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Amazon Go and the Future
- themark 9y agoThe line to get in reminds me of how the line for self checkout is sometimes longer than the staffed lines.
- IamNotAtWork 9y agoI always go for the staffed lines because they do the job faster than I can do it myself. Especially for things where someone needs to look at your id, like buying alcohol - a cashier is faster than self-checkout.
- themark 9y agoFunny thing- when self checkout first opened in California you could buy alcohol from them. Unfortunately, the unions pushed hard to get that banned.
- rplnt 9y agoNot to mention the self checkouts, at least from my experience, need to be staffed as well. One person can maintain maybe 3-4, so it's not unusual to see half the self-checkouts closed.
- jon889 9y agoSelf checkouts can just appear to be closed for no reason because of things like it's rejecting coins, or keeps getting coins stuck, or the weighing scale isn't correct. Faults with over complicated machines rather than a personel problem
- Falling3 9y agoSure, problems with individual machines happen. But in my experience, it's almost always banks of machines that are closed due to staff limitations.
- xya3453 9y agoIt's quite common for a single staff member to manage 10–12 self checkouts in Australia. This will improve given time for the general population to warm to the SCO process combined with improvements in the machines themselves.
- segmondy 9y agoIt's new, everyone wants to try it. If this becomes the norm, the line won't be an issue.
- douglaswlance 9y agoLine length doesn't correlate with line speed. You can wait in a short line longer than a long line.
- huhtenberg 9y agoSelf-checkout lines usually move much faster though.
- Falling3 9y agoThat seems to be a function of the number of items that people bring to those checkouts rather than anything else. All things being equal, it's always been my experience that the self-checkouts are slower, not faster.
- jonknee 9y agoSure, but there's one line for 4-8 self checkouts which makes the line move faster even if everyone is a technophobe.
- xxpor 9y agoUsually because they do the correct thing and have one line for 6 machines, while every other line is for one particular cash register.
- b4lancesh33t 9y agoI have a lot of trouble with hot takes like the quoted tweet. It's not funny. It's so dumb. It's pointlessly negative. Sometimes I feel like this kind of midbrow objection is sucking out all the headspace that should be reserved for thoughtful commentary.
- steve-benjamins 9y ago> Well, I would ask, what about the labour of Marx’s day, the factory workers borne of the industrial revolution that he thought should overthrow the bourgeoisie? From what I understand, Marx's contribution to political thought is his philosophy of history. it's not that the proletariat would overthrow the bourgeoisie in his day— but rather that it was simply an inevitability. History was marching towards it. I know Ben was using it as a way to tie-together political implications— I'm just clarifying.
- throwawayjava 9y agoThe last section of this piece is funny because the first 3/4ths of the essay is fundamentally Marxist in its descriptive characterization of the role of technology in capitalist economies. In particular, this part of the last section is straight-up wrong: > Marx saw a world where capital subjugated labour for its own return; technologies like Amazon Go have increasingly no need for labor at all. First, because even the author's idealized view of Amazon Go does require labor (the author even discussed this at length; that labor takes the form of R&D). Second, because Marx did see this possible world, and even wrote about it extensively in chapter 15 of Capital. I find that happens a lot in articles like this one -- ideas that originated with Marx are parroted by an author who doesn't realize that Marx wrote extensively on the role of technology in capitalism. General advice on articles like this one: If you're going to write about labor and technology in capitalist economies, and don't want to unknowingly parrot lots of Marxist ideas, you should read capital. Capital certainly contains some prescriptions you may disagree with, but it also contains a lot of descriptions. If you're thinking about labor and technology, there are better than even odds that you're re-inventing one of Marx's descriptions. He was the first one to say a lot of the obvious stuff. Even more general advice: western stigmas aside, familiarity with Marx's writing is as indispensable to understanding modern economic thought as familiarity with Smith, Hayek, Keynes, et al.
