Amazon Go

With its first cashless supermarket, Amazon is kicking the anthill of the supermarket chain.

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While the president of Carrefour, Alexandre Bompard, announces the elimination of 2400 jobs and the injection of 2.8 billion euros in digital, at the same time, Amazon, the world leader in e-commerce opens its first mini-mart. Not just any mini-mart; a sensor-covered mini-mart in which customers shop and leave without going to the checkout. Do these two pieces of information herald a revolution in distribution? Is a redistribution of the cards taking place before our very eyes? And what if Amazon, in the end, had only one goal: to buy out the current giants of retailing, including Carrefour, to become the key player in the sector? 
 
Seattle. A pretty little street. A supermarket like there's one on every corner of our cities. 170 square meters, no more. The customer enters, badges his smartphone, chooses the products he wants from the shelves, puts them in his shopping bag and leaves the store. No checkout, no queues, no salespeople. It's as simple as that. His shopping basket is automatically analyzed by a myriad of electronic eyes, deep learning algorithms grind it all together and it's done. His account is automatically debited.
 
 
This is the first Amazon Go store; it is said to be Business InsiderThis is the first of a network of 2,000 sales outlets to be progressively installed.
Amazon is not the first to come along. It is one of the founding fathers of e-commerce, first focused on cultural goods and then on a catalogue of more than 500,000 products of all kinds. You can buy everything on Amazon, or almost everything. Over the years, the iconic brand has improved its knowledge of the intricacies of e-commerce to the extreme; it has relied more than rightly on logistics, the key to success and confidence in the field. It has invented online marketing, how to get to know the consumer and the best way to sell him the product he is looking for or simply coveted. Amazon aggregates a considerable marketplace. In short, a web giant that hundreds of millions of customers regularly use on all continents. Its founder, Jeff Bezos, has this year become the man wealthiest of the planet.

For every problem, there is a solution

So, with its position on the web, what does Amazon do in the physical retail trade, the neighbourhood shop, in "brick and mortar" as they used to say in the early days of the web? Is it a step backwards, a back-pedal? A nostalgic return to the roots? Not quite. Amazon knows that consumers, although they are increasingly using the web to shop, many are still attached, at least when it comes to food and fresh produce, to physical commerce, and are happy to shop in stores near their homes or on the outskirts of cities. Hypermarkets have certainly reinvented their trade, but they are still a machine for producing a turnover that can be counted in billions of euros for a single store. Amazon knows this perfectly well and carefully observes that food represents only 5 % of its turnover. On the other hand, what it has also detected is one of the major drawbacks of this traditional trade: you have to queue at the checkouts and wait, sometimes for long minutes, to pay. As with Amazon, there is a solution to every problem, so why not get rid of this constraint? Advances in visual recognition, image flow analysis, sensory sensors, algorithms... make all dreams possible today. So it's only a short step from there to imagining a supermarket without checkouts, where the customer could help himself and leave in complete freedom.

Technical challenge

The technical challenge was not easy to overcome. Amazon is very stingy in explaining the technology used. They talk about visual recognition, algorithms, deep learning, sensory sensors, so many swear words that don't mean much as they embrace a heterogeneous field of realities. « We've created the most advanced shopping technology in the world... "Amazon claims on its website. « This is made possible by the same type of technology used in autonomous cars. " adds the brand.  
 
To identify the product that the housewife is going to put in her basket, visual recognition sensors can certainly be used. These have made enormous progress in identifying complex shapes. But from there to working in a real situation, with a host of consumers helping themselves on the shelves, there is a margin of technical difficulty that engineers are still struggling to overcome with flawless efficiency. Amazon's prototype store was launched in December 2016, but it took more than a year to make it operational. According to the American press, Amazon had to deal with bugs in its camera system that made it difficult to distinguish between people of the same build. Also, children brought into the store were causing difficulties by moving products to the wrong places.
 
