the key technology, and this was the direction most manufacturers were heading in. With RFID, inventory can be monitored throughout the supply chain with the simple addition of passive tags into product packaging - an incredibly cost-efficient solution - and the tags of a basket or trolley can be read at the point of ‘check-out’. This process requires few staff - or even none at all - and minimises the wait people experience at checkouts, as well as delivering a far higher level of accuracy.

Algorithms approach 
 
RFID is far from a new technology, and the average shopper is used to seeing it in the form of retail security tags on clothing and more expensive groceries like alcohol or meat, so why is it not being put to wider use? Factors from set-up costs and tracking to data protection and customer resistance all play a part in keeping RFID from expanding. These same factors also impact the likes of Amazon’s cameras and algorithms approach, perhaps even more so than to RFID. Initial reports indicate some problems off the bat, with the technology running a year late, in spite of its five-year development period, and Amazon suggest that such a format is only going to experience a limited roll-out.
 
Regardless of how things play out with these emerging technology trends, they are far from being the end product. They are mere stepping stones in the ongoing mission to deliver top quality shopping experience with rock-bottom outgoings - and who else better than Amazon to make this happen?
 

Tagged as: Amazon Go | ecommerce | AI | RFID | BMc Equip