- thisisit 9y agoI like reading stratechery time to time for tech related strategy writeups. But this writeup somehow loses plot. The focus is too much on what are fixed and variable costs and the repeat of Amazon's buyout of Kiva. What would have been an interesting discussion is to look at how the retail market is actually unfolding: https://www.bloomberg.com/graphics/2017-retail-debt/ https://www.bloomberg.com/graphics/2017-retail-debt/ And whether cutting out the variable costs of a cashier etc is really worth the trouble in R&D and systems. Edit: After reading some of the responses, I wanted to add something. If we look at the linked article above, retailers are taking in loans to open more and more stores. The idea being more stores = more customers = more profit. But that is not materializing at all. The question becomes - where does the issue lie really? Are variable costs the reason? What does Amazon Go solve really? Sure, some might say better software is the whole point of Amazon Go. But,we are not talking about a SaaS where the cost of delivery is nearly negligible - it takes nearly the same amount of real estate and fixed costs to deliver 1 or 1000 of a SaaS product. That is not true for B&M. If they want to ramp up then they will need to open more stores - that requires real estate and other fixed costs.
- jjallen 9y agoThere's not just the reduced cashier costs, but the vastly increased revenue per foot of store that will come about when customers know they don't have to wait in line. The store will also be less empty per dollar of sales; or, said another way, shoppers will spend less time in store, creating the appearance of an emptier store for shoppers walking by, making it less time-consuming to enter. Oh, and don't forget those prime signups just for people who want to try the store (though the number of non-prime subs when these stores rollout will be not huge).
- nieksand 9y agoIndeed. The article didn't touch on how this approach reduces friction for buyers, which is hugely important. For the short-to-mid term, I suspect that frictionless shopping is a bigger deal than change in cost structure that comes from booting cashiers.
- lolwhatitis 9y agoDoesn't Wal-Mart have prior art on this? I see people take stuff and leave without using the checkout all the time!
- hodder 9y agoI wish the author would skip the accounting and econ 101 segments that eat half of this article. The author's writing is usually kind of fun, but it is unfortunate he feels his readership doesn't understand the difference between fixed and variable costs.
- bendavis381 9y agoPersonally I appreciated it
- prepend 9y agoI liked these sections. It’s always amazing to me how many developers don’t understand marginal cost and opportunity cost and therefore misunderstand the true economic power and forces behind software. I like how Microsoft, Google, and Facebook were framed and it was essential for the author’s point on how Amazon is trying to do for reality and real stuff what others did for digital.
- jamestimmins 9y agoThis is also a key piece to understanding why developer salaries can be so high. Revenues can grow much faster than costs, which makes the high salaries economically possible.
- returnInfinity 9y agoDon't have mba or ever studied economics, so that helps.
- deleted 9y ago[deleted]
- alant 9y agoOnce other super markets adopt automatic check out, shopping at supermarkets would be a lot less bad~.
- losteverything 9y agoI wish there was a mention that 5 people can buy the same milk and all can each pay a different price (and none know what the other paid either) I always thought it would be something to charge a wealthy person more since they can afford it. With GO franchise i could charge $20 for milk to the teacher pensioner backed by my tax dollars; $0.50 to the poor mother of 3 kids, and $10k to jeff bezos. Then I could stop subsidising farmers. Of course my points are extreme but we never had a way to charge different people this easily
- mtgx 9y agoI wonder if only poor people will visit such stores in the future, once the word of this gets around.
- epicide 9y agoYeah, all the people that this would affect negatively (as OC described) have the power to prevent it. It likely would work the other way around where the rich automatically get it deducted from their taxes, somehow.
