Is there anything Amazon (NASDAQ: AMZN) isn’t trying to do?

With no surprise, Amazon continues to dabble in a variety of different sectors.

Earlier this week, it announced that it will be introducing its own version of the convenience store, called Amazon Go.

Of course, we’re talking about Amazon here, so it’ll be a little out of the norm — definitely not your average convenience store.

What makes Amazon Go stand out from other convenience and grocery stores is that Amazon Go stores won’t have any checkout lines or cashiers — in hopes to really bring convenience back to shopping.

In Amazon’s hometown, Seattle, the company has created a small grocery store that will allow customers to go through the store and pick up drinks, prepared meals, and other items off shelves and walk out of the store without having to wait in any checkout line whatsoever.

After all, the most inconvenient thing about grocery stores are the checkout lines, whether it is too many customers checking out at the same time or one customer holding up the line because they’re trying to find their credit card.

You’ve been there before — the longer it takes to check out, the more irritable you get. 

As of right now, the 1,800-square-foot Amazon Go store is only open to Amazon employees as a way of beta testing the store.

Before going public, Amazon wants to fully understand how the stores will work and what kind of experience customers will have.

Will it be as easy and convenient as they hope? Will they encounter any problems with the technology? Will the technology interact efficiently with the consumer?

All questions I’m sure Amazon is taking into consideration and solving before it goes public with Amazon Go.

The launch date for Amazon Go stores is set for early 2017.

So, how does it work?

The full-fledged details are a little vague at this point, since Amazon doesn’t want to give it all away.

But it’s mentioned that it will be using the same technology used in driverless cars — technology like computer vision, sensor function, and deep learning.

There will be sensors throughout the store and on the store shelves. The sensors will help identify if an item has been picked up or put back on the shelf.

This could be a major win for Impinj (NASDAQ: PI), an Internet of Things company, which seems to be behind Amazon’s efforts. If all goes well, Impinj could be supplying Amazon with the sensors and software it will need for its Amazon Go stores. 

In addition to sensors, the stores will incorporate artificial intelligence to help detect what customers are looking at.

Essentially, the idea is that a customer will have Amazon Go’s app on their phone, and they’ll encounter a kiosk when they walk into the store. They’ll scan their phone to the kiosk, which will then identify that the customer has entered the store, and it’ll begin to keep track of the products they pick up to purchase.

When the customer is done shopping, they can simply walk out, and they’ll be charged for the items they’ve grabbed while in the store.

Not only will sensors and artificial intelligence be able to identify what a customer picks up (and puts back), but it’ll also have the ability to track the shoppers’ interests.

This will create even more data for Amazon to help it further understand purchasing trends and how to cater to certain demographics.

It’ll also help to identify what products are most popular. And when it comes to the inventory for each store, Amazon will be able to know what products it’ll need to order and keep in stock, as well as which items aren’t selling — something the common grocery store isn’t able to efficiently track.

Going Beyond Online

Amazon has a huge online presence — there’s no doubt about that.

It’s tried to reach out to customers by offering them the option to order groceries online that would be delivered to their houses, but that idea didn’t gain as much traction as it was hoping for.

Gene Munster, an analyst at Piper Jaffray, said:

The way we think about it is the size of online retail is going to continue to grow dramatically but there will always be an offline option… They’re trying to streamline and capture a portion of that offline experience.

Amazon realized that when it comes to certain products, customers would rather go to an actual store and pick them up than order them online. And that’s one of the biggest reasons Amazon decided to go ahead with this project. 

It’s been able to reach its online customers; now it needs to go beyond online.

Until next time,

Jennifer Clark
Pro Trader Today