Just over five years ago Amazon started working on ground-breaking technology. It’s project: Amazon Go. It’s purpose: to simplify and automate the shopping experience. It’s implications: Amazon Go’s automatic shopping experience raises questions about the data it collects and how that data is used in dynamic and personalized pricing.
What is Amazon Go?
So what exactly is Amazon Go and how does it make our lives easier?
Amazon Go is a brick and mortar convenience store-style store. Well, when you first arrive at the store it might look like a train station because you walk through turnstiles that require “token entry” (more on this later). Once you enter, it looks like a glorified 7-11. There are ready-to-go meals, snacks, meal kits, staples like bread and milk, and you can even buy booze! But here’s the kicker: there are no cash registers. There is no check out line. There is no physical check out of any kind.
Here’s how the store works: you enter the store through the turnstiles using the Amazon Go app on your smartphone. You walk through the store and take what you want to take. Then you walk out. Yup, you just walk out of the store. Within a few minutes, you will receive a receipt on your smartphone billing you for what you walked out with.
How is this all possible?
Amazon Go Technology
Amazon Go employs what it calls computer vision and machine learning to track what we take out of its store. There is a complex setup of cameras in the store that watch and monitor your activity. The system can see when you’ve returned an item to a shelf and even monitors whether a product was consumed before leaving the store (and charges you for it!).
Amazon is pretty hush hush when it comes to elaborating on its technology, but we can confidently assume that cameras using a complex web of recognition features and motion sensors are at play, because the product labels are not imbedded with fancy trackers. They have perfected the technology to simply see what you’ve taken and charge you for it without having to interact with a human, or better yet, wait in any checkout lines.
Of course, you will see store employees restocking shelves and interacting with customers, and there is someone checking ID in the liquor section. But if you really need to grab and go, there’s no better way than with the elimination of check out stands.
Amazon Go Locations
When Amazon first started to test this concept, it did so with a location at its Seattle campus and limited use to Amazon employees. After years of refining and adjusting the technology required to operate this store, it finally opened its doors to the public about a month ago.
The only current Amazon Go store is located at 2131 7th Ave in Seattle. It is open weekdays from 7am-9pm. It is 1800 square feet of convenience-store-like offerings.
There are probably plans to open similar stores in the future. You could see this technology used in Amazon’s newly acquired Whole Foods stores. Maybe they’ll even sell the technology to grocery stores or retail stores. Amazon has yet to unveil its future plans of Amazon Go.
I hate when I go into the store for just a couple of items, and it takes me longer to check out anything else! Sometimes it’s because there aren’t enough registers open. (Don’t you hate that? There are plenty of registers and if the store would just have more cashiers available they could shorten the wait!) Sometimes the person in front of you decides on the spot to apply for a loyalty card or even worse, a store credit card. Those applications take FOREVER and the cashiers let them apply right there during checkout! Or, to the detriment of the people in line and the cashier, a customer decides to use up all their coins to make a payment. Who even carries coins anymore? Whatever the case, we’ve all had unpleasant check out experiences.
Amazon Go aims to eliminate the annoying checkout line experiences that consumes have. So far, it’s doing a good job. But as it eliminates this, it raises questions in the way this technology uses information gathered. It’s not just used to eliminate checkout lines. Have you heard of dynamic and personalized pricing?
We see dynamic pricing when we shop on Amazon. Dynamic pricing is a practice where businesses adjust prices in real time based on factors such as supply and demand. It is not uncommon for shoppers to add an item to their Amazon list, only to return a few hours later and see that same item listed at a different price. Here’s what happened with a storage basket I was watching:
The price could be higher or lower than before. And it could continue to change that day, and certainly will change over the next few days. Pricing changes take into account time, market conditions, sales margins, etc. It might look at competitor prices and inventory, too.
