JUST WALK OUT TECHNOLOGY– the key phrase used for Amazon’s cashier-less convenient stores, Amazon Go. These stores resemble the look of normal convenience stores, but customers don’t need to wait or scan to pay; they just have to walk out the stores with items. Amazon opened its second New York City location in June 11th, 2019. This location is the 13th amongst other locations in Seattle, Chicago, and San Francisco.
Amazon’s initiatives to apply their online experience to brick-and-mortar shops are not the new thing. Back in 2017, Amazon acquired Whole Foods in order to expand its fresh grocery lines and physical store footprints. Amazon has also experimented with brick-and-mortar shops like Amazon 4-star with highly reviewed and rated items from amazon.com, and Amazon Books, which was literally a physical version of amazon.com book stores (Amazon Books NYC: Does it predict the future of retail?). Although these experiments weren’t the solution for the future retail, large retail enterprises, including Amazon, have tried to reinvent the physical shopping experience to be more reachable and convenient with the use of technology.
In 2011, Tesco in South Korea installed a virtual shopping experience in Seoul’s subway stations — customers could scan QR codes on printed supermarket shelves on the station platforms. The idea was simple: hard working people didn’t have time for a grocery shopping and Tesco tapped into this concept by having them multitask during everyday commutes. Although this attempt is more about marketing rather than a practical solution, their registered members rose by 76%, and their online sales increased 130%.
Unlike Tesco’s case, in the case of Amazon GO, customers still need to go to physical stores. Presumably, Amazon Gocan help customers save time in its target market, which include dense downtown settings, where register lines get long during peak hours. However, one of Amazon Go’s main agendas is to reduce the operating cost, human staff.
The history of physical stores
One’s grocery shopping experience from markets in the 1800s was simply inefficient. Customers needed to visit individual stores that sold different goods. In 1916, the first Piggly Wiggly store in Memphis completely changed this flow. The customers were led to the store’s storage to pick up items themselves, and then to the centralized registerarea to pay all items together. This system didn’t only help operation costs, but it also stimulated customers to buy more by spending time picking up different items.
In the 1930s, the Great Depression had pressured more supermarkets into the same direction and to pursue economies of scale, which ultimately lead to the success of Walmart. This then led to e-commerce giants like Amazon in later days. In the meantime, physical stores adopted various technologies to run a centralized register even more efficiently with less human staff. In 1972, Kroger agreed to test the barcode system to manage inventories better, soon creating the industry standard, Universal Product Code (UPC).
Timeline of the modern supermarket
1916 — The first Piggly Wiggly store let customers pick items from its storage and pay at the central location.
1930s — The Great Depression directed many stores to adopt the centralized register with the large quantity model.
1950s — Many big-box supermarkets appeared in suburban settings due to the motorization.
1969 — Walmart chain was founded. The original store was Walton’s 5–10 opened in 1950.
1972 — Kroger agreed with Radio Corporation of America (RCA) to test the barcode system.
1974 — The first use of the standardized barcode system, Universal Product Code (UPC), at Troy’s Marsh Supermarket.
1997 — Contactless payment system, Speedpass by Mobil, which looks like a keychain, was introduced to make a purchase without the use of cash or credit cards.
2001 — Kmart adopted the self-checkout as the big-box player, but it then removed it from its stores by 2003.
2014 — Apple Pay expanded the use of contactless payment to the wider merchants in the US.
2016 — The first Amazon Go store opened in Seattle.
What does Amazon Go try to solve?
Customers save time by NOT waiting in a cashier line.
The closest precedent may be the self-checkout system in some large-scale supermarkets or drugstores. I personally find it useful for a faster process, though, it receives more criticism, mainly because customers are not trained to use registers (some poll from 2014 suggested that 93% of people disliked them).
Customers don’t have to carry their wallets.
The contactless payment system, such as Apple Pay, is the closest solution allowing customers to shop cashless. However, identifying and counting items still relies on human staff. To address this, technology to detect what items each customer has picked is being explored. For example, the creative unit, teamLab, created a hanger that reacts as a customer picks it up. Similarly, tagging items had been the mainstream solution, but this solution does not connect the product with the customer’s identity.
For connecting individual customer identity, personal mobile phones take an important role. The remaining question is how to make the connection, and how to make the process frictionless. The low energy bluetooth device, Beacon, was seen as a solution. The company Emoticons introduced small, stylish, and affordable Beacon devices that were also easy to install in retail stores.
