Amazon has done well in America. But Amazon is not a force in global retail – it represents a very low single-digit percentage of the total retail market. Jeff Bezos, the Founder and CEO of Amazon, knows that. You cannot have disruptive impacts in global retail unless you bring atoms in the playbook. So, besides the success of Amazon digital, Amazon has been going offline. It brought Whole Foods home. But the biggest that will happen is Amazon Go – automated and cashier-less retail shop. Simply, with Amazon Go, Amazon can become the operating system of modern retailing. In the company’s letter to shareholders, Jeff made that note.
Amazon today remains a small player in global retail. We represent a low single-digit percentage of the retail market, and there are much larger retailers in every country where we operate. And that’s largely because nearly 90% of retail remains offline, in brick and mortar stores. For many years, we considered how we might serve customers in physical stores, but felt we needed first to invent something that would really delight customers in that environment. With Amazon Go, we had a clear vision. Get rid of the worst thing about physical retail: checkout lines. No one likes to wait in line. Instead, we imagined a store where you could walk in, pick up what you wanted, and leave.
Getting there was hard. Technically hard. It required the efforts of hundreds of smart, dedicated computer scientists and engineers around the world. We had to design and build our own proprietary cameras and shelves and invent new computer vision algorithms, including the ability to stitch together imagery from hundreds of cooperating cameras. And we had to do it in a way where the technology worked so well that it simply receded into the background, invisible. The reward has been the response from customers, who’ve described the experience of shopping at Amazon Go as “magical.” We now have 10 stores in Chicago, San Francisco, and Seattle, and are excited about the future
Amazon Go is a new kind of store featuring the world’s most advanced shopping technology. No lines, no checkout – just grab and go! If it thrives, Amazon will license the technology to the world of retail. So, it is going to become like Amazon’s AWS (Amazon Web Services), the cloud computing business, which allows people to rent cloud computing spaces for their online solutions. Amazon Go will help retail stores to rent the technology to automate their stores at scale.
According to a promotional video published by Amazon, the store concept uses several technologies, including computer vision, deep learning algorithms, and sensor fusion to automate much of the purchase, checkout, and payment steps associated with a retail transaction. The store concept is seen as a revolutionary model that relies on the prevalence of smartphones and geofencing technology to streamline the customer experience, as well as supply chain and inventory management. However, public roll-out of the Seattle Amazon Go prototype location was delayed due to issues with the sensors’ ability to track multiple users or objects within the store, such as when children move items to other shelves or when more than one customer has a similar body habitus.
One Oasis Emerges
Amazon Go will evolve as a separate product even though at the moment, it is supporting Amazon commerce. As typical in the One Oasis Strategy, the original goal is to make the best product better, but over time, the solution can go alone in itself. The AWS was built for the ecommerce business. Today, it is a business of itself, delivering great value.
Indeed, oasis is very critical and every company has oasis. Your best product is the oasis in your business. Every other product feeds on that best product. If you build your investment around that main product, you will find success, because those investments will have a clear “customer”, and that reduces market risks. In other words, if your new business investments are geared to support the best product, and the best product is doing well, it means the risks on the new investments will be easily managed. Provided the best product continues to do well, demand on the new investment is assured. That is the One Oasis Strategy.
The technology will bring the unification that will help Amazon pursue a bigger share of the global retail market. Yes, hybrid commerce is important as most nations still do retail offline. The Amazon Go will help in accelerating the mission, not just to sell more things for Amazon, but to collect “taxes” as Amazon currently does, in taking companies online, via AWS. Yes, as companies license the tech, on the global retail space, they will pay fees to Amazon. The acceleration of 5G will make this redesign happen faster.