- pdkl95 9y ago> all the people that this would affect negatively ... have the power to prevent it This is based on the incorrect assumption that the people being gouged by variable pricing are rich (or at least "not poor"). > (as OC described) The OC's pricing - like his patently incorrect view of teacher income - isn't based on reality. Being poor is very expensive[1][2]. The entire point of this new wave of price discrimination is to use modern data analysis to minimax how much each individual can be gouged. This is always regressive, because the poor do not have the same ability to shop around for better deals, buy in bulk, and other money-saving techniques that require up-front investment of time and/or money. [1] https://www.huffingtonpost.com/lauren-greutman/why-being-poor-is-more-ex_b_9194906.html https://www.huffingtonpost.com/lauren-greutman/why-being-poo... [2] https://www.economist.com/news/united-states/21663262-why-low-income-americans-often-have-pay-more-its-expensive-be-poor https://www.economist.com/news/united-states/21663262-why-lo...
- shubhamjain 9y agoThe article doesn't explain why Amazon wants to create a future straddling both sides of online and offline retail. If drone deliveries are the future, and VR is going to be as good as real, then, isn’t offline retail headed for a decline? Isn't that what Amazon wants us to believe?
- deleted 9y ago[deleted]
- cpuguy83 9y agoAmazon wants to be part of every financial transaction you make, and they realize that not everything can be done online.
- cryptoz 9y ago> If drone deliveries are the future Noone thinks this for 100% of deliveries. I think about 98% of my Amazon orders today would be too heavy for the first 10-20 generations of drones. Not to mention, many people live in places where drone delivery will never be allowed by law. > and VR is going to be as good as real Noone thinks this either, not for all people and not for all time. Amazon isn't making financial decisions based on thinking that 100% of people will eventually be in VR 100% of the time. Even if the technology is massively successful, that would not happen. > isn’t offline retail headed for a decline? Yes of course. It's declining from about 90% of money spent to about 80% over the next few years or so (estimates) > Isn't that what Amazon wants us to believe? What? Amazon wants your money. They don't care what you think the future will be like.
- shubhamjain 9y agoYou're right. I wasn't suggesting that VR/AR and drones would take over the retail landscape in a flash but these developments, combined with the general convenience of online retail, might make offline buying a highly unfavorable option for plenty of everyday things. If groceries being sold at Amazon Go could be bought just as easily through an app and delivered reliably in a short while with no additional cost, would the sophisticated system remain just as useful?
- petra 9y agoOne interesting question about this is that of strategy. How will Amazon use this to strengthen it's power? One possibility is of course building convenience stores. but the task is immense - there are 150K conevinence stores in the US, more globally. and they have only a limited window until competitors copy the tech. So they will probably want to get the maximum strategic benefits in that time window. And while licensing money is nice, that's not the best asset convenience stores has got. Their best asset is their location and their space. If Amazon get access to some of that, they could build a distribution network, maybe for grocery pickups, maybe at a global scale, and at a very fast growth rate. And somewhere along this process, i suspect Amazon could convince or get enough power so that convenience store owners will partner with them, for example on selling Amazon private label.
- ionforce 9y agoHow "limited" is that window? Let them copy it.
- petra 9y agoSurely Google could develop this in less than 5 years - and that's not enough time to own all the stores in the world.
- dingo_bat 9y agoGoogle won't do it. They are incapable of anything that doesn't involve selling ads. I think that's a major point in the article. No other company capable of executing this seems to be interested in doing it! Only Bezos!
