A couple of weeks ago, Amazon.com Inc. announced it will be opening a grocery store. This is an unexpected move for the e-commerce giant.
Amazon Go is the name of the name program. The reveal video promises “no lines, no checkouts, no registers”. It’s about to enter the pilot phase, being limited to a single store. The only customers to test it out will be employees.
So why the hype?
More Than Meets the Eye
It might seem strange that the announcement of physical store is having such an effect on news outlets. After all, e-commerce sales continue to grow each year. The sale of groceries isn’t new for the company as its AmazonFresh program made its debut back in 2007. This being Amazon however, means the project is more nuanced then it first appear.
A 2014 patent filed by Amazon gives more insight into how the store could work. Basically it involves a whole lot of cameras, sensors and tracking. Natt Garun, from the Verge, comments:
The patent describes a system where cameras could capture you as you walk into the store, then identify who you are based on an ID card that’s associated with your Amazon client
There are cameras lined within the store as well. They’d determine if multiples of the same items are taken. So if you took several bags of chips to get to one in the back and you put the rest back, then the cameras would recognize the action and keep you from being charged.
Sensors in the shelves are another way for the store to know what you have taken. They will check to see if the weight has changed from its original state.
Why Invest in a Grocery Store?
There are some unique ways Amazon Go stands to benefit the company.
Amazon Go, even if it were expanded far and wide, would generate a shadow of the sales of the parent company. E-commerce will have the advantage over physical stores because it isn’t limited by the geography of its customers.
What Amazon Go represents for the company, is valuable information on its customer’s buying habits. Customers would be enticed by the promise of a hassle-free grocery experience, and the cameras in the store would collect information about them. Nat Garun continues:
The patent says this is used to identify the shopper’s hand to see whether they actually pick up anything off a shelf, but combine that with the fact that Amazon knows what you’re buying and who you are down to your skin colour and this is pretty next-level market data
Information gathered this way could be used to strengthen its other programs, AmazonFresh in particular. The company would be able to see what works to move a product and what doesn’t. Having physical stores would also allow Amazon to broaden its influence in the retail market.
Time will tell how much of a disruption Amazon Go will be on the industry. The promise of “no lines, no checkouts, no registers” sounds appealing but customers may not like being always watched.
The store will also be a model for other industries to consider. In the same way the reveal of Amazon Prime Air made waves in 2013, the same will be true for Amazon Go.
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