Amazon dabbles tech that could crush retail
LAST Sunday in Palm Springs, California, Jeffrey Bezos, the chief executive of Amazon, climbed into the cockpit of a robot and began flailing his arms, causing the robot’s enormous appendages to mimic his movements.
“Why do I feel so much like Sigourney Weaver?” Bezos said, referring to the actress who wore a mechanical suit in a battle in the 1986 movie Aliens.
The entrepreneurs and academics, attending an Amazon conference on robotics and artificial intelligence, chuckled. Later, Bezos posted a photo on Twitter of himself in the suit with a more menacing air, the robot’s arms raised as if about to deliver a bonecrushing bear hug.
For years, retailers have been haunted by the thought of Amazon using its technological prowess to squeeze them into powder. That battle has mostly played out on Amazon’s home turf, the world of online shopping.
Now the fight is coming directly to retailers around the globe, where Amazon is building a fleet of physical stores. And while most of the attention has been focused on Amazon’s grocery store dreams, the company has a more ambitious collection of experiments.
If those experiments work they could have a profound influence on how other stores operate. Over time, they could also introduce new forms of automation, putting traditional retail jobs in jeopardy.
The company is exploring the idea of creating stores to sell furniture and home appliances – the kinds of products that shoppers are reluctant to buy over the internet sight unseen, said one of several people with knowledge of the discussions who spoke on condition of anonymity because the plans were confidential. The stores would serve as showcases where people could view the items in person.
Amazon is also kicking around an electronics-store concept similar to Apple’s retail emporiums, according to two of the people familiar with the discussions. These shops would have a heavy emphasis on Amazon devices and services such as the company’s Echo smart home speaker and Prime Video streaming service.
And in groceries the company has opened a convenience store that does not need cashiers, and it is close to opening two stores where drivers can qui c k l y pick up groceries without leaving their c ar s, al l i n Seattle.
O v e r s e a s , A ma z o n i s quietly targeting India for n e w b r i c k - a n d - m o r t a r grocery stores. It is a vast market, and one still largely dominated by traditional street bazaars. Amazon’s internal code name for its India grocery ambitions: Project Everest.
Since the late 1990s, pundits have asked when Amazon – which Bezos founded on the premise people would rather shop from the comfort of their screens – would start building stores. But executives saw plenty of opportunities in online retail and new ways to reach people, from creating digital book-selling devices like Kindle to building up the Prime membership service for getting faster deliveries.
In 2012, Bezos told an interviewer that shoppers were already well served by existing retailers and that Amazon had no interest in a me-too effort.
“We want to do something uniquely Amazon,” he said. “If we can find that idea, and we haven’t found it yet, but if we can find that idea, we would love to open physical stores.”
Joe Thompson, a former general manager in Amazon’s retail business, sees physical retail as key to Bezos’ out- size ambitions for the company. “I can’t help but feel that, in Bezos’ mind, he wants to be the first trillion-dollar valuation company,” said Thompson, who is now an executive at BuildDirect, an online home improvement store. To do that, he said, Amazon would have to “crack” a couple of “completely underpenetrated markets online”.
Amazon’s current market value is bobbing around $400 billion.
In the coming weeks, Amazon is expected to open its first two grocery pickup stores, in Seattle’s Ballard and SoDo neighbourhoods, which will allow customers to order food online and schedule brief windows for picking them up in person. Recently, as cars ripped by, workers hung a sign on the exterior of one of the stores – to be called AmazonFresh Pickup, according to city permit documents obtained by GeekWire – before quickly covering it up.
A growing number of established grocery retailers are experimenting with this “click and collect” approach to shopping, i n c l u d i n g Wa l - M a r t , Kroger and o t h e r s . According to one person br iefed on A m a z o n ’ s p l a ns, t h e company has been developing technology f or a u t o m a t i - cally detecting when a c u s t o m e r pulls into the parking lot so orders can be brought to them more quickly.
A few kilometres away from its other Seattle stores, on the ground floor of one of its office towers in the city, the company is testing Amazon Go, a convenience store concept stocked with beverages, sandwiches and prepared meals, which are put together by chefs in a kitchen that is visible from the street.
The retail industry has been captivated by Amazon Go’s technology since the company unveiled the store late last year. The store uses a combination of sensors and artificial intelligence to automatically detect the food items shoppers remove from shelves, so they can leave the store without visiting a cashier – the way customers do when they bolt from an Uber.
“Amazon is wonderful at frictionless commerce,” said Timothy Laseter, a professor at the University of Virginia’s Darden School of Business.
There have been glitches with the technology that Amazon engineers continue to work on, according to a person familiar with the operations. For now, only Amazon employees are allowed to use the store. Amazon previously said it would open Amazon Go to the public in early 2017.
If Amazon is successful at automating the checkout process, the longterm implications for employment could be far-reaching because other retailers would probably do everything possible to copy it. More than 3.4 million people are employed as cashiers in the US, according to the Bureau of Labor Statistics.
Amazon Go technologies like artificial intelligence are “Latin for ‘fire cashiers,’” said Scott Galloway, a professor of marketing at New York University’s Leonard N Stern School of Business.
“I’ve probably been in 30 boardrooms of retailers in the past year,” Galloway said. “I would say the number 1 topic of conversation is Amazon.”
But he sees the slow pace of Amazon’s rollout of stores is a sign that it has not figured out physical retail yet.
“What appears to be clear is they haven’t yet zeroed in on a format they’re willing to massively scale,” he said. “This is a company that the moment it figures out something that works, it puts nuclear energy behind it.”