Yes or No to Amazon Go?
So Amazon announced the concept for their new physical grocery stores which are expected to open up early next year. They are supposedly using their machine-learning technology to help differentiate themselves from other supermarkets:
Shoppers will use an app, also called Amazon Go, to automatically add the products they plan to buy to a digital shopping cart; they can then walk out of the building without waiting in a checkout line.
The stores will sell ready-made food, staples like bread and milk, and other grocery products. Amazon says its stores are about 1,800 square feet, so they are relatively small compared with big supermarkets.
A checkout-free grocery store sounds pretty cool, but there seems to be some room for error. I wonder how they'll combat things like theft, glitches, peoples phones dying, etc. I'll definitely have to try it out though once there's one near me. What are your guys first impressions on Amazon Go?
Amazon's machine learning systems are pretty sophisticated, I wouldn't underestimate them. I would say that their system probably will minimize theft vs traditional supermarkets. It's a fantastic application of computer vision. Amazon has the $$ to work out these glitches though as they have always done. That's why this would be such a difficult space for even the best AI startup to break into. Need the money for brick and mortar as well as the underlying technology. To me though this should be a pure licensing play. They should just license the technology to companies like walmart and have them beta test it in stores.
At the same time though, it does seem like a strange investment given that Amazon's long term strategy is to deliver everything to your doorstep. Perhaps their analysts believe that people will always want to go into actual supermarkets sometimes, which I could be convinced of.
This is the kind of machine learning system that is quite difficult to alpha test. That's why they need the stores to be pretty small so that they can train these systems to be able to deal with things like theft and other glitches. Once they have resolved a lot of those problems, I imagine they will start licensing the tech to brick and mortar retailers that have larger stores.
Overall, I think the technology is viable, Amazon has the $ to beta test the stores to resolve the vast majority of potential problems, and that big players like walmart and costco will be very interested in licensing Amazon's technology in the future.
Amazon won't have to rely solely on third party shipping if they have retail locations. At that point they can ship direct from Amazon warehouses to stores on Amazon trucks, local deliveries can be done through Amazon couriers like Amazon Now. If successful each location can begin serving as a fulfillment center and a retail store.
Then again these are the guys that made the Amazon Fire smartphone...
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Amazon is going to probe as many different things as possible until they figure which one could potentially be the next... well... Amazon. Stay tuned for more of this.
I think we should wait before knowing completely about their service quality and process.
I appreciate this initiative. Amazon will be rock if they can implement this project properly.
I'd venture that they might be the best suited company in retail to implement such initiatives.
This is an excellent example of increasing economic efficiency. If this innovative idea is successfully expanded and executed, humanity should applaud Jeff Bezos and Amazon for their extraordinary contribution.
100% the future of all shopping. In 10-20 years this will be every store, if not sooner.
if the technology was really all that great they'd just apply a brain scanner to see what I was going to buy and then ship it to me.
amateurs.
but yeah, this will be a good initiative, I've never invested in AMZN and probably never will, but one thing about Bezos is his commitment to reinvestment in his business and his willingness to innovate.
Bad move imo. With things such as Google Express, the future of grocery shopping is moving towards allowing others to shop for you and bring it straight to your doorstep. Consumers like this because they won't physically have to go to the store and it makes life much easier for them. By opening physical stores is a step backward for Amazon.
The future of shopping will be companies shopping for consumers and delivering the groceries to their houses for a minimal premium. This is not innovation at all.
I have mixed feelings about this. At the end of the day, this is still a grocery store. A business that has historically had crappy economics. Could this make that business marginally better? Yes. Is it a potentially high return area to invest capital? I would think no, but I would also think that Amazon is thinking several steps ahead rather than just one or two. So maybe I am missing the broader goal. Is this really that big of a step forward? I don't think so. Like I said, I think it's marginally better.
Now some things could likely improve from the business standpoint. I worked in a typical supermarket in high school and I can tell you there are a couple big things that are a money drain for these companies. In no particular order:
1) Employees, specifically unionized employees. All of the employees, expect a few managers, were unionized at my store (this was true company-wide). The union mentality encouraged employees to do the bare minimum in order to not get fired, leading to a very inefficient store. We needed way more people than we should have and paid some people much more than they would have gotten otherwise. By going with a smaller format store and eliminating the front end staff (checkers, baggers, and customer service), Amazon Go could avoid a big part of the cost of the traditional store. However, you still need people to be available for customers, to stock the shelves, to potentially go out into the parking lot and get shopping carts, etc. So those costs don't go to zero.
