Subscribe / Unsubscribe Enewsletters | Login | Register

Pencil Banner

Why smart stores don't check out

Mike Elgan | April 10, 2017
Amazon, Starbucks and Apple want you to walk into their stores, pick up your items, then walk right out. There's just one problem.

There are other items, such as your lunch, that are too perishable for shipping.

Amazon has been trying a range of ideas for breaking into the $800 billion U.S. grocery industry. The Amazon Fresh delivery service is now available in 20 U.S. cities. Prime Now delivers groceries from local grocery stores in a few locations. Subscribe & Save lets people subscribe to buy paper towels and a range of other non-perishable but frequently consumed items for delivery like other Amazon items.

A system like Amazon's "Just Walk-Out Technology" adds convenience to shopping. But the real revolution is a quantum leap in behavioral data. In the same way that companies like Amazon, Google and Facebook track every mouse movement, every click, every scroll and every hesitation while you're browsing the Internet, Amazon Go's system potentially brings that level of customer awareness to the brick-and-mortar space. They'll know if you hesitated to buy that cupcake. They'll know you spent three minutes browsing the burrito options without finding something you wanted. They'll know exactly how long you were in the store, which sections you checked out and of course what items you bought, exactly.

It's likely that Amazon will open the Amazon Go store to the public sometime in the next few months. They will probably have to limit the number of customers allowed in the store at the same time. And the "Just Walk-Out Technology" will make a lot of errors for the next few years, requiring human supervisors to monitor and correct those errors. For the foreseeable future, Amazon Go will be a half-baked mirage.

Amazon will accept losses resulting from errors as the price of learning how to do no-cashier retail. Eventually, the payoff could be huge. Once Amazon makes "Just Walk-Out Technology" reliable and relatively error-free, the company can roll out stores nationwide, then worldwide.

Like self-driving cars, however, automated stores that really work are years away, and for the same reason: A.I. just isn't good enough yet.

 

Starbuck's Mobile Order & Pay is hot, but still has grande problems

Starbucks is also working on the elimination of cash registers and cashiers. The company's app enables a service called Mobile Order & Pay, where you can order anything on the Starbucks menu via the app and pick it up without interacting with a cashier.

The company last week opened a mobile-only store at its Seattle headquarters.

Here's the company's dirty little secret: Mobile Order & Pay doesn't really work that well. (Starbucks did not return my request for comment.)

Sometimes customers place their order at the wrong store. I've done this myself a few times. That means the product is wasted at the wrong store, and the customer has to wait in line like everybody else at the right store.

 

Previous Page  1  2  3  4  Next Page 

Sign up for CIO Asia eNewsletters.