“Intelligent Retail: The Rise of Frictionless Commerce” – Jamshed Dubash
No one wants to wait in a long line, and yet that’s what customers do everyday in brick-and-mortar retail stores.
Except for a store located at 2131 7th Ave, Seattle, WA, near the corner of 7th and Blanchard.
That’s where retail history is being made – at Amazon Go – the first intelligent brick-and-mortar in the history of retail.
In creating this unique shopping experience, Amazon asked themselves two questions:
- What if we could create a shopping experience with no lines and no checkout?
- Could we push the boundaries of computer vision and machine learning to create a store where customers could simply take what they want and go?
The answer to these questions led to a disruptive innovation that promises to change brick-and-mortar retail forever.
What is Frictionless Retail?
A decade ago, IBM envisioned the future of retail, with no cash registers, no cashiers, and no checkout lines:
More recently, we have talked about frictionless commerce as the change brought about by the Internet – through the lowering of transaction costs and the convenience/ease of online shopping. But now, frictionless retail implies much more. Amazon Go has established a higher standard – a new and improved customer experience that all retailers are going to have to deal with. We can now reframe frictionless retail as a checkout-less shopping experience. The customer simply picks up the product and walks out of the store. Artificial intelligence (AI), computer vision, deep learning algorithms and the Internet of Things (IoT) do the rest.
Here’s how Amazon describes the experience:
When you arrive, use the app to enter the store, then feel free to put your phone away—you don’t need it to shop. Then just browse and shop like you would at any other store. Once you’re done shopping, you’re on your way! No lines, no checkout.
Amazon Go integrates various technology components: computer vision, sensor fusion, IoT, and AI to create this frictionless shopping experience. The easy part for the system is identifying you as you enter through an identification gateway similar to a subway turnstile. The genius of Amazon Go is that from the moment you step into the store until you leave, AmazonGo keeps track of you, along with the items you select. As you simply walk out of the store with your items, it adds up your virtual cart, charges your Amazon account, and sends your receipt to the app.
What Amazon Go has developed today is a very interesting experiment. But is it really scalable? Analyst Bill McBeath suggests that there are as many as 200+ cameras in the ceilings and 4000+ more cameras on the shelves along with weight scales on each shelf. Certainly, this would mean some very significant changes to existing retail, so the jury is still out.
Intelligent Retail
One example of intelligent retail is the enhancement of the fitting room experience based on augmented reality. Just like the ordinary checkout experience, another aspect of shopping that retail consumers find time-consuming and inconvenient is the fitting room experience.
Of course, we know that try-before-you-buy is one of the main reasons why brick-and-mortar stores are not going to go away. In fashion retail, however, we are seeing new innovation from Cisco:
Augmented reality technology is already being tested in-store by many retailers to help enhance the shopping experience and eliminate the fitting room inconvenience; see this field-test from Timberland.
By cutting down on the time it takes for a customer to try on an outfit or outfits, the store can impact the velocity of commerce in a significant way. The customer can also ask friends and relatives for comments before they buy – making social-buying an added function of the brick-and-mortar.
Location and Micro-Moments
Another example of intelligent retail is featured in the Deloitte 2018 AI Innovation report: DeepMagic‘s AI-based kiosk.
The intelligent kiosk is a robotic retail format that allows merchants to run economic satellite stores in locations where consumers need specific products, but currently have no ability to buy.
If you are looking to expand existing retail operation into new locations, you can acquire a walk-in kiosk for secure, unattended retail operations in targeted locations where people would like to shop, but currently can’t, including hotel lobbies, residential buildings, office spaces, university campuses, airports, etc. By placing these kiosks in locations that maximize sales, merchants can create distributed stores catering to the “I-want-to-buy” micro-moment.
In 2017, physical retail represented 87% of all retail sales. Brick-and-mortar shopping is a visceral, as well as social experience that provides instant gratification for the consumer. Robotic retail formats enable instant gratification without incurring the cost disadvantage of physical stores.
Convenience
How does a brick-and-mortar retailer compete with Amazon? Amazon Go requires steep upfront capital costs, significant infrastructure and technology investments and support capabilities, and ramping up that goes along with steep and significant tech-staff.
One alternative is for a retailer to buy or rent an AI-driven, pop-up kiosk as described previously. This allows agile testing of format, product placement, and distribution focal points. This unattended, small-footprint, walk-in and secure 24/7 store allows the retail owners to enjoy the operating benefits of a vending machine and the product diversity and customer experience of a small retail store at targeted locations. Monitoring the kiosks via live streaming provides up-to-date inventory information. Merchandising and efficient replenishment are limited costs to this unmanned retail kiosk.
Frictionless shopping can provide customers with positive shopping experiences not only from the giants in retail like Amazon, but for smaller and smarter merchants who recognize the potential of innovative POS solutions. New retail formats offer frictionless convenience to the shopper and at the same time help the merchant save on operating costs.
The Age of Intelligent Retail is here. Are you ready?
SEE ALSO: “Marketing and the Internet of Things: Are You Ready?”
Based in Boston, Jamshed Dubash is an independent consultant focused on creating new business opportunities in the enterprise IoT/M2M market space by integrating wireless ‘edge’ sensors, big data, and advanced analytics to help companies increase operational efficiencies and reduce costs. He has 7 published patents and 10 pending patents in RFID/IoT/M2M/sensors and wireless tracking technologies and applications. Disclosure: Dubash is an advisor to several IoT companies, including Deep Magic.