2) A typical supermarket is stocking tens of thousands of different items at any given time. This is a HUGE waste and leads to massive amounts of money that get tied up in working capital. For example, part of the time at the store I worked at I was in the produce department. We literally had a dozen different options of bagged carrots. Why the hell do you need that many??? No one buys more than one or two options. Grocery stores do this to get discounts from suppliers by buying volume, then selling as much volume as possible to customers. (High vol, low margin.) Stores also often feel they need to have every thing under the sun so that a customer can get everything in one trip. The store wants to avoid losing a customer because that customer can't get everything at said store when they can get it at xyz other store. This is massively inefficient and leads to a bunch of written-down inventory that is lost to spoilage. (Not too mention the utility bills, maintenance, and repair costs of a large store are quite high). A smaller concept, like Amazon Go, is basically using a Dollar General or Aldi type framework where you concentrate on fewer items and achieve less inventory loss, use less working capital, and get greater bargaining power with your suppliers on the fewer numbers of items you buy in large quantity.
So in short, maybe Amazon could pull off higher return economics than a typical grocery store. I think a big element of this will be using the warehouses. Economies of scale are often found regionally, but not necessarily nationally or internationally. Taking the Dollar General example again, DG benefits greatly from controlling certain regions it operates in via spreading its regional fixed costs (stores and distribution centers) across a larger potential sales base. This doesn't work everywhere though. I think Amazon could encounter a similar situation but may be able to benefit across a larger geography by using its mega-warehouses.
Time will tell though. There are benefits, but this does not strike me as all that interesting.
Humanity's economic improvements have always been marginal. What people either forget or do not understand is that in (free-market) economics (substantive) marginal improvements are what is valuable. This basic economic fact has been evident at anytime throughout history. (Substantive) Marginal improvements are all that is required for a new, innovative entity to displace old, incumbent entities, and to generate extreme wealth in doing so. Recent examples of this would be Myspace and Facebook, Netflix and rental stores, Amazon and brick-and-mortar retail stores, Apple VS other phone-makers (removed Tesla and incumbent automakers, and SpaceX and NASA from the list, since it would be a travesty to call these innovations 'marginal').
You seem to be drawing a distinction between marginal improvements and what you consider to be "substantive" marginal improvements. Humanity's economic improvements have always been marginal? Then why are all your examples technological? Technological improvement and economic improvement are not the same thing. Is the world economically better off because Facebook replaced Myspace? If we're talking about technological improvements then your examples of Netflix and Amazon seem to contradict the implication of your statement that Amazon Go is a substantive marginal economic improvement. Netflix didn't wipe out Blockbuster because they created stores with no employees at the front where you could just grab a movie and walk out. They wiped out Blockbuster by eliminating the need for the rental store entirely. Amazon is capturing more and more of the U.S. retail share not by creating retail stores with no employees at the front, but rather by eliminating the need to go to said stores in the first place. A grocery store with no employees at the front is still a grocery store. (If it looks like a duck and quacks like a duck, then it's probably a duck.) What would be a real improvement, as others mentioned above, is if Amazon could quickly deliver all of the fresh groceries, and other household items (via PrimePantry, for example), you need right to your door eliminating the need to go to a grocery store at all. That's substantive progress.
Lol Tesla
You guys missed the best part though. Amazon's cutting edge computer vision tehnology makes the whole grocery store experience better, not just checking out. So for instance, let's say you're on the hunt for some peanut butter, when you suddently realize you have to take a leak. All you'll have to do then is lower your underpants a little and let it out. The computer vision will detect your stream and cause a little hole to open up on the floor, to take in all the urine. Also if you get a chubby, the computer vision will detect it and send over some sex robots to your aisle
Good thing too because clean urine costs good money.
i'll buy pantry items and some select dry goods online but anything fresh I want to personally inspect and select each item and will NEVER buy them online. As a result, I think they need a hybrid: physical presence with advanced online capabilities. If this was a startup asking for cash I would say no thanks unless they refine their model (interestingly Amazon is testing a brick and mortar version which I think could be great).
The New Amazon GO Store Is Now Open (Originally Posted: 01/23/2018)
According to this article in the WSJ, Amazon.com Inc.’s cashierless convenience store opened to the public yesterday. The new Amazon Go store uses computer vision and machine-learning algorithms to track shoppers and charge them for what they select, thereby eliminating checkout counters. Essentially, you go inside the store and leave with the items you want without going through the checkout counter. Once you leave the store, your Amazon account will be charged.
What Does This Mean For Whole Foods?
What Are Competitors Doing?
Amazon is using a lot of advanced technology to make our shopping experience quicker and easier, but I do appreciate the personal one on one services stores in Paris gives you. What do you think monkeys? Is Amazon going to be the future of retail, or is this just a display of technical prowess? I did notice the similarity between the names AlphaGo and AmazonGo, both are projects that display technical prowess than practical use today.
Passionate Investor, way too quiet in here. What about these resources:
If we're lucky, the following pros may have something to say: IAMB4TMAN forsythben @RedRover521"
If those topics were completely useless, don't blame me, blame my programmers...
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