- deleted 9y ago[deleted]
- skywhopper 9y agoIt's tiresome to read articles like this that just accept these loss-leader vanity projects as real, impending culture shifts. This is a clever convenience store built to test and more importantly showcase Amazon's ideas for automation and machine learning. But it's not a grocery store, and it's not yet anything close to a scalable business. The idea the author floats that this type of place could ever be open with no staff present is ludicrous. To get a bit more specific, this Recode article has actual pictures from inside: https://www.recode.net/2018/1/21/16913984/what-does-photos-amazon-jeff-bezos-seattle-new-no-cashier-line-grocery-story-amazon-go https://www.recode.net/2018/1/21/16913984/what-does-photos-a... The store has a bunch of ready-to-eat and semi-prepared bundles that hit a very narrow niche in the grocery market. There are a few pre-packaged name-brand products, but everything is arranged in a highly regimented manner, and the store is very small. It's revealing to note what's missing: any fresh produce whatsoever. What I'd rather see from these articles is a bit more of a critical eye on the claims. Does the company actually think they could leave the store open with no employees present? Do they even have a reasonable premise that fewer cashiers even means fewer employees? (Someone needs to be there to help people who don't have the app, or to watch that no one jumps the turnstiles, or to keep the place clean, or to restock the shelves.) And what about the software itself? Do the cameras keep track of the inventory correctly? What if a customer puts a product back down in the wrong place? How much awareness does the software actually have? Is it tracking your phone or you? Does it attempt to deal with scams (can you bring an empty boxed meal kit into the store, replace a new one from the shelf with the empty, and then walk out)? Maybe these aren't big concerns for this single store, but they are huge concerns if you want to scale this to compete with 7-11 or Pret a Manger, both of which, I will note, have more fresh fruit available for sale. Now, I don't think Amazon is really thinking that sort of thing is imminent, or that they are actually going to make money from this store. This is a vanity experiment, nothing more. They are getting lots of free advertising from a credulous press, and that's plenty sufficient for them.
- petra 9y agoTrue, even as a vanity project it could increase Amazon's share price by enough to justify the effort, even if it fails.
- 9y ago
- beegeezuz 9y agoI never understood the point of this when you have free fast delivery with Prime Now.
- adamio 9y agoThis same article could have been written 120 years ago about Automats https://en.wikipedia.org/wiki/Automat https://en.wikipedia.org/wiki/Automat
- toastking 9y agoOr the tech reinvention of automats: https://www.eatsa.com/ https://www.eatsa.com/.
- gkanai 9y agoRetail with no employees was done in China last year, fwiw: https://www.technologyreview.com/s/608104/in-china-a-store-of-the-future-no-checkout-no-staff/ https://www.technologyreview.com/s/608104/in-china-a-store-o...
- phinnaeus 9y ago"Purchases are made using an app to scan a barcode and paying over the phone." That's like the difference between a fully autonomous car and an automatic train.
- PuffinBlue 9y agoThe impressive thing about Amazon to me is that it thinks/acts for the longer term. I guess it's Bezos that's the driving force behind this (he funds the Long Now 10,000 year clock project after all, so must have some interest in the long term). Very many things become possible when you think on long timescales. Things like space travel. I know Elon Musk is the poster boy for it at the moment, but it's comforting to me at least that In Bezos there's another 'moon-shotter' who thinks on the timescales required to actually achieve such long term goals. I know that's a bit of a tangential leap from retail stores to becoming an interplanetary species but the long term mindset behind achieving the two the same.
- aaron-lebo 9y agoThere's good and bad to that. You want people thinking big and long term but you also don't want that to become more important than the short term and the small things. That abstracted, encompassing way of thinking doesn't really care if Amazon's delivered a bad product that isn't worthy of consumers this quarter because there's always a next, and what's one customer and one sale when you've got 2 billion customers, a media empire, and and missions to the moon? There's only so much focus any individual or company has. I guess in politics that would be political capital, there's probably something similar in business. If Bezos is the driving force behind Amazon, how does that scale as Amazon takes on more and more? And longer-term, does that carry over when he's not around anymore due to old age or a bus?
- PuffinBlue 9y agoYes, you are right, it's always good to keep a weather eye on the here and now lest you lose the source of energy powering your long term plans.
- TeMPOraL 9y agoActually, I feel we could use much more long-term focus. Because right now, pretty much every single company is solely focused on "the short term and the small things", and the result isn't delivering good products and making consumers happy - the result is optimizing products and services to minimum possible quality, while gaming consumer reactions, in order to extract as much profit as soon as possible.
- ctvo 9y agoThe points about marginal costs are true, but I would argue the thinking driving the Amazon Go store is the customer experience: How do we improve the retail experience for customers and differentiate? Then they worked backwards to make the economics work. These stores, if they open at scale, will most likely lose money, but the customer experience will be so far beyond current brick / mortar stores that going to a Walmart becomes a jarring experience. Just like Amazon.com vs. other e-commerce sites. That's the moat.
