What is Amazon Go?
On December 5th Amazon unveiled its first convenience store. Entitled "Amazon Go," the store is a high-tech grocery store located at 2131 7th Ave Seattle, WA 98121. It is currently in a private beta testing and as of right now is slated to open to the public early 2017. This is particularly interesting because we all think of Amazon as the company that redefined the retail market by eschewing brick-and-mortar stores. So what has changed? According to the video embedded below, Amazon intends to create a store that has "No lines. No check-out."How does Amazon Go work?
The customer experience will look something like this: [2]- Customer enters the store and is simultaneously "tagged" via smart phone
- Customer shops for their desired items
- Some combination of cameras, GPS, and sensors keeps track of where customers are in the store
- Some combination of cameras, infrared, load, and pressure sensors determine whether items are picked off (or returned to) the shelves
- Customer leaves the store with their items and is "logged out" via their smart phone
- Sensor triggers and charges that customer for the items that they took
- Receipt is automatically emailed to the customer for the items that they were charged for
What is the technology behind Amazon Go?
Based upon Amazon's marketing video, the technology is cutting edge. Note all of the current buzzwords that appear near the middle of the above embedded video:- computer vision
- deep learning algorithms
- sensor fusion
As we are talking a statistical based system, this means that there is the possibility that the system will not be able to reasonably determine what item was acquired. Amazon's documentation goes on to state that if the inventory management system cannot reasonably accurately determine the identity of the picked item then it may go one step further and incorporate past purchase history and/or items that the user has already gathered during their current shopping experience. [3]
In short, the system operates through an implementation of a heavy dose of machine learning.
What impact could Amazon Go have on the supply chain?
It is very clear that the shopping experience of an Amazon Go differentiates it from the existing convenience store / grocery store paradigm. Assuming that it takes off, it could very much alter the retail shopping experience. As a society, this will further remove us from interacting with strangers. It will increase the expectation of immediate fulfillment that has proliferated with younger generations. It will likely cause high-end retailers to further emphasize the shopping experience by catering to customers rather than simply offering a product.From the standpoint of a retailer, in theory the systems behind Amazon Go could entirely eliminate shoplifting. [1] This would be a boon because it will reduce the likelihood that they have to write product off. Besides the obvious cost savings, this also removes one highly variable consideration when determining how much product to inventory, and so also offers savings through optimal reallocation of funds. However, I would argue that it is likely that the real value of the technology is for order picking and fulfillment. This is of course not surprising since Amazon developed it.
Resources
[1] Amazon Go Ends Checkout Lines And Shoplifting, Begins A New Era In Retail[2] How Amazon's line-less grocery service would really work
[3] How ‘Amazon Go’ works: The technology behind the online retailer’s groundbreaking new grocery store
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