Amazon’s Go Store Payments Test

by Raymond Pucci 0

While still not open to the public, Amazon’s Go convenience store in Seattle is still in the pilot phase and being tested by employees and internal stakeholders. As the following article describes, the technology has not been fully revealed. Most observers indicate that the technology is nothing really new, but Amazon is also looking at this experiment as a way to fulfill deliveries for online orders.

The store of the future has been a long time coming. More than a decade ago, IBM produced a television commercial that follows a young man with muttonchop sideburns and an indolent expression as he hurries through the aisles of a supermarket, stuffing merchandise into his baggy coat. Everyone in the store, from the butcher to an elderly shopper, glares with disapproval at the suspicious-looking young man on what seem like an obvious shoplifting spree. But as the “suspect” exits the store, a security guard calls him back. “Excuse me, sir,” the guard says. “You forgot your receipt.” Immediately, a voice-over changes the tone of the ad from ominous to optimistic. “Checkout lines—who needs ’em?” asks the disembodied voice. “This is the future of e-business.”

Retailing may now have reached the brink of that long-anticipated future. Amazon, which overtook Walmart in 2015 to become the world’s largest retailer, is poised to invite the general public into its Amazon Go convenience store, which the company has been testing in Seattle. It’s a place where patrons’ cards or accounts are charged automatically when they pick up merchandise and put it into a cart or a bag; they can even stuff items into their tighter, modern-day coats if they choose. If they change their minds and put the product back in place, its price is subtracted. Think of it this way: While a shopper is filling a physical cart, the store’s amalgamation of high-tech gear totes up the purchases in a virtual shopping cart.

In a short, Amazon-produced video about the 1,800-square- foot Amazon Go store, hip-looking young adults navigate the store and make their purchase decisions. A narrator describes the technology that tracks their purchases as an amalgamation of “computer vision, deep learning algorithms, and sensor fusion—much like you’d find in self-driving cars.” The thinking behind the tech? “Four years ago, we started to wonder—what would shopping look like if you could walk into a store, grab what you want, and just go?”

No doubt Amazon has the deep resources and stick-to-it philosophy to attempt this type of retail experiment. The company always looks for new ways to leverage its core online business. It’s been the delivery and fulfillment side that has been challenging. How many e-commerce companies would start their own truck fleet plus lease planes to deliver the goods? Consumers are always looking for convenience and speed, and the Amazon Go store is the right solution at the right time. However, until more is understood about costs and other business results, its financial success will not be known. Sam’s Club is also testing a scan and go concept, although store personnel are used to check receipts against goods carried out. At the Amazon Go store the technology is reportedly precise enough to detect any item removed and/or put back on store shelves without verification by store staff. Expect Amazon to reveal more soon, along with a hopefully not-too-distant opening date for the general public.

Overview by Raymond Pucci, Associate Director, Research Services Advisory Service at Mercator Advisory Group

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