Amazon Go: One Store to Rule Them All

Amazon is very clever. With the announcement of Amazon Go, an entirely new type of store and shopping experience, they have just given us a blueprint of how they intend to dominate the future of retail.

If you haven’t seen the video, I suggest you take a minute to view it. There are a few key things to notice. First, Amazon starts with the pain point–lines. Perhaps one of the worst experiences at retail is standing in a check-out line, going through the transaction process. Amazon’s video starts with the value proposition that hits that nerve and builds from there.

Here is a parallel observation. I have been thinking about why the Uber experience is vastly better than taking a taxi. There is the app and the “not having to hunt down a taxi” part but, more often than not, even if a cab is sitting in front of me, I’ll still request an Uber. I believe it is for the single reason of not having to pay/tip at the end of the ride. One of the most compelling parts of the Uber experience is to simply get out and get on with your business. Not having to worry about paying or tipping eliminates the “friction” at the end of a cab ride. I’m sure there is a deeper psychological point here about humanity and how, after we hunt or gather, we are simply ready to be done. Checking/paying at the end of that journey is something annoying standing in the way of completing our task. It is this view that makes Amazon Go interesting. At least, that is the simplistic part the consumer will understand. Go in, shop, walk out.

Under the hood and behind the scenes, there is a lot more complicated tactics and strategy at play. As you watch the video, reflect on what Amazon is doing with the Go experience. They state they use three core technologies — computer vision, deep learning algorithms, and sensor fusion — to bring about the “just walk out” technology. With that bit of detail, it is likely they are using computer vision with a combination of proximity sensors to know what you picked up. Perhaps there are cameras/sensors near all the items so the computer can see what items you pick up and pair that with your profile/identity/account when you pick it up. Alternately, this could all happen as you walk out as well as sensors and computer vision + RFID or some other local proximity sensors could sense everything you have in your cart and pair it with your account to charge you. Whatever the combination is, there is a lot of technology behind it and that is probably the key point in all of this.

I believe Amazon just took all of retail hostage. I’ve long argued that Amazon is not a retailer. They are, fundamentally, a technology company who happens to be in retail. That is abundantly clear with many things they do but very clear here with Amazon Go. I’ve also long argued that retailers have not implemented technology well enough to compete with Amazon. Largely because they are retailers, not technology companies. My gut feeling has always been that retailers (at least most of them) will not figure this out and will fail at the technology bits and fall by the wayside.

If the direction I feel Amazon is going with the Echo and other first party hardware lines is any indication of their larger strategy, then Amazon is using these Go stores as a showcase for their backend technology — AWS plus a host of hardware that can go into a store and revolutionize and modernize the physical retail experience. Amazon has no intention of building thousands of stores. Those thousands of retail locations competing with Amazon know their physical space is their biggest asset. Amazon just showed them how it’s done, with the caveat of saying, “you can do this also, but you are going to have to use all of our technology to do it.” Brilliant,

Just as they did with the Echo, where they offered an entire platform to third parties to build their own solutions as a part of an AWS service that includes natural language processing, “Lex” the framework for the Alexa assistant, and deeper entrench customers into the AWS framework, they can now similarly offer a framework to retailers to use all the technology behind Go and rake in the margins and the cut of sales. Amazon’s online storefront grew as third parties offered their products through Amazon’s online marketplace and Amazon took a cut. You have to wonder if a similar play is possible with this solution where they can subsidize some of the hardware/sensors costs to big box retailers with the costs of an AWS solution and then take a cut of the transaction.

With any angle you analyze this, it leaves us with the reality that Amazon just showed retailers a solution they can not implement and will likely show them a path to be Amazon customers. Amazon, very likely, just conquered physical retail.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

19 thoughts on “Amazon Go: One Store to Rule Them All”

    1. I buy lots of stuff from Amazon. They don’t have my email so they can’t spam me. I see small ads on other sites referring to things I’ve bought from Amazon but I ignore them. I don’t see anything scary or even significant about Amazon having data on me.

  1. The most important aspect of Amazon Go is the fact that cashiers and representative at a store represents nearly 40% of operating costs and increases each year compared to the technology that will be used to replace them that depends On the Moore law that reduces costs Exponentially each year, which will allow Amazon to reduce the price of the products of its store in a competitive way compared to the existing one

    1. If they do…
      And if they do, since they own the infrastructure, how would this impact competitive retailers? This has not happened yet, but it better be on the ant-trust radar.

