L-R: Dilip Kumar, VP of technology, Amazon Go and Amazon Books; Gianna Puerini, VP, Amazon Go; Jeffrey Dastin, technology correspondent, Reuters
Opening a new grocery concept is tricky enough as it is, often requiring adjustments even after the ribbon is cut. Amazon isn't immune to this, even with a store employing technology not used by the competition that seeks to disrupt an entire industry.
That’s arguably the biggest takeaway from the Seattle-based ecommerce giant's Amazon Go store, whose VPs, Gianna Puerini and Dilip Kumar, shared insights into the creation of the technology that fuels the store’s “just walk out” model – which caused the 10-month delay of the store's public opening due to its difficulty in tracking more than 20 people at a time or items moved from their specific shelf space. The VPs' presentation took place March 18 at ShopTalk in Las Vegas.
To give a quick overview of how it works: The store uses technology similar to that powering self-driving cars, employing computer vision, sensor fusion and deep learning to automatically detect when products are removed from, or placed back on, shelves. To use the “just walk out” technology, patrons download and check in via a mobile app, take what they want, and walk out the door, where they are charged for the products they take with them. There are no lines or barcodes to be scanned in the process.
Opening the presentation, Kumar shared three challenges his team faced when creating Amazon Go:
The team had to pull off the “just walk out” technology in a way that makes it seamless and effortless.
The concept required algorithms that are beyond state-of-the-art for its computer vision and machine learning to solve the problems of who took what. Also required were people shopping close to each other to test everything.
The store needed a robust hardware and software infrastructure to support everything.
True, some retailers overseas – such as Alibaba Group, with its Bingobox convenience stores – rely on RFID instead of computer vision for their own “grab-and-walk-out” stores. However, tagging every single item with an RFID label is burdensome and costly, Kumar stressed.
An interesting, unexpected challenge was training consumers to rethink how they shop in general. Puerini noted that when the first Amazon Go store opened to the public, staffers were positioned earlier in the path to purchase to answer questions and assist shoppers. However, the end of the path was in need of significant help: She didn’t expect so many to stop before exiting and ask if it were OK to leave, requiring the staff to post a sign assuring shoppers that they could go without physically checking out. Even she still sometimes thinks twice when exiting the store, as shopping Amazon Go requires changing a behavior consumers have had their whole lives.
It’s easy to think Amazon developed its new Amazon Go concept to cut costs or simply “do tech for tech’s sake” – and there might be a little truth to both. However, Puerini emphasized that retailers looking to employ similar technology in stores have to establish a sustainable business model that comes down to the customer. Grocers must ask themselves: “Who is my customer? What can I do to add value to their life? What am I uniquely positioned to offer them? And if I’m not offering something unique, am I willing to build, buy or go another route to offer it?”
Other questions and insights Puerini and Kumar brought up regarding Amazon Go include:
What are customers buying at Amazon Go? The top seller is the chicken banh mi sandwich, although meal kits for dinner, fresh fruit in the morning, and items from Seattle bakeries also are popular.
What has Amazon changed since opening the store? Learning about what customers like.
How does Amazon determine what products or brands to introduce and/or discontinue? Customers write in via the Amazon Go app, which also is used to enter the store and pays for the total purchase upon leaving, about the brands and products they wish that the store stocked. When carrying a suggested item or brand makes sense, Amazon listens.
What are the metrics for the store’s success? Pulling off the just-walk-out part is only part of the battle. Amazon Go is definitely about convenience, but none of that matters if pricing and assortment aren’t to shoppers’ liking. Therefore, primary focus is given to making sure Amazon understands what customers like, listening to their feedback and continually adapting to meet their needs.
Randy Hofbauer is the former digital and technology editor of Progressive Grocer. He has more than a decade of experience as a content strategist, researcher and marketer, almost all of it covering CPG retailing. His insights and work have been cited in a nu Read More