Amazon Go may Reshape the Grocery Industry

Dave Lee
Aug 24, 2017
3 min read

(Photo from Amazon's website)

Have you ever imagined shopping in grocery store without the checkout? Last December, Amazon announced their no lines, no checkout grocery store called Amazon Go, located at 2131 7th Ave, Seattle, Washington. However, at this stage, it’s only open to Amazon employees in their Beta program. With new technologies allow customers to walk in, grab products and walk out the store.

According to a study by Pricewaterhouse Coopers (cited in Hamstra, 2012), 37% of grocery buyers has confirmed that the price is the top influencer when deciding where to shop, while convenience was close behind with 28%. And the largest component of convenience was fast checkout which marked up 30% of “memorable great experiences” in the grocery store.

Moreover, grocery retailing is highly competitive and customer retention is a strategic factor because loyal customers are more profitable customers. Another study suggests that quick checkout is one of the most important aspects driving first-store loyalty along with other aspects including low prices and variety of offerings (Brown, 2004). Amazon Go is therefore, potentially providing a new customer experience that no other stores have ever offered before. This disruptive innovation can dramatically change the way people shop at grocery stores.

How does Amazon Go work?

The 1,800 square feet Just Walk Out store is exactly like an convenience store or grocery store, offering ready-to-eat breakfast, lunch, dinner and snack options made fresh everyday, but no checkout required. However, shoppers will need an Amazon account and a free Amazon Go app in their smartphones to access the store (“Amazon Go,” n.d.).

(Video from Amazon's channel on Youtube)

Using same types of technologies in self-driving cars such as computer vision, sensor fusion and machine learning, Amazon Go is able to track customer’s activities while they’re in-store shopping. Whichever or how many items taken by the consumers are detected and automatically updated in their virtual cart. And when they finish shopping, customers simply walk out and Amazon Go will charge their Amazon account and send a receipt to their phone just shortly after they leave the store (“Amazon Go,” n.d.).

The Future of Grocery Stores

The changing game in grocery industry as expected, is really challenging. Unfortunately for customers who were excited to experience the new concept grocery store, Amazon Go has been delayed because of technical problems. It was reported that glitches happened when there are over 20 customers in the store at the same time, making their opening schedule to public has been moved from early 2017 to unknown time. "Up to this point, they were going nowhere," said Alan O'Herlihy, whose Ireland-based company Everseen developing technology similar to Amazon Go's, had been skeptical of Amazon's project. "Now the game is changing with the acquisition of Whole Foods. The data they'll be getting is incredible,” he added (Rubin, 2017).

However, they haven’t failed yet and the Amazon Go team is still developing the system. A former employee of Amazon stated that "They were on a path that it could be a viable product. There were still challenges to be overcome, but it wasn't failing either." (Rubin, 2017). Once Amazon Go become a success, other brick-and-mortar stores might adapt this technology and create a new world of grocery retailing.

References

Academic Articles

Brown, J. (2004). Determinants of loyalty to grocery store type. Journal of Food Products Marketing, 10(3), 1-11. doi:10.1300/J038v10n03_01
Hamstra, M. (2012). In-store experience key for grocery shoppers. Supermarket News, Retrieved from http://ezproxy.ecu.edu.au/login?url=https://search.proquest.com/docview/1242130832?accountid=10675

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