These devices could emit bluetooth signals constantly, and they did not require pairing steps like regular bluetooth. This way, the system could identify when a customer entered the store and track their locations in the store. However, the solution did not come with a practical way to identify items the customer chose. Additionally, customers needed to download an app to have the connection.
Amazon also foresees their Amazon Go stores to cut the operation cost.
How does Amazon Go work?
In order to successfully achieve this JUST WALK OUT TECHNOLOGY, Amazon Go stores have to achieve the following with extremely high accuracy:
- Register a customer — so the store can link their Amazon account.
- Track the customer’s location — so the system can correlate the customer data, and the actions taken place.
- Detect an item that was picked up — so the system can add items to the virtual shopping cart of the customer who was at the location.
- Detect an item if it was put back onto the shelf — so the system can remove items from the customer’s virtual shopping cart.
- Detect when the customer leaves the store — so the customer’s online transaction can be completed.
1. Register a customer
This is the most conventional part of the experience. Customers have to download an app to their phone, which is not part of the Amazon app. At the store entrance, they have to scan the QR code on their app to the gate, which almost looks like some sort of a subway entrance.
When I visited the store, I was with my wife and baby. I thought each person had to scan different QR codes and enter separately. However I was told that all of us can use the same QR code.
2. Track the customer’s location
There are hundreds of cameras mounted on the ceiling; they are RGB cameras for tracking individual customers. Amazon has mentioned that their Go stores don’t use any facial recognition technology.
Instead, these cameras detect each customer’s general profile and track individuals with motion detection. The camera correlates a customer leaving Camera A and picks up the same customer entering Camera B. The accuracy of tracking is augmented by the use of separate depth-sensing cameras, according to TechCrunch article.
3. Detect an item that was picked up and 4. Detect an item if it was put back onto the shelf
This is the most unique characteristic of Amazon Go and is represented in its store design. Each shelf has a weight sensor that knows the exact weight of each item. When an item is picked up, the sensor can tell exactly which shelf the item is from. Similarly, the sensor detects when the object with the same weight is put back.
The central processing unit relates the information about each customer’s location and the actions taken place on each shelf. Because of this system design, each shelf has clear guides separating each row, and they are more spacious compared to regular grocery stores. The store always looks tidy and well organized, because items need to be placed precisely, and space helps accurately detect customers.
5. Detect when the customer leaves the store
Customers don’t have to scan the QR code to exit like they do when they enter. In-store tracking detects when they leave the store.
When I walked out from the store, I was curious if the store successfully detected items that my wife picked up. In fact, it took about 5 minutes after leaving the store to receive my receipt and see any updates on the app. I am not sure if this was by design, but I hope Amazon Go app had updated my virtual shopping cart while I was in the store.
What does Amazon Go look like in the future?
From my experience at the small Go store, there was plenty of human staff. Amazon Go is still an early initiative, and it needs people to help operate it. For example, detecting the right item for the right customer’s virtual shopping cart is still assisted by human staff when the processing’s confidence score is low.
In addition, the friendly staff standing by the gate was helpful for answering questions and assisting customers who were not used to the new-age shopping experience. Restocking and reorganizing items on the shelves were also handled by humans. Having the right items on the right shelves, which could have been misplaced by customers, is the key for the entire system. Human staff is an inevitable workforce flexible enough to adjust the misoperations. Nonetheless, Amazon’s vision is to make the operation as efficient as possible.
According to the new estimates from RBC Capital Markets analysts, Amazon Go brings in about 50% more revenue compared to the traditional convenience stores. Although the initial store cost $1 million in hardware alone, the cost can be drastically reduced by reverse engineering the earlier cases and deploying them on a large scale. Bloomberg reported that Amazon is aiming to open 3,000 locations by 2021.
Amazon Go is the sophisticated version of future retail, which has been attempted by many of its competitors. If it had not been by Amazon, I can imagine the exact same solution being deployed to more convenient stores by providers. For consumers, it is only about 30 seconds that they save from a regular shopping trip at a convenience store. Yes, we don’t need to bring our wallets, but we need to carry our phones anyways and open the app and scan. So is it really that much better for consumers’ shopping experience and efficiency?
One thing I really liked about Amazon Go is its limited product variety in the relatively spacious store, which is in place for pursuing its high accuracy of product detection. This lies in comparison to regular convenience stores that look messy with overwhelming product variations. I used to like this about convenience stores. Today however, with too much information and items being accessible online, I am probably not the only one who prefers something simpler, at least in physical spaces.