No-sellers: New trends in the retail industry?


After Amazon.com, a US-based multinational e-commerce conglomerate experimenting with its off-the-shelf Amazon Go store in Seattle, many people thought about a new trend in retail.

The Amazon Go store has no sellers but is entirely operated by cameras, sensor chips, artificial intelligence, applications on smartphones. However, according to experts from Harvard University, this is not simply because profits are difficult to offset the investment costs. Amazon itself has not made a single statement about Amazon Go store expansion.

Many barriers

Amazon Go brings new experiences to customers when shopping. Scan the Amazon Go app to a computer located in front of the door, then just select the goods according to your needs, put them in a cart or cart and out of the store, no need to wait for the cashier check and charge.

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According to Nick Harrison – CEO of global financial consulting firm Oliver Wyman, Amazon Go is considered as human interaction with the latest technology. This experiment is very valuable, promising to bring retailers a new business trend, shifting with the flow of technology to attract more customers. But there is always a gap between experimentation and reality. For retailers, it is an investment cost, and for customers, not everyone is interested in a store with no staff but only technology.

What Amazon Go has, some technologies have been applied in supermarkets, but the effect is not as much as expected.

Amazon Go uses RFID tags to control the amount of goods customers take off the shelves. This is an automatic identification method based on remote data storage. An RFID tag is attached to the item, recording information about the product’s price. Customers entering the supermarket just need to choose their favorite products and take out the invoice that is automatically printed without having to queue at the cashier to check the price by scanning the barcode and then taking the bill.

However, not many supermarkets in the US use this technology because the cost of RFID tagging is sometimes even more expensive than the item, while saving each penny is a competitive advantage of the supermarket. Especially customers do not require this technology to make purchases faster and still satisfy the payment queue.

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Amazon Go believes that its technology only changes the role of the employee, such as replacing the cashier. Customers buying and self-checkout have been done by many countries more than 10 years ago, such as Japan, UK, Netherlands, USA.

However, this is only for retail areas with small premises and expensive labor costs. In general, supermarkets in the US do not like self-checkout very much, even in crowded cities like New York because of the labor cost per square meter.2 still low and the fact that customers are waiting for payment also helps control who is old enough to buy alcohol, as well as avoid loss of goods.

Since everything is automatic, Amazon Go uses electronic shelf label (ESL) to display prices and merchandise information. This technology helps retailers quickly update new prices, promotional information, and types of goods, but when launched, only the French market will accept them because supermarkets here pay quite high wages, so they have to use Electronic price list to reduce staff, thereby saving costs.

Currently, many US supermarkets have applied electronic price lists to update prices in real time to boost revenue through providing information on discounts and promotions. But in general the technology is not too popular.

One of the things that Amazon Go can do well is to inherit the benefits of the smartphone. The main thing for a customer to walk out of the store without stopping the cashier is through Amazon’s mobile payment app.

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This technology is not new because the two big companies, Samsung and Apple, have created payment applications such as Samsung Pay and Apple Pay, not to mention many banks and financial institutions that have provided mobile payment applications. But according to statistics, not many Americans use these applications because it is limited to transaction points and not more convenient than using credit cards.

Stop at testing?

Automated stores are just a test worth checking out as it doesn’t say anything about business performance.

According to George Faigen – Harvard University professor, over time, the stock market reacted quite positively to Amazon shares after the group introduced the Amazon Go store. Because investors expect Amazon Go to use the latest technology capable of transforming traditional retail systems.

However, Mr. George Faigen commented that the way of applying technology to the retail system is not completely convincing customers, so it is difficult to say Amazon Go will become a new trend of the retail industry.

Automated stores are just a test worth checking out as it doesn’t say anything about business performance. Because by bringing new technology into operation does not save much for retailers, and it is unlikely to attract more customers to generate enough revenue to offset operating costs. On the other hand, according to statistics, for a store like Amazon Go to become popular, it takes 10-15% of other retailers to accept technology as a sales solution.

“In general, it is only advisable to observe the moves of Amazon to see what customers are attracted to, thereby applying a part of technology to the business” – Mr. George Faigen said.

Amazon Group executives are only testing Amazon Go and haven’t had any expansion plans yet.

Minh Phuong
* Source: Saigon Businessman

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