 
The use of innovative technologies is not something new in mass retailing. Most major retailers are already practicing "self scanning", adopting mobile cash registers as is the case at Sephora or Apple Stores. But considering a system of "just walk out technology" as Amazon claims is a challenge when it comes to points of sale offering items as numerous and diverse as those found in a large grocery store and a fortiori, in a hypermarket. However, let's assume that Amazon will be able to meet this challenge in the near future. So what is the interest of this announcement with its "wow" effects, and above all, what is the strategic stake of such an innovation?
 
By announcing its concept, Amazon takes all the actors of the mass distribution sector by surprise. They have invested heavily in the last few years in online commerce, they invented the drive but have not managed to profoundly change the concept of the supermarket. Amazon tells them that it is possible and announces with fanfare the emergence of a disruptive model: a model that is neither totally physical nor totally dematerialized. A physical model in which technology is predominant. A model where the customer no longer waits, no longer even realizes that he is buying. A model where the purchase is instantaneous, irreversible and totally painless. A model where the slightest buying behavior, the slightest hesitation is analyzed, scrutinized and dissected by the merchant who has become panoptic. A model where humans, those damned humans who cost a lot, who grumble and sometimes go on strike, can be eliminated; no need for cashiers in Amazon supermarkets.
Kick in the anthill
By launching Amazon Go, the Seattle-based firm is kicking the anthill and shuffling the cards by allowing everything possible. The company is drawing on its experience in automation and on the groundswell of robotics and artificial intelligence. Amazon has made this a speciality with its logistics centres. The magazine Quartz notes in this regard: " Amazon already uses robots in its warehouses to transport products to humans, who then ship them. They are working on robots that will soon be able to find the products and ship them themselves. Reverse this process, and those same robots will theoretically be able to restock the shelves of an Amazon Go. In the near future, such a store could potentially operate almost entirely without humans.. »

Warning shot

So, wouldn't Amazon Go be the warning shot that foreshadows major upheavals? It should be taken seriously. The timing of Amazon's announcement with that of Carrefour is dreamy. The president of the hypermarket chain has just announced the elimination of 2400 positions from its headquarters in France out of the current 10 500. This "transformation plan", as Alexandre Bompard, the company's CEO, puts it, is accompanied by a 2 billion euro cost reduction from 2020 on a full-year basis, notably via savings on logistics and structural costs, as well as a plan to reduce the 273 stores that used to be part of Amazon's head office in France. Dia but passed under its own banner. Carrefour has a total of 115,000 employees in France.
Alexandre Bompard, CEO of Carrefour
 
 
At the same time, the CEO announced that his plan also calls for 2.8 billion euros of investment over five years to accelerate the group's digital strategy and the development of its sales via all possible channels.
A far-reaching plan designed to meet two major challenges: on the one hand, to manage the "legacy" of hypermarkets, which were born during the previous commercial revolution in the 1960s and whose model is in serious need of dusting off. On the other hand, to bring the brand into the 21st century commerce, especially digital commerce. This is a matter of urgency. Indeed, with 12,300 stores under the banner in the world and 374,478 employees, with a turnover of 88 billion euros, half of which is in France, the French retail giant, which in 2001 was still the world's second largest retailer behind the untouchable American group Wal-Mart, now occupies 9th placeThe number of people who have a job, exceeded by Amazon (6th), according to Deloitte's annual barometer.
Crossroads overtaken by Amazon, would he be a prey for Jeff Bezos' band? According to the daily newspaper Les EchosAmazon does indeed have huge financial means at its disposal, as evidenced by the amount invested to acquire the organic retailer Whole Foods: nearly 14 billion dollars, the equivalent of the market capitalization of Carrefour, and twice as much as that of Casino! Jeff Bezos also benefits from the latitude of his shareholders to be able to lose money in order to tame certain markets, which can make one fear the worst in terms of price wars in a market that is already ultra-competitive and has been in deflation for several years.
Rumors of a takeover have been spreading over the last year. Amazon has approached a number of retailers to form alliances or partