The biggest e-commerce company on the planet recently entered the brick-and-mortar shopping game with Amazon Go and has been making industry waves for months.
The technology behind Amazon Go is shrouded in buzzwords. In short, the small-format grocery store is supposed to automatically know what a shopper has taken from shelves, and keep track of them in a virtual cart. Once the customer finishes shopping, they can simply leave the store. Amazon charges their Amazon account and sends a digital receipt.
No checkout? No long lines? It’s easy to see why Amazon has pursued this concept. But let’s consider some of the challenges.
We can safely assume that Amazon will nail the tech — that’s what they do. But how does the company plan to attract brick-and-mortar shoppers away from stores they’ve grown comfortable with? Here are three obstacles standing in Amazon Go’s way to becoming the revolutionary brick-and-mortar experience it’s been hyped up to be.
Robots replacing humans
Amazon Go’s transition into the grocery and convenience store space — an industry that averages notoriously low profit margins between just 1 and 3% — may be more of an experimental outing than a long-term play. Experts believe Go may be a pilot program for the e-commerce giant to grow its mobile payment strategy or perfect certain technologies for Amazon Web Services. For Amazon Go to succeed, however, it will need to lean heavily on automation, which has the potential of being more aggravation than it is worth.
A lack of on-site associates can become an infrastructure nightmare since few will be present to answer shoppers’ questions. Knowledgeable workers make for a more personalized, and successful, shopping experience. According to Salesfloor, 84% of shoppers seek help or recommendations from sales associates. Taking human interaction out of stores could really harm one of the most appealing parts of in-store shopping. So, while eliminating the checkout line and all its potential problems is appealing to customers, taking associates out of the equation can result in a less enjoyable experience for the shopper.
Amazon may face challenges finding vendors who are onboard with the new model. They will need to outfit inventory with radio-frequency identification (RFID) tags to support a cashier-less business model, an expensive undertaking for both Amazon and any potential vendors. Vendors may be hesitant to take on the higher costs for custom packaging, as well as tagging their stock with RFID chips (for which they’ll likely be partially accountable). This is especially the case since the Amazon Go concept is still in its infancy and doesn’t yet offer the economies of scale to make such investments in RFID worthwhile. According to a study by Kurt Salmon, 25% of retailers who haven’t implemented RFID said cost was one of the biggest reasons why, while 75% say they’re waiting for broader industry adoption.
Updating security measures
Assuming both shoppers and vendors are on board with this “store of the future,” Amazon Go still has a serious issue that has many experts genuinely concerned: security. Hackers and thieves are always coming up with inventive ways to steal product. PC Magazine highlights several ways somebody could steal from Amazon Go, noting that it wouldn’t be hard for a shopper to bring in a pre-programmed RFID tag to put over an existing tag as a signal blocker. Thieves could also line their bags with Faraday cage material to block incoming frequencies, thus rendering the RFID concept useless. Lastly, it's wholly possible customers could use stolen credentials and charge purchases to other people’s accounts without being detected.
Amazon Go’s overall security may also be affected by its desire to remove physical employees from the stores. It will need to develop and maintain a high-tech security system to catch potential shoplifters, forgers and cyberthieves — a task that will take time and money.
As with any high-profile innovation, there is plenty of buzz surrounding the first Amazon Go store opening to the public. But with significant obstacles ahead of the retailer, only time will tell how successful Amazon’s new initiative will be.