Until recently, dynamic pricing was primarily found online, where it is easy to modify prices and take into account real-time consumer data and market conditions. But now with the emergence of automated consumer shopping and better tracking of purchasing experiences off line, businesses are able to collect more data and react in real-time. Those cameras following us around in Amazon Go sensing all that we touch, look at, pick up, put back, and ultimately purchase, can process that information. It can be logged into complex algorithms that will then change our purchase prices.
Dynamic pricing can be both good and bad, for both businesses and consumers.
Dynamic pricing is slowly being taken over by personalized pricing. In personalized pricing, businesses are trying to learn what a customer is willing to pay for a particular item. To explain this, picture a car dealership.
Each serious buyer comes in with a bottom line price they’re willing to pay for a car. Of course, they’d like to get a deal. The car salesman also has his bottom line price he must sell the car for. Of course, he’d like to get more for the car. The two parties go back and forth and hopefully reach a price both sides are happy with. The car salesman might take into account what the customer is wearing, when they’re coming in, what they currently drive, where they live and what they do for a living when coming up with his pricing strategy. This, in its simplest form, is personalized pricing.
Personalized pricing is scary. Consumers worry about the way their personal information is being used. Privacy is a concern. Fairness is another concern. When formulas and algorithms used to determine prices are constantly changed, this could turn consumers off to a product or business. While businesses are keen to use it to increase revenue, they are aware of the possible negative side effects it would bring with consumers. Your best bet is to make sure that you are an informed consumer and that you shop around.
Keep This in Mind
Dynamic pricing and personalized pricing are going to continue to evolve. Naturally, because businesses don’t want to lose you as a customer, they will gravitate towards policies and practices that leave you satisfied. But it’s important to stay current with how they are going about their business.
Keep in mind that in an effort to make your shopping experience more convenient, businesses will have to develop technology to learn more about you. Shortening and eliminating checkout lines comes at a cost. Is the cost worth it? I think it is if it’s used for my benefit, right? I mean walking in and out of Amazon Go as if it’s my kitchen pantry is pretty ideal.
Automation at Restaurants
The idea of cutting out checkout lines and automating purchase processes is not new. Serverless restaurants and order automation has been prevalent in Japan for decades. When I lived there over ten years ago it was not uncommon to walk into a restaurant, order and pay at a machine, then either go to a counter or have your food delivered to you. It was actually pretty fun.
Some people like the interaction with servers, asking their opinions about different dishes or learning about what the most popular dishes are. But you can program a lot of that information into a machine. Plus, sometimes it’s easier to read and display nutrition facts and additional high resolution images on a screen. (And best of all, you don’t have to tip a machine!)
Eating at a serverless restaurant will no doubt speed up service. What’s more, it puts the customer in better control of the speed of service. You order and pay when you want, without having to flag down a server. So in essence, you’re cutting out another wait in another “line”!
Automation and Your Coffee Fix
How long do you spend standing in line at Starbucks in the morning? Even with the mobile app, you might find yourself waiting longer than you’d like for your specialized drink of choice. Henry Hu is the founder of Café X, currently a kiosk coffee vendor found in San Francisco and Hong Kong. The kiosk is home to a robotic arm that is programmed to make your specialized drink while you watch.
You order your drink and pay at a touchscreen pad at the kiosk, or on a mobile app. The robot can make several drinks at once, each drink takes about 20 seconds. Then you use a pin number to open the hatch that has your drink. Hu has streamlined the coffee ordering process and in affect, lowered the price as well. Prices for coffee start at $2.25 at Café X. The speed and efficiency of this business model dramatically reduces wait times and limits your time standing in line.
Amazon Go, Café X, and serverless restaurants are raising the bar when it comes to convenience for its customers, particularly concerning wait times. After reading this, if you’re a server at a restaurant or cashier at a grocery store, you might worry about your job security. Well the technology isn’t ready to scale right now. Even if this is the future of shopping and consumption of goods, it’s a while away. Don’t reach for the classifieds just yet.
Now if only they could do something about those lines at Disneyland…