      1. Probably in the same way that Amazon prime does today by killing their competitive advantage and forcing Wall Mart, Target and many Brick & Morta store to adapt to them

  2. Although the Amazon solution is very interesting, we should also remember that this is only one of the solutions to the friction that a customer experiences at a store. We should also consider that cameras that track your every movement inside a store are simply beyond creepy. This is getting very close to crossing the line.

    The Amazon solution cures the problem of going through the cashier. However, in a supermarket, I still have to push a huge trolley, walk through huge aisles (in the US), pack my groceries into a plastic bag, take that to the car, etc. If for example, one could simply look at a display while in the drivers seat, push buttons or talk into a speaker, pay with Apple Pay, and then the groceries would be waiting for me at the store car park exit in a plastic bag, wouldn’t that be nicer? This is of course similar to what automated vending machines do or what drive-through fast food chains do. And we all know that vending machines and drive-throughs can work without being creepy.

    Ideas and solutions to make physical retail better are all very interesting, and I think that there is great opportunity for technology to help. However, I do not think that one random solution that one big company brought out is necessarily the one and only one definitive solution. There are many more, and some will not have to be creepy.

    1. Choosing your own food and vegetables are part of the shopping experience and those who do not like that, can always order online already.

      If you are so worried about the cameras that follow your every movement inside a store, how do you sleep at night knowing that there are already cameras in many of our streets that is doing a lot more than simply follow your movements, or even satellite drones that already do it on a global scale?

      1. The surveillance cameras in Japan at least, do not have AI. Also unauthorised people are typically not allowed access to the recordings and can view them only in the presence of a police officer. There are laws (and common sense) in place to ensure that the privacy of normal people is protected.

        I don’t know what the legislation is in other countries, but I do know that privacy is a growing concern that is accepted online often only because the options are limited.

        And choosing vegetables may be part of your shopping experience, but that does not mean that the only solution is to have cameras watching you all the time. There are other ways.

        1. There is no such thing as good surveillance or bad surveillance, that’s a fallacy

          You are either for it, or against it

          The law can change at any moment or violated or come with an unintended consequence, and quite often good people can end up committing evil things to other convincing themselves that it is for the greater good

          1. You completely miss the point. You seem to miss that at least in some countries, privacy is taken very seriously and that measures are taken so that data that is gathered through cameras should be used only for specific purposes. There are specific laws that protect our right to privacy. People get sued for invasion of privacy.

            Surveillance is accepted for crime prevention, but laws or guidelines are in place to restrict usage for other purposes. Litigation still happens.

          2. You’re the one who presumed that the same thing does not apply to an Amazon Go store or that the US doesn’t take privacy seriously

          3. Culturally and as a general policy direction the US leans towards less regulation, so no, they do not take privacy as seriously as other countries, and they tend to lag on issues like this.

          4. That’s actually the wrong question. The right question is which countries are more progressive than the US?

          5. Hey, this is my country you’re talking about you Canuck you! If you don’t like it, leave the continent! 🙂
            (I don’t really think this way, just practicing, though it is a very Apple position…)
            Seriously though. Here in ‘merica we gots 2 major political parties. The right wing, and the very right wing. Oh, and Kid Rock and Ted Nugent. Both from Detroit incidentally… Who’s more progressive? EU right wingers appear as flat out liberals here.
            Sigh…

          6. I wish you would be more specific about what you mean. I’m not sure what you mean by “the same thing” here.

            What I am saying is that surveillance is generally accepted if the purpose is crime prevention. It is often not if it is for commercial purposes. Measures are often in place to ensure that the data/videos cannot be used outside of the publicly announced purposes. In the case of Amazon Go, they would have to carefully announce how and why they are using that data, and many consumers will not appreciate the marginal benefits.

            As for the US, I do not have sufficient information to judge how strong privacy laws are, hence I make no assumptions. I do sense that the war on terror has made America more tolerant of surveillance for crime prevention purposes. I also believe that minorities and women, who are underrepresented in tech, will likely value privacy more.

          7. The biggest violator of privacy and abuser of surveillance system with malicious intentions are government institutions mainly the local police or FBI agent so if you are really concerned about these things you should not Support surveillance in any form.

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