Author(s): Raghu Gopal
Over a decade ago, IBM shared its vision of the future of grocery shopping with a customer simply grabbing items from the shelves and leaving the store. To naive observers, this seemed like a suspicious method of shopping. IBM's vision appeared too good to be true.
Fast-forward more than 10 years to 2018.
Yesterday, Amazon opened its first and much-anticipated Amazon Go grocery store to the public. The move comes a year after the company launched its store in Seattle to employees of the retail giant. That trial run allowed Amazon to successfully test its artificial intelligence-powered technology with employees and reviewers.
The Amazon Go store offers no cashiers or checkout lanes. Instead, Amazon relies on a smartphone app, hundreds of cameras mounted on the shop ceiling, computer-vision algorithms and machine learning to determine what customers pick up. It then charges the credit card connected to the customer's Amazon account.
Before entering the store, shoppers must install the free Amazon app — available for iPhone and Android devices — and link it to their Amazon shopping account. Once the app is installed, customers use their mobile device to check into the store using a QR code at the entrance. The app lets the store's artificial intelligence system track the shoppers' selections. Customers can walk out of the store at any time. The sum of their purchases are charged to their Amazon account and an electronic receipt is then delivered to their smartphone.
This store opening is a watershed event for the US retail industry, but it also seemed inevitable. Amazon has been promoting this concept for over a year. Furthermore, when the company enters a business, it innovates rather than duplicates. It exploits the latest technologies to improve efficiencies and alter the user experience.
Amazon Go is now operational at one location in Seattle and it's uncertain how far Amazon will take this approach. The company is using its clout as an online retailer to change the offline experience. The Amazon Go experience may appear simple, but it was an extremely complicated mission.
According to the US Census Bureau, only about 10 percent of US retail sales take place online and certainly only a sliver of grocery sales. To get the benefits of this business, Amazon recognises it needs to address offline shopping by modernising the in-store experience, crossing physical tools with its users. It would seem obvious to expect Amazon to expand this trial to other sites and eventually to its hundreds of Whole Foods stores.
It's too early to say if Amazon can disrupt the grocery industry the way it has the retail business in the US, but the technology behind Amazon Go could turn out to spark one of the more exciting developments in the shopping experience in decades.