I follow retail innovation and the point of sale and payments industry a fair bit. I’ve written dozens of articles on Amazon, so much as so I could be considered an Amazon evangelist.
However, AmazonGo has been rolled out very conservatively. Only now, is the Seattle pilot expanding to places like San Francisco and Chicago.
The End of the Cashier and Physical POS is Near
The end of the cashier and a lot of retail staff is near, we know this from how automation is about to scale in retail, logistics, E-commerce and this will also trickle down to brick and mortar stores. Retail Dive calls this cashierless point of sale systems, that’s one way to put it, or virtual ones that take out the friction of standing in line, “Just walk out” technology.
Retail Automation will Accelerate in the 2020s
From E-commerce warehouses automation to investing in drone delivery and logistic automation upgrades, China is catching up to the west. Amazon besides acquiring Whole Foods, has not been overly aggressive in entering physical retail.
China’s Retail Winners Will Expand Globally
We know JD.com will expand globally in the next two years in a huge push that could transform the future of retail. Walmart has elected to partner with Tencent, where WeChat pay is now possible in China.
Walmart acquired Flipkart in India at a huge price, that probably won’t be able to compete with Amazon in the long-run there. In developing AmazonGo like tech, Microsoft could theoretically disrupt AmazonGo, and Amazon’s uncharacteristic slow implementation of this tech. Alibaba you might say is the real first-mover in store automation with products like “smile to pay” facial recognition and cashier less cafes.
Microsoft is reportedly working on and has developed prototypes that it has showcased that would eliminate cashiers and checkout lines from stores, in an early challenge to Amazon’s automated grocery shop, Amazon Go. With Amazon slow to expand AmazonGo stores, this is a huge opportunity for Microsoft.
Microsoft in 2018 has been making great inroads in China, so Walmart/Target is not the real play here, it’s all about China.
Microsoft’s AI team has basically been developing systems that track what shoppers add to their carts. This is the same computer vision, camera, sensor, LiDAR enabled tech that is similar to what Amazon has done with AmazonGo. It’s definately replicable, and China in particular is flooded with various iteration of what the smart store, vending machine, mobile store, could be capable of in a self-serve setup. All of these solutions have one thing in common, they are mobile driven with new tech and drastically reduce the need for retail employees (not just cashiers).
Microsoft has shown sample technology to retailers from around the world and has had talks with Walmart about a potential collaboration, three of the six sources said.
How valuable would this be to get retailers on Microsoft’s Azure Cloud? It’s a huge monetization angle. Microsoft would be able to build a solution, that is, it’s working on ways to minimize the potential expense of the technology, and could be working to create a device that would manage networked cameras and other equipment in-store, according to the report. If the solution would be transferable to different retail environments, something that could scale, it could be a major retail innovation for the years to come.
Amazon Go, a highly automated store that opened to the public in Seattle in January is finally coming to Chicago and San Francisco. AmazonGo has been fraught with delays that’s likely making Amazon executives cringe. It’s a difficult tech to implement, it’s automation like we’ve never really experienced. So, it was only a matter of time that other tech companies and retail giants such as Alibaba and Walmart would think about how to replicate similar solutions. But Microsoft? I have to admit, I didn’t see that coming.
Retail Tech is a Genius Revenue Stream for Microsoft
For Microsoft, becoming a strategic ally to retailers has meant big business. In addition to developing retail technologies, it ranks №2 behind Amazon in selling cloud services that are key to running e-commerce sites, for instance. (Business Insider)
Reportely, it’s only about a dozen engineers that are responsible for this, but if I was Microsoft, I’d put a lot more resources behind this. To disrupt AmazonGo you’d have to see the long-term financial opportunity of this, in particular how it can build your ties in China. Walmart or Target are not the ideal B2B customers here. It’s 7-Eleven, Tencent, Alibaba and the small physical and convenience store sector. It’s SMBs and miniature grocery store environments that fuel retail all around the world. This kind of tech is ideal for small store environments.
Can Microsoft’s AI Team Accomplish an AmazonGo Competitor?
Microsoft’s effort to date has largely fallen under its Business AI, or artificial intelligence, team, one person said. A group consisting of 10 to 15 people has worked on a host of retail store technologies, and they have presented some of their efforts in front of CEO Satya Nadella. So if it’s such an exclusive team, could it really compete against Amazon? Is it even realistic to suppose it could. I don’t know, but it impacts Microsoft’s cloud and AI orientation at its core and would be a major boost for its relationship with China. Combinased with the advances in facial recognition China is making, it could be very valuable tech if they could get it right fast enough.
Perhaps with the right partnerships, Microsoft could make a serious go of it. Amazon isn’t the only Seattle-area tech giant that wants to change how we pay for items at the grocery store. But grocery; that’s even more complex than the smallish AmazonGo model.
Nadella wanted an “intelligent edge” device that could manage connected gadgets such as cameras on site with minimum data transfers to the cloud, which would cut down on costs. That sounds more like a Cloud-play, than a retail tech play. We know Microsoft’s entire strategy is now very diversified but centered in the Cloud. It’s not like there aren’t AmazonGo competitors out there, but Microsoft’s announcement (it does not comment on “speculative rumours”), could also just be a PR move.
It’s not as if Microsoft’s business AI team could replicate Amazon whose R&D budget and 5-years of work. Nor could just any company replicate what Waymo has done with autonomous vehicles and years of testing as we are seeing with the likes of Uber and Tesla.
Cashiers will gradually become obsolete as retail changes, but it’s not likely to occur as soon as some surmise. After all we’ve been saying the paper receipt would go extinct, for literally decades. Inspite of smart stores, E-commerce showrooming, physical stores are still alive and thriving. Most of retail is still failing in omnichannel, not to mention customer-centric personalization or truly seamless shopping.
You can hire computer vision specialist and Amazon leftovers, but when the entire tech community calls this an AmazonGo competitor, you have to take it with a grain of salt. Microsoft, is not Amazon.