- Cashierless shopping is the next big thing in retail
- Amazon leads in this technology
- The opportunity is early but the market is massive
- Amazon could dominate the market through liscencing
- The trend is early but bears watching as the next big thing for the company
You just need a few groceries for dinner. You are already late but you run into the store hoping to be in and out. You grab your items head to the cashier line and find five overflowing carts in front of you crawling at the snails pace. Your choice is to abandon your food or grit your teeth and curse the store for being so grossly understaffed. Either way the customer experience is horrid and yet there is no one reading this article who hasn’t been in this situation multiple times.
There is no job in America that is more ripe for automation than that of a cashier. It is literally a negative value job as its only purpose is to delay the transactional process. (Bagging is a separate activity that could easily remain in place to help customers with large volume orders.)
Contactless Retail is the Future
Cashiering of course is a nineteenth century activity designed to record transactions and accept payment – all of which can be easily automated in today’s high tech world.
No one has invested more money and come up with more elegant solutions to solve this problem than Amazon #AMZN – a high technology company masquerading as the world’s largest on-line retailer. Although many consumers view Amazon as a retailer of almost any item on earth, retailing is practically a loss leader for the company. The company makes a modest $10 billion in profits off a revenue base of more than $300 Billion collecting a third of a penny for every dollar in sales. It’s real profits are derived from AWS, advertising and unique hardware such as Alexa.
GO Stores are the Stores of Tomorrow
Amazon has been a stealth software and hardware company for more than a decade and its research and design work is about to pay off big once again. The company is at the forefront of developing truly contactless brick and mortar retail which it first demonstrated with its Amazon Go Stores.
The Go stores are the first truly frictionless retail concept that requires no stop and pay process to shop. The technology is a combination of hardware and software bundle that monitors the full shopping experience and accurately tallies the bill and provides a digital receipt for the user.
The business proposition of the concept is crystal clear. Not only does it eliminate the bottlenecks in retail but it frees up the staff for restocking, bagging and customer services duties resulting in a much richer, more valuable shopping experience.
Biometric Authentication Means no Need for ID
Amazon is just starting to license the technology with the first deal to be done with Hudson Newstands which are ubiquitous at all major airports in the US. Hudson which caters to a digitally literate, time sensitive crowd is a natural first choice and there is little doubt that the test pilot will succeed. But Amazon is not resting on its laurels. The company is gone beyond its smartphone app to use palm reading technology which it considers to be more secure and at the same time easier to use as it requires no phone, wallet or any form of identification from the customer in order to shop at the store.
Although some customers will be reluctant to “register” their palm prints due to privacy concerns, the fact of the matter is that modern technology already tracks not only every transaction but every step that we make. In our modern economy customers are always willing to give up privacy in order to gain convenience and with contact free frictionless retail Amazon is just taking the next natural step in the shopping experience.
Adoption May Take Time
Although the company’s proof of concept appears to be solid, with Go stores running smoothly for over a year, like with all high technology the adoption curve will take time. Not only is this a capital intensive proposition for retailers, it is also a major cultural shift. After centuries of cashier based shopping consumer tastes especially amongst the older cohort may be slow to change. Nevertheless the experience is so simple and intuitive – authenticate, walk in, shop and leave – that it is likely to be adapted quickly by consumers and more importantly once it becomes commonplace the stores that do not possess this system will likely lose market share to those that do.
For Amazon cashierless shopping presents yet another long term income opportunity as the company will no doubt try to license the technology the world over. For now the Amazon Go project remains a curiosity, but Amazon is famous for endless iterations that then suddenly take off as the market quickly adapts its technology.
Amazon Well Positioned for Next Change in Retail
The one barrier to universal adoption is the need for authentication. This will be an especially sticky problem for lower end consumers who may not have digital profiles. It may also be a political lighting rod for those municipalities which deem such service inherently discriminatory. That’s why stores initially may not have a choice but run a hybrid model that would still maintain some cashier capacity on premises. Ultimately however, as governments move towards digital cash the profile issue should disappear and leave Amazon well positioned to benefit from the next big change in retail habits.