Once again, Amazon aims to raise the bar

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Amazon is once again jolting the status quo in mass market retailing. The e-commerce pioneer, which has done more than any other company to transform consumer expectations and the way people shop, early this month took the wraps off an experimental brick-and-mortar store format with the potential to revolutionize the grocery shopping ­experience.

MMR OpinionAmazon Go, as the prototype in downtown Seattle is known, deploys a range of cutting-edge technologies similar to those used in self-driving vehicles, including computer vision, deep-learning algorithms and sensor fusion, to eliminate the traditional checkout process. Upon entry, customers scan a QR code obtained from the Amazon Go app. As they move through the aisles of the 1,800-square-foot store, the systems track the items they select (products returned to shelves are automatically deleted from the virtual basket) and add the charges to shoppers’ Amazon account as they depart.

For the time being, access to the store — which sells ready-to-eat meals and snack food prepared on site, bread, milk, eggs, and a tight assortment of other supermarket staples — is limited to Amazon employees who are putting the “Just Walk Out” technology package through a final beta-test. After a four-year development period, Amazon Go is slated to open to the public early next year.

By doing away with the need for customers to stand in line and wait while a store employee scans and bags items before paying, Amazon is attempting to remove perhaps the greatest frustration in brick-and-mortar shopping. If Amazon Go ultimately delivers on that promise, it will raise the bar for mass retailers everywhere.

Grocers, in particular, are currently in Amazon’s sights. The company in recent years has devoted a lot of time, talent and capital to developing tools that will enable it to grab a bigger share of the nation’s $600 billion a year in supermarket sales. In addition to Amazon Fresh, which in return for an annual fee of $312 provides customers with same- or next-day delivery of food, beverages and other grocery items, the company is crafting drive-through facilities for grocery pickup and stores comparable in size to the average U.S. supermarket that will offer click-and-collect service as well as traditional ­shopping.

If that’s not enough to make grocers and other retailers sit up and take notice, it probably won’t be long before Amazon introduces another innovation that does. The company’s hallmark is a refusal to settle for the status quo. Over the years it has augmented its business with such programs as Amazon Prime express shipping; Amazon Marketplace, which allows independent retailers to tap into the power of the eponymous website; and Dash Button one-click reordering for frequently used household products. Amazon’s forward-thinking ethos is captured in the line with which founder and CEO Jeff Bezos customarily closes his annual letter to shareholders: “It’s still Day 1.”

While Amazon’s embrace of the new and ability to shake up the retailing scene are admirable, it should be noted that, since its founding 22 years ago, the company has benefited from an indulgent attitude on Wall Street, where investors and analysts often seem to judge its results by a less stringent standard than they apply to traditional retail businesses. Creating different ways of doing things can, indeed, be costly, and there are cases where the financial community needs to take that into account. It would encourage innovation and make the industry more dynamic if all retailers were evaluated by that standard.



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