Since its founding in 1994, Amazon has enjoyed infamy as the ultimate disruptor of traditional retail. However, in January 2018, the e-commerce giant took its first steps toward reinventing the brick-and-mortar shopping experience, launching Amazon Go, a physical “store of the future,” to consumers in Seattle.
As the largest e-commerce player in the U.S., Amazon has leveraged its scale and vast accumulation of data to identify user behaviors and engage in constant optimization, creating a nearly frictionless shopping experience. Amazon Go approximates a physical manifestation of essentially the same concept: sensors in the store recognize a customer upon entering the door, log every item they put in their “virtual basket” (and accounts for those they put back on the shelf), and automatically charge their Amazon Prime account when they walk out, entirely eliminating the need for checkout lines or cashiers. 
The stores leverage what Amazon has dubbed “Just Walk Out” technology: with the help of computer vision, sensor fusion, and machine learning, customers are able to make purchases without a cashier.  Figures 1 and 2 demonstrate how the technology aggregates data from multiple sensors to ensure that it accurately and reliably tracks a specific user’s movements. Sensors also leverage a customer’s past purchase data to confirm that they are correctly identifying the items picked. For example, if the inventory management system is unable to discern whether the customer picked a bottle of ketchup or a bottle of mustard, it will reference that user’s purchase history to determine which of the two is more probable.  Similarly, the system will consider the contents of the user’s existing basket to determine likely product adjacencies. 
Amazon’s use of deep learning algorithms to develop its “Just Walk Out” technology has a number of implications for both product development and process improvement. At a high-level, Amazon is pursuing an omnichannel strategy and developing an entirely new type of shopping experience by reproducing its online competitive advantage – the ability to accumulate and exploit data – in brick-and-mortar retail. As a result, the company has been able to optimize productivity while minimizing traditional operating costs. After conducting an analysis of customer activity at Amazon Go’s flagship store over several days, data analytics firm Brick Meets Click estimates that the store generates $2,700 in annual sales per square foot of selling space, with an average of 50 inventory turns per year. This extremely high sales per square foot metric, matched only by Apple and a few other specialty retailers, demonstrates just how effectively Amazon has maximized customer throughput and sales by removing traditional retail’s most pervasive bottleneck: the checkout line.  All the while, Amazon has virtually eliminated the cost of checkout personnel.
In the short term, Amazon plans to build as many as 3,000 cashier-less stores by 2021, targeting dense urban metros with young professional populations. CEO Jeff Bezos has reportedly expressed interest in targeting the fast casual and quick service restaurant space, where long lines at highly-trafficked meal times abound.  Many predict that Amazon will also couple the “Just Walk Out” technology used in its own stores with its high-profile acquisition of Whole Foods, potentially leveraging the learnings from Amazon Go to optimize the grocer’s 450+ retail outlets.  Moreover, the technology has significant long-term implications on Amazon’s ability to accelerate data capture and more accurately predict user demand, which could ultimately increase the overall efficiency of its supply chain and distribution across all of its channels. 
However, despite the operational efficiencies achieved by eliminating checkout lines and cashiers, the cost of opening a single Amazon Go location remains extremely high. Bloomberg reports that the Seattle flagship required a $1 million outlay in hardware alone.  In addition, the potential impact on the 3.5 million cashiers employed in the U.S. remains an open question.  One key consideration for Amazon is how it can explore job creation in the sector by focusing on new skill development.
The advent of Amazon’s cashier-less stores also raises a fundamental question about the offline shopping experience: are consumers really willing to sacrifice face-to-face interaction in brick-and-mortar retail? In a survey of 1,000 U.S. consumers, 30% of Baby Boomers expressed unwillingness to try Amazon Go, and 20% of respondents felt that they would be “losing out on something” by foregoing a traditional store. Similarly, when asked to identify the biggest deterrent for shopping at Amazon Go, 24% cited the lack of social interaction.  As Amazon continues to iterate on its store technology, it should also consider how it can preserve the more social aspects of traditional retail.
- Do you think that the cost of opening an Amazon Go store will prove prohibitive for scaling the technology?
- Do you think that “Just Walk Out” technology is truly the way of the future? In 10 to 20 years, will all stores operate without cashiers?
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 Jason Del Rey, “We May Have Just Uncovered Amazon’s Vision for a New Kind of Retail Store,” Recode, March 30, 2015, https://www.recode.net/2015/3/30/11560904/we-may-have-just-uncovered-amazons-vision-for-a-new-kind-of-retail, accessed November 2018.
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 “AmazonGo’s retail productivity: at least $2700/sq ft selling area & 50 inventory turns/year,” Brick Meets Click, October 29, 2018, https://www.brickmeetsclick.com/amazongo-s-retail-productivity–at-least–2700-sq-ft-selling-area—50-inventory-turns-year, accessed November 2018.
 Nick Wingfield, “Inside Amazon Go, a Store of the Future,” New York Times, January 21, 2018, https://www.nytimes.com/2018/01/21/technology/inside-amazon-go-a-store-of-the-future.html, accessed November 2018.
 Spencer Soper, “Amazon Will Consider Opening Up to 3,000 Cashierless Stores by 2021,” Bloomberg, September 19, 2018, https://www.bloomberg.com/news/articles/2018-09-19/amazon-is-said-to-plan-up-to-3-000-cashierless-stores-by-2021, accessed November 2018.
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 Soper, “Amazon Will Consider Opening Up to 3,000 Cashierless Stores by 2021.”
 Alex Polacco and Kayla Backes, “The Amazon Go Concept: Implications, Applications, and Sustainability,” Journal of Business and Management, 24, no. 1 (March 2018): 79-92, Google Scholar, accessed November 2018.
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