Can the Amazon Go model be generalized to other brands?

by bold-lichterman

Amazon GO, the store of the future that continues to pour a lot of ink in recent weeks. 6.9 million views on YouTube that everyone has talked about at least once in their workplace. We have to admit that to Amazon, they have the art of making people talk. In this short article, let’s try to understand the Amazon Go model and answer a question: Will stores without queues or checkouts democratize quickly?

Technologically, the great unknown …

The principle of Amazon Go is relatively simple to state. You install the Amazon Go application which will allow you to identify yourself at the entrance of the store via a QR-code. Then just take the products that interest you, put them where you want and then leave the store to be automatically debited, with the invoice. It’s magical and like any good magician, Amazon doesn’t reveal its secret. We will simply have the right to know that the technology “Just walk out“Uses the”Computer Vision, Deep learning algorythms, sensor fusion“. Blah blah blah, that doesn’t mean much. Computer vision? No idea but we imagine cameras.

We wonder who issued a press release without talking about this revolution that is the machine learning in 2016. “Sensor fusion», This is where it eventually gets interesting. Everyone agrees that the only transmitters / sensors sufficiently precise to guarantee billing are RFID chips, but, and this is up to me, my first reaction would be: all for that!

Ultimately, the most likely hypothesis is that Amazon really did succeed in creating what is featured in the video. A store covered 100% by video cameras, which identify you and then follow you as soon as you enter the store. The same cameras will then determine what you’re taking off the shelves, which sensors will simultaneously confirm for double checking. I don’t believe for a moment in scales on the shelves that would mean that the “chef” of the store is capable of making sandwiches, all of which weigh significantly different.

Let’s give Amazon the benefit of the doubt, it’s finally possible. The video also refers to self-driving cars; I have to admit that if I prepare to let an AI decide my life for 1000km of highway, I can trust Amazon to charge me 10 euros for a sandwich.

Amazon, a technology company

When Amazon launched its Web Services in 2006, nobody – except Jeff Bezos possibly – expected that this activity would take such a weight in the giant. It is today the most profitable branch which generates nearly 16% of turnover with an increase of 55% over the last financial year, almost three times more profitable than the traditional sales activity. It is these services that make it possible to finance the expansion of e-commerce but also the launch of new services such as Amazon Prime video. It also gives Amazon a huge lead in accessing compute Teraflops / s. Without being an expert in AI, I imagine that 178m2 of stores, covered by enough cameras for all angles, which must follow – without ever losing – an individual and knowing what he is entering to within 5 cm requires a little more than ‘a server in the reserve. And if access to this power has never been so inexpensive – thanks to Amazon in particular – it nevertheless represents a significant cost on profitability. of one project. When you’re Amazon Go, it’s at cost because the power is yours. If you are another distributor, you will have to rent this power.

As Pirreli said in his ads, “syears in control, power is nothing“. Amazon uses the machine learning for several years now, especially for its traditional e-commerce services or to deploy its Alexa assistant in our homes. Knowing that a senior engineer in machine learning costs an average of $ 130,000 annually, that it takes a few dozen to develop this kind of system and Amazon has been working on the subject for four years, I’ll let you calculate the entry ticket.

In short, you will understand, with net margins of less than 4%, it is almost impossible to make such an installation profitable. At least for now, all of these costs should drop over time and the surfaces on which this type of system will become possible may then increase. The average size of a hypermarket being 7500m2, that makes 46 Amazon Go stores to monitor and incidentally, 7000 customers to track step by step each day. Is a retailer can deploy the “Just walk out»Technology in the next 5 years? Absolutely not. But ultimately, that is not the important thing.

Move the lines

The first note of importance is that Amazon continues to forcefully diversify its activities. With colossal investments (more than 3 billion in 2017) in video productions, in food with the sale of “Amazon made” snacks (and therefore much more profitable) or delivery less than an hour which makes it possible to sell annual subscriptions very easily. With the exception of Cdiscount, which recently launched into mobile telephony, it seems that most French leaders have done the opposite and tend to strengthen themselves in their respective fields of expertise. The future will decide between them even if it should be remembered that none has the same means as Amazon.

The second point is that with 109 seconds, Amazon shows what we can expect from commerce in the coming years. I will not go into their ability to generate buzz, but if I am not aware of such a project with other distributors, I know that the investments in machine learning are constantly and not inconsiderably increasing at most of the top 10 French e-commerce sites. Finally, what the Amazon ad doesn’t say is the price of the sandwich. At a time when we should hear a lot about purchasing power in France, there is much to – if not bet – at least hope that future innovations will be more profitable for our wallet.

Finally, it is interesting to note that like large French distributors, Amazon boasts in its advertisements the return of advisers to the shelves to provide advice and information. So there is not necessarily need to worry about jobs, moving from a cashier job to acquiring and sharing knowledge about the products we sell, it seems to me to be a progression – even at a minimum. And I’m still waiting for someone to explain to me how to open Amazon Go in Paris without recruiting security guards at the entrance to the store.

Amazon Go is a concept store, no more and no less a show of force to the world. Yes, we are able to charge you with the only agreement that you have entered our products. Amazon denies wanting to expand the concept and I tend to believe them, they have much more important growth vectors to deal with. The question that remains is therefore: is this all we are entitled to expect in our businesses? Or more simply, will Amazon Go really be open to the public in 2017? Answer soon.

Pierre-Aurèle-Martin-Zoksmedia-the-experts

Pierre Aurèle has worked for 10 years in e-commerce where he supports large accounts in the development of their sales and in the deployment of ambitious projects. He recently joined Atecna to diversify its skills.

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