Amazon's Plot To Takeover Retail

Amazon Go might look like a novelty, but it's Amazons first step towards retail domination

31Jan

Amazon's latest offering to the world, Amazon Go, was launched last week with predictive fanfare. The irony of people queueing to shop at the first 'queue-less' supermarket wasn't lost on most.

The first Amazon Go store opened in downtown Seattle and has been hailed as the store of the future, and it certainly looks like it. Equipped with no more than the Amazon Go app on your phone, all you have to do is swipe a QR code at the entry turnstiles and that's it. Just walk around, pick up what you want and walk out. Once you leave, the app takes the money out from your Amazon account and emails you a receipt.

Amazon calls this tech, 'walk out' technology, explaining that it works using a combination of 'computer vision, sensor fusion, and deep learning' to track your purchases. Essentially, sensors on shelves register when an item has been picked up and one of the many, many cameras scan a dotted-code on the packaging. Add a dash of AI and abracadabra, receipt in your inbox.

With only one store open at the moment, it is stocked like your average 7-Eleven, but more basic; groceries, toiletries, and snacks, mostly. However, it's not without flaws, other than the constant queues since its launch. Accidental shoplifts have been tweeted about and there are still a lot of unanswered questions. What if you pick up more items than you have money in your Amazon Go account? What if your phone gets stolen, can the thief go on a shopping spree with it? What about light-fingered children who 'accidentally' pick things up while their parent's shop?

These are all valid questions, but the only question I really cared about was 'how does Amazon intend to use this store to take over the world?'. Amazon doesn't do half measures; they enter a market and they disrupt it. A quaint little store that allows you to buy snacks without having to scan or queue is pretty novel, but seems like an inefficient way to take over the supermarket industry, right?

Well, to get an idea of what Amazon might be up to, we have to consider another one Amazons products - Amazon Web Services.

This business-focused arm of Amazon is a cloud computing service they launched in May of 2006. Initially created to help Amazon host and organize its own site, they soon realized they could also license the technology to other companies. Now, with clients like Netflix and NASA, Amazon Web Services is the most profitable branch of the company, bringing in $1 billion in operating profits in 2017. It is now 10 times the size of their next 14 competitors, combined!

Once you take this strategy into consideration, Amazon Go and the way it has been marketed takes on a much more insidious shade.

Let us consider how Amazon even made us aware of their new store. They released the first and only Amazon Go advert over a year before the shop launched. In it, we witness customers basically living the future; scanning their phones on the way in, picking up items, and walking straight out.

They dropped this advert the way Beyonce drops a new album; out of the blue with no warning, no press release...they even disabled comments on the Youtube video. They just let us all internalize the video for over a year and have our imaginations run wild.

Unbeknownst to many, 2 years before they released this video, Amazon filed for 2 patents. While these patents were supposedly about their warehouse, they happened to include most of the technology we now see in the new Amazon GO store.

The first patent, titled 'Detecting item interaction and movement' is described in its abstract section as a 'system for the tracking removal or placement of items at the inventory locations'. This is exactly how the store tracks what people pick up in the store. The second patent's abstract delves into the other half of the process, 'picked items are automatically transitioned to the user'. Simply put, this covers how Amazon automatically charges you for your purchases.

This is how it all comes together.

First, Amazon files patents for 2 advanced pieces of technology. It later releases a video detailing a new, frictionless shopping experience, which we all begin to internalize. This begins to alter our core expectations for what is to be expected in a retail store, something which hasn't changed much in decades. They then release a small store to prove the tech, which obviously gets a lot of public attention.

After a while, as they carry on ironing out the bugs, they open up more and more stores across the country. They then start to integrate the tech into their other big retail asset, Whole Foods. This helps further normalize the tech and alters our expectations of what we feel we deserve when we go shopping. While this is happening, Amazon is doing what it does best - gathering precious customer data. It begins to accumulate invaluable information on shopper habits, fine-tuning as it goes along. This is the kind of data that any retail store would find extremely valuable.

Eventually, you are left with a population that wants every shopping experience to be as frictionless as when they visit Amazon Go or Whole Foods. You also have retailers who want access to the technology, not just to placate their customers, but to gain access to all that juicy, targeted customer data.

Most retailers won't be able to afford the infrastructure needed to make their version of an Amazon Go store. But why would they even want to when Amazon will happily license the technology to them for a much more reasonable fee?

There is no way this stops at supermarkets. Every single brick and mortar store will be able to benefit from this tech, and after a while, the more retailers that adopt it, the more we will come to expect this convenience from every store we walk into.

The global retail market today is worth $25 trillion. With the power and influence the company now has, it is fair to say Amazon Go is but the first stepping stone towards Jeff Bezos' domination over the entire retail universe. 

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