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Walking out of a store without paying to be called shoplifting. At Amazon Go, it's called "walk-out shopping" – and it's an illuminating look into how Amazon goes the future of retail.
I visited the new Amazon Go store in San Francisco that opened in late October, one of just six in the United States so far. Fare – basic food, drink and drugstore items – plus some prepared food including salads, sandwiches and take-home dinner meal kits.
Browsing the oddly generic inventory, I racked up my brain over what I could not imagine. Unlike 7-Eleven for example, they do not sell beer or cigarettes or lottery tickets. The wares are far more like a drugstore like CVS (CVS) or Walgreens (WBA), or a full grocery store. And the food, while looking relatively fresh and healthy, is undoubtedly less appealing than many "fast-casual" eateries in San Francisco.
There have been plenty of customers – and there is a lot of interest in the market – and a worker told me that the shop gets very busy around lunchtime. That mix may be one way of looking at Amazon's plans for Amazon Go, said eMarketer retail analyst Andrew Lipsman.
"Is this going to compete with grocery, convenience stores, or grab-and-go? [lunches]?, "Lipsman said." In Chicago it's all about grab-and-go – the lunchtime places that make up every day. "
Amazon Go is not the only instance of Amazon expanding into the physical world. It also maintains a few dozen 'pop-up' stores in the U.S. acting as a sales floor and showroom for a limited selection of Amazon products. And this holiday season, it's sending you to a holiday catalog – yes to a real paper catalog, feel to your home.
What does this all add up to? In part, borrowing 'old retail' tactics is a defensive strategy against big-box competitors' growth in online sales, according to Brittain Ladd, a logistics consultant and Amazon's training executive.
"It is an omni-channel retailer that has embraced traditional retail strategies for attracting as many customers as possible," he said. "Walmart, Target (TGT) and other retailers have increased their focus on closing the gap with Amazon, and it's working."
But unlike your average big-box store, Amazon Go is just as much a test ground for the technology that powers the 'walk out' experience. An extensive network of sensors, cameras and computer vision software stitching the data together make the experience possible. That's how Amazon tracks what item you've picked up, or put back, in place of old-fashioned checkout scanners.
"It's a lot of things that we're doing in the past," said Zev Fima, Research Analyst for Jim Cramer's Action Alerts Plus Portfolio. which owns Amazon. "This will likely allow Amazon to offer exceptionally competitive prices while outperforming other brick-and-mortar retailers in terms of margins and experience."
There's a good reason why Amazon has a good reputation Lipsman added.
"The camera and sensor technology is more likely to be more discreet, smaller, but you can not help it, but it does not help you." checkout line, that's a game changer. " In addition, there may be potential avenues for Amazon to license the technology for other environments, Lipsman noted.
While Amazon has not said how many Amazon go to it's plans to open, a recent Bloomberg report said that it plans to open 3,000 locations by 2021. Other analysts have offered more conservative estimates, but in any case, many experts agree that Amazon Go is poised to expand quickly.
And since it's hard to talk about automation without also bringing up prospective job loss, there was little trace of a robot apocalypse – at least at this point. While there were obviously no cashiers, they were at least a dozen or more at the small shop – mainly meticulously stocking and re-stocking the inventory.
Amazon is not the only one in this race. Arch-nemesis Walmart (WMT), for example, is testing its own version of automated shopping as part of its Store 8 division, its in-house tech incubator. According to a report from The Information, Walmart is testing automated checkout among other applications at a 50,000-square-foot store outside New York.
It might be too soon to tell who will win this retail technology race. But it's clear that in the near future, Amazon wants you to just walk out.
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