The Amazon Effect: Amazon Go Stores and The Future of Retail
There are times of the year when people around the world start thinking about spending some extra money in retail stores. It can be the holiday season, or it can be such days as Black Friday or Cyber Monday. Or simply birthdays or the desire of wanting to reward oneself.
However, when the shopping bug demands some action, rather than heading to the streets and shopping malls as people used to do some decades ago they grab a cup of coffee and login into their computers for a session of e-commerce shopping.
This reality where more shoppers head to screens rather than to brick-and-mortar stores means that retailers in the physical world need to offer a better customer experience, perhaps a more personalized one, if they are to have a future.
But perhaps not even personalization can stop retailers from going through a massive change. Or perhaps even extinction, if they are not fast enough to respond to the digital change and transformation that is evident in the retail industry.
In 2016, $1.26 trillion of retail sales were influenced by digital media, according to a report by industry analyst company Forrester Research. The firm projects that mobile devices alone are going to influence $1.4 trillion in local sales increase by 2021. And so, experts began to talk about the Amazon Effect.
The Amazon Effect
Since Amazon debuted back in 1994, the company has changed the way we shop and bring goods home. Since the beginning, Amazon has had some kind of impact on traditional forms of retail. The introduction of a simpler, faster online shopping process which saves time and requires no extra effort in mobility won consumers over almost immediately. This quickly became a global trend.
The added benefit of having the products delivered right to the front door became one of the best selling points. The technology driven way of shopping offered by Amazon prompted comsumers to demand the same from traditional retailers. However, retailers didn't count with the technology Amazon had at hand.
What is the Amazon Effect and what it means for retailers?
This increased e-commerce and the manifestation of the ongoing consumer shift to online shopping resulted in the evolution and consequent disruption of the retail industry. This evolution and the changes that have been affecting the retail market is called the Amazon Effect. It affects the retail industry as a whole and it affects the consumer economy.
For decades, Amazon has been expanding into new types of businesses disrupting and shaking the world of its competitors. Food and grocery delivery companies know the Amazon Effect has impacted their business, especially those who don't count with the technology that is characteristic in any Amazon new line of business.
Grocery stores and fast-food restaurant chains are now also seeing the Amazon Effect quickly approaching their doorstep. The Amazon Go stores were born.
The future of retail
The physical stores that wish to remain competitive in the digital future will have to offer something special to consumers, something that they can't get from online stores. Offering drone delivery could be a way to attract consumers. However, despite there are some ongoing trials with products delivered by drones, regulations are not there yet.
So, Amazon has gone a step forward with its Amazon Go cashier-less, automated stores. Something much less complicated to implement since it doesn't need to wait for new regulations as delivery by drone has.
By 2021, it's perfectly possible that other retailers are going to jump into the Amazon Effect wagon bringing global consumers to a new way of shopping. This is going to the change the future of retail at a global level. Changing the landscape of grocery shopping and of course changing jobs as we know them.
Amazon Go: Cashier-less store: How does it work?
Amazon, always a step forward in innovation, has been adopting new technologies in retail for years. This has created the Amazon Effect. Now the company's Go cashier-less stores are quickly expanding. After opening the first cashier-less convenience store for Amazon's employees, the company opened the Go stores to the public in January 2018.
There are currently six cashier-less store locations in the United States: Three in Seattle, Washington, two in Chicago, Illinois, and the latest which opened in October in San Francisco, California.
The Go stores feature the world's most advanced shopping technology such as artificial intelligence (AI), multi-sensors, and hundreds of state-of-the-art CCTV cameras. Amazon plans on expanding its cashier-less stores rather quickly. The company has announced that it will be opening 3,000 Go stores by 2021.
Amazon Go is now called the future of shopping. Going to an Amazon Go store involves customers entering to the Go store using the Amazon Go application previously downloaded on their smartphone.
After the QR code on the phone is scanned at the entrance point and the customer's Amazon account identified, customers are ready to browse the store and take the products they want. Sensors signal the movement of the product, which is added into the customer's virtual shopping cart.
When done shopping, with no cashiers or self check-out stations, the customer simply leaves the store. At home, customers can check the list of products they purchased and the total the spent on their Amazon account. Amazon sends a receipt and charges the purchase to the customer's Amazon account directly, which is linked to the major banks, credit and debit cards.
The technology behind Amazon Go: Just walk out technology
Amazon Go stores use the same type of technology used in self-driving cars. Amazon calls it 'just-walk-out' technology. Computer vision algorithms help Amazon understand why people choose certain products over others. Sensor fusion, and deep learning algorithms .
All the products have camera recognizable codes in the form of dots. Hundreds of cameras and electronic sensors keep track of every person who enters the store; they also track every product on the shelves, and how they move.
Sensors detect when a product is taken from the shelf and place it in the customer's virtual cart, or if the product is returned to the shelf.
Sensors also detect where people put the products when they change their mind, if they place them where they found them or on a different shelf. The system is also powered by artificial intelligence.
The success in the future of Amazon Go: Where is retail going?
Experts say the success of Amazon is in the vast amount of data the company has and the knowledge in consumer behavior the company has achieved thanks to the advanced machine learning technology.
According to Professor Daniel Raff from Wharton Management, Amazon is going to make a big improvement in the retail industry, ending up being a much more powerful enterprise than it is now. For retailers, it's difficult to know what to sell in a particular place at a particular time, especially when it comes to perecibles.
Using machine learning to make an improvement in the efficiency of the whole foods retail business is going to have a paramount impact in the future of the industry.
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