The idea behind this is that automation reduces the money that the retailer must spend on human shop assistants, and this in turn reduces the overall operational costs of the store. Further, the high level of automation reduces waste, error and theft from the store. The risk of armed robberies is reduced to virtually zero as there is no cash in the store at any given time, as such there are no costs associated with recording, securing or moving cash. This appeal towards store safety have suggested that there are plans for another 3000 similar shops before 2021 (by 2024 there are only a total of 42 stores in the USA and the UK). Hot on their heels are competitors like Walmart who are working with Microsoft to devise their own system of checkout free shopping. Amid this positive outlook, many have expressed doubt as to the ability of Amazon Go stores to really disrupt the traditional supermarket. With approximately 1000 products in each Amazon Go store as it stands, it is hard to see how the technology can be scaled up to cope with the 1000s of products that large supermarkets have in their stores. Supermarkets typically have 80,000300,000 SKUs (stock-keeping unit is an identification code depicted as a machine-readable bar code for a store to keep up with stock demand, tackle loss prevention, and ultimately support its sales) in any given location, so the capacity of Amazon Go's technology to manage such a large inventory is in doubt. The technology Amazon Go stores use to monitor purchasing relies on bulky cameras, currently located in the ceilings of Amazon Go stores. These provide a 3-dimensional perspective and a picture of each item is taken before the Al system identifies it and applies the correct charge. However, this system may find it difficult to tell nearly identical products apart, which could indicate problems scaling up the system, especially to one that oversees larger inventories. Furthermore, the sheer volume that the Al system required to manage an inventory of 1000 items takes up has caused some concern. Located in the roof of the Amazon Go stores, hundreds of cameras are operating as people enter and leave the store. Maintenance costs for these cameras are likely to be high, and there is always the risk of fire and overheating as the technology is used over longer periods of time. Others have raised concerns about the level of adaption a building might need to have to accommodate a bulky system of hundreds of cameras installed. Cynics and critics suggest that whereas the Amazon Go model can be praised for economizing retail space since it does not need human-manned checkout stations, that additional space is surely used up again to accommodate the IT systems. Furthermore, as it stands, human supervisors are required to manage error in the existing camera systems, so all of these costs and risks have to be factored into the debate as to whether Amazon Go stores are going to be the future of shopping. As regard to customer data as well as data from transactions, the Amazon Go model is premised on hundreds of pictures being taken of every person entering and exiting the store. Amazon then stores these pictures for long enough to identify the products being purchased, before the images are deleted. Credit card information is captured at the point of registration for the app that is required to use the Amazon Go stores, and then credit and debit card information is captured when purchases are made. Further receipts are issued after purchases are made, and the system also records how long an individual has been shopping for (this is printed on the receipt). With a need to capture and store such large volumes of information that is both sensitive and personal to people, it is not surprising that many are concerned for the security of the information and the potential for the information to fall into the wrong hands. Amazon Go stores are in their infancy, and have not had to deal with any negative publicity surrounding data breaches, or cyber security issues. Yet, these very issues are things that could damage the operation of the whole Amazon Go approach. It will only take one major cyber security breach for confidence in the whole system to be shaken, or for the system to attract the attention of regulators or even legislators and policymakers concerned for the future protection of the data that is gathered and held for the purposes of cashless shopping. These issues will have to be managed very carefully, and proactively if Amazon Go growth forecasts are to be realized. 1. Describe the category of e-commerce that Amazon Go falls under, and discuss its business model, particularly its value proposition, revenue model, market opportunity, as well as its competitive advantage.
The idea behind this is that automation reduces the money that the retailer must spend on human shop assistants, and this in turn reduces the overall operational costs of the store. Further, the high level of automation reduces waste, error and theft from the store. The risk of armed robberies is reduced to virtually zero as there is no cash in the store at any given time, as such there are no costs associated with recording, securing or moving cash. This appeal towards store safety have suggested that there are plans for another 3000 similar shops before 2021 (by 2024 there are only a total of 42 stores in the USA and the UK). Hot on their heels are competitors like Walmart who are working with Microsoft to devise their own system of checkout free shopping.
Amid this positive outlook, many have expressed doubt as to the ability of Amazon Go stores to really disrupt the traditional supermarket. With approximately 1000 products in each Amazon Go store as it stands, it is hard to see how the technology can be scaled up to cope with the 1000s of products that large supermarkets have in their stores. Supermarkets typically have 80,000300,000 SKUs (stock-keeping unit is an identification code depicted as a machine-readable bar code for a store to keep up with stock demand, tackle loss prevention, and ultimately support its sales) in any given location, so the capacity of Amazon Go's technology to manage such a large inventory is in doubt.
The technology Amazon Go stores use to monitor purchasing relies on bulky cameras, currently located in the ceilings of Amazon Go stores. These provide a 3-dimensional perspective and a picture of each item is taken before the Al system identifies it and applies the correct charge. However, this system may find it difficult to tell nearly identical products apart, which could indicate problems scaling up the system, especially to one that oversees larger inventories.
Furthermore, the sheer volume that the Al system required to manage an inventory of 1000 items takes up has caused some concern. Located in the roof of the Amazon Go stores, hundreds of cameras are operating as people enter and leave the store. Maintenance costs for these cameras are likely to be high, and there is always the risk of fire and overheating as the technology is used over longer periods of time.
Others have raised concerns about the level of adaption a building might need to have to accommodate a bulky system of hundreds of cameras installed. Cynics and critics suggest that whereas the Amazon Go model can be praised for economizing retail space since it does not need human-manned checkout stations, that additional space is surely used up again to accommodate the IT systems. Furthermore, as it stands, human supervisors are required to manage error in the existing camera systems, so all of these costs and risks have to be factored into the debate as to whether Amazon Go stores are going to be the future of shopping.
As regard to customer data as well as data from transactions, the Amazon Go model is premised on hundreds of pictures being taken of every person entering and exiting the store. Amazon then stores these pictures for long enough to identify the products being purchased, before the images are deleted. Credit card information is captured at the point of registration for the app that is required to use the Amazon Go stores, and then credit and debit card information is captured when purchases are made. Further receipts are issued after purchases are made, and the system also records how long an individual has been shopping for (this is printed on the receipt). With a need to capture and store such large volumes of information that is both sensitive and personal to people, it is not surprising that many are concerned for the security of the information and the potential for the information to fall into the wrong hands.
Amazon Go stores are in their infancy, and have not had to deal with any negative publicity surrounding data breaches, or cyber security issues. Yet, these very issues are things that could damage the operation of the whole Amazon Go approach. It will only take one major cyber security breach for confidence in the whole system to be shaken, or for the system to attract the attention of regulators or even legislators and policymakers concerned for the future protection of the data that is gathered and held for the purposes of cashless shopping. These issues will have to be managed very carefully, and proactively if Amazon Go growth forecasts are to be realized.
1. Describe the category of e-commerce that Amazon Go falls under, and discuss its business model, particularly its value proposition, revenue model, market opportunity, as well as its competitive advantage.
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