When Amazon announced their plans to buy the upscale grocer Whole Foods, the common thought was Amazon was going to use the stores as inventory source for an online food ordering system. That may be partially correct, since Amazon does have an online food division Amazon Fresh. However, the crew at Amazon was looking much further ahead.

In fact, their concept Amazon Go, is another case of Amazon revolutionizing the way business is done. This time, Amazon is revolutionizing brick-and-mortar retail. Wait, isn’t Amazon the company driving brick-and-mortar stores out of business with their ecommerce system providing a broad selection, delivered as soon as you want it, for cheaper than everyone else?

With Amazon Go, the company is bringing back the very thing they’ve been putting out of business — retail brick-and-mortar shopping. Once again, they’re reinventing retail shopping. What was old will be new again.

No Lines, No Checkout

If you’re still struggling with how to use the self-checkout machine at your local grocer, don’t worry. Amazon Go jumps magnitudes ahead of the current arc of retail and technology to smart stores. Since the store is “smart” you don’t have to be. All customers have to do is pick up the item they want, put in their bag, and walk out of the store.

The store knows who you are, knows what you put in your bag, and charges your purchase to your card and delivers a receipt to your phone as you exit the store. How does it work?

The shopping experience, in the one trial store in Seattle Washington, begins when a customer taps their cellphone on a turnstile as they walk into the store. This logs them into the store’s network and connects to their Amazon account through an app.

A smartphone with the app installed is required to enter the store via presenting a barcode to a sensor. This barcode scan (along with other sensor technology eg: GPS, etc) tracks that you have entered the store, identifies you’re moving through the store and then identifies the product you pick up.

The company calls it “just walk out technology.” The technology uses a number of sensors in the store and on the products to track items customers pick up. These are then added to the virtual cart on their app. If you pick up an item then later decide you don’t want it, putting in back on the shelf will remove it from your cart. When the customer leaves, the app adds up everything the customer has taken and charges their Amazon account.

Amazon began work on the project in 2012. Sensor Fusion technology uses an array of systems for confirmation and cross confirmation of all transactions. The system is so powerful it is said that only 30% of the product needs to be in view of the product sensor cameras for a high certainty confirmation.

When you walk out of the store, the sensor fusion of technologies has already confirmed your order and totaled it up. All billed to your future Amazon Bank Card, — yes they’re working on that now, also – But currently, your current payment card on file with Amazon gets charged.

The Future of Retail Shopping

Today you need a smartphone with the app, however in the future the very powerful facial recognition systems using their Rekognition AI technology will eliminate this requirement. Thus the moment you enter the store, the store itself can not only identify what you are walking out with and purchasing, it can identify you, at some point with 100% certainty just by your face and other confirmations not requiring your smartphone. Your face will be your membership card and your payment card, no smartphone needed.

Don’t assume Amazon Go stores will be empty of any reasonable number of employees. Cashiers will be a thing of the past. However the selves in a high volume store will need to be constantly tended to. perhaps employing three times more employees focused on doing this work. Combine this with Amazon’s just-in-time inventory system. These employees will be mixing with customers and will be helpful and attentive.

The technology “is amazing,” food marketing expert Phil Lempert told USA Today.

He’s even more intrigued by the multiple images of “meal kits” show in Amazon’s video. These “everything you need to cook a quick, high-quality dinner” kits have become popular, but the economics of delivering them has meant they’re difficult to make economically viable. Stores such as Amazon Go may provide a sweet spot for them.

“When you look at the store itself in the video (and presumably it is the actual store), they have done a great job of merchandising, and having “meal kits” available is simply brilliant. As the meal-kit industry struggles due to the shipping/logistics aspect,” Amazon Go could be a venue where they could succeed, said Lempert.

Moving ahead, Amazon will likely license the technology centered around Amazon Go very much like the technology that built Amazon’s website, the AWS platform and most recently the Alexa platform. This means that Amazon could very well me become the largest technology supplier for retailers in the future. This will very likely extend to Amazon Payments and cost savings that Amazon could share with the smallest to the largest merchants.

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