- aviv 9y agoFirst Amazon kills retail stores. Then it opens its own retail stores. Sounds like a winning strategy.
- JoeAltmaier 9y agoThey disrupted the space, killing traditional stores. Theirs will not be a traditional store. Once upon a time our local small town had a general store. The freeway came thru, and it went out of business. Then a gas station came in by the freeway. Then it started offering some groceries, clothing, amenities. Hey Presto! and we have a general store again.
- deleted 9y ago[deleted]
- peterkshultz 9y agoWhen Amazon Go was first announced, my guess was that they were using RFID tags on every item in the store. I now understand why that was misguided: the cost of RFID tags would scale linearly with the amount of goods sold. With Amazon's camera/ML technology, they can reproduce this store wherever they want for just the cost of the hardware and maintenance. I really appreciated the article for explaining that.
- femto113 9y agoThe economics speak in this is just wrong: A cashier is a marginal cost... for a convenience store to sell one more item requires some amount of time on the part of a cashier, and that time costs the convenience store operator money. Since the cashier is paid regardless of whether the item is sold they are not a marginal cost in this context. If anything other than a publicity stunt Amazon Go is instead an effort to increase employee productivity, similar to grocery stores putting in self-checkout kiosks where two employees can supervise 10 to 20 kiosks instead of staffing one traditional checkout lane.
- ghaff 9y ago>Since the cashier is paid regardless of whether the item is sold they are not a marginal cost in this context. They're not a marginal cost but they are mostly a variable cost. Cost accounting is tricky. Most things aren't pure fixed costs or pure variable costs but cashiers are pretty close to the latter.
- chis 9y agoI used this store every day over the summer when I worked in this building. Don't underestimate the reduced friction of cashier-less shopping: I went to that store way more often than the alternatives. I was able to get in and out of the store in around 30 seconds if I knew what I wanted.
- pdgupta 9y agoAt Amazon, the debate to set up brick and mortar stores used to come up at every year's planning session. For Amazon it was never simply about doing brick and mortar stores for the sake of having brick and mortar presence, but categorically how would our stores be fundamentally different (experience, value to customers). If there was not a clear answer to this, the discussion was punted to next year. With their bookstores they have fundamentally altered the buying experience. And now with their grocery store too, they have fundamentally altered the experience. They only open it up to public once the "experiment" has worked. Expect this to be just the beginning. But over the "long-term" this will become the new normal. There is no question about that. It is the long-term thinking that leads to these experiments and initiatives in the first place. Not all long-term thinking is alike (comparing Amazon with other companies). At Amazon, it manifests into every aspect of business, strategy, and operations.
- herodotus 9y agoWhen I got into computers eons ago, I really believed that they would be a force for social good: relieve tedium, improve the lot of most humans, and so on. But I really have trouble seeing a huge benefit to the inevitable elimination of many checkout jobs across the world. Sure, lining up takes a bit longer, but there is a social aspect to grocery shopping that is disappearing, and that is not good. I just extrapolate to a world where 3 or 4 companies own everything, and I wonder where that leaves all the other people on the planet.
- Eridrus 9y ago> but there is a social aspect to grocery shopping What are you talking about? I have never in my life had any meaningful social interactions with grocery store employees.
- AnimalMuppet 9y agoIf you shop in a neighborhood store, and your neighbors also shop there, you run into people you know at the grocery store. Not employees, but customers.
- herodotus 9y agoI shop at a neighbourhood grocery store, and I regularly chat with the checkout staff. One of them brought her daughter to our house on Halloween. I know many of them by name. Sure its not a deep connection, but it is a friendly "Hi, how are you doing".
- sumoboy 9y agoI wonder if Amazon tried other concepts like putting cameras at the checkout instead so putting all your food on a conveyor and let cameras scan and weight everything. Similar to that at the airport scanning your carry on items. Scaling the store size would seem extremely expensive, so much infrastructure.