Bull Session
The Future of Retail
January 21, 2017
Episode Summary
On this episode of The Digital Life, we discuss Amazon Go and the future of retail. As e-commerce continues to rise in popularity, retail stores are taking a huge hit, losing billions of dollars in transactions which have migrated online. What should physical retail look like then, in the 21st century? Ironically, Amazon, the e-commerce giant, might have the answer.
Amazon Go, the company’s new retail offering being beta tested in Seattle, is a IoT-enabled grocery store which forgoes the checkout line. Customers can walk in, grab what they like from the shelves, and just walk out again — no waiting in line required. How does Amazon Go work? When customers walk in, they tap their mobile phones on a turnstile, which logs them into the store’s system. It connects them to their Amazon account via an app. Amazon Go uses machine learning, sensors, and AI to track the food items that a customer selects and adds them to the app’s virtual cart. If the customer picks up an item and puts it down again, the item is likewise removed from their cart.
Amazon Go is just one of a host of ideas for retail store formats that re-define that experience: product curation, showrooms (a la the Apple Store), immersive environments, etc. Join us as we discuss the evolution of the retail store.
Resources:
Amazon just opened a grocery store without a checkout line
Retail stores as a result are taking a huge hit. I mean, what do we need physical retail for anyway, in the 21st century? I’d like to dig into that.
If you’re in the science fiction section, it’s very different from getting a recommendation on Amazon, like, “If you liked this book, maybe you’ll like this next one.” When you’re surrounded by the physical objects, and looking at all the spines of the books, and just going through them one by one, it’s really different. Of course, navigating that space versus navigating via the Amazon website, so whether it’s used books which sometimes the stores are less organized than others, or you’re big box Barnes & Noble or independent bookstores, they all have their own personality, there’s an element of curation there, that I find that retail experience to be something that I treasure and enjoy.
Very similar actually to the way I used to dig through CDs if our listeners remember CDs. They used to have used CD stores, I don’t know if those are still around, but I had that same sense of being surrounded by the objects that were somewhat curated by the owner of the store and just being able to really dig into those. I like those experiences very much, and I’d be disappointed if independent bookstores, if used bookstores went away as a result of eCommerce. On the other side of things, I do enjoy going to the Apple Store to check out the latest gadgets, so I don’t know what you call that, that retail experience, almost like the lab or something like the display that you can play with, but those two experiences for me I think are pretty fun.
In contrast, I could do without some of the grocery stores experiences that I have, waiting in long lines, bumping into people, getting in other people’s way. You have the cart there and someone parks the cart in the middle of the aisle and you can’t get by, and they’re bent over looking at something on the shelf so you can’t shove your way by, so there’s lots of awkwardness there. There’s definitely retail experiences I could do without. Dirk, I mean, do you have any retail experiences do you like? I’m sure we could all share plenty of experiences about negative retail experiences, but do you have some positive ones, as well?
Another is clothes shopping. I actually do some clothes shopping online but it’s common when I do, the things aren’t fitting right. I should bought one size bigger, one size smaller, or maybe that particularly garment just didn’t fit me really well. Now, the model of there’s small through XL, there’s four basic sizes that clothes are broken into, that is to some degree a product of the old retail environment, right? There’s certainly ways around that. There’s other ways to think about how to size clothes up to and including having them all be custom made which probably isn’t going to work for every income bracket but it’s one of those things that’s solvable, but today, no way.
Like, if I want something that’s definitely going to fit, I want to go to a store. Like, right now I need a new hoodie and I’m trying to figure out which store to go to buy one, to try them on, because I know if I order it online, it’s just not going to fit quite the way I want. Even if it technically fits, I want one that feels a certain way and it simply requires trying it on. A third category I think about are groceries, and like I know how I want an avocado to feel, and if I’m buying avocados, assuming I’m buying for multiple days and not just one day, I want one that’s ready to go today, I want a couple that feel like they’ve got a day or two still to go.
If I want good tomatoes, I need to go in there, look at those tomatoes and pick out the right ones, and it would be prohibitively expensive for them to make sure that everybody who ordered tomatoes online got good tomatoes because that’s a tremendous amount of product that then can’t be monetized, that doesn’t reach up to that level and that category. From the standpoint of my shopping and my expectations both in shopping but then also in the products that I end up with, today there’s just no way for online ordering to make up for a lot of that stuff.
I thought that was pretty clever way of using this plethora of sensors that are cheaply available now, sort of the promise of the Internet of Things in a contained environment that made a lot of sense to me. I could see myself maybe shopping more frequently for groceries instead of going once a week to the grocery store and getting everything at once, if I need I could just fly in and grab what I needed for the night for dinner, and then fly right back out again.
I think Amazon is definitely pursuing that strategy. We’ve talked before on the show about the Amazon Echo is controlling for your smart home. Amazon is going whole hog into the Internet of Things and looking for those magical interactions, and I love the concept, I love the big idea. Execution wise, I absolutely want to try it out. It’s too bad it’s obviously near their headquarters in Seattle right now, so they can control the beta test there, but I definitely want to try it out now. Whether it’ll be like a Disneyland trip, you do it once, you’re like, “Okay, that’s enough,” who knows? But I really like the thinking behind that.
Imagine this IoT solution in a few years can get rolled out to some local guy who’s able to curate all the books that design geeks, whatever, want to have and with this tech, potentially he doesn’t even need to be in the store the whole time because I could walk in and find this lovely book on design and say, “Hey, shoot. I’m just going to walk out with it now,” and boom, it goes through my Amazon cart. The idea that with Amazon, they’re not just creating this as an experiment. They’re looking to make this into a platform, I could almost guarantee it.
My imagination runs wild with the possibilities of preserving some of these physical retail experiences that I love and maybe reducing the cost of owning those kinds of spaces with this technology. Who knows if that’s going to be possible or not, but it definitely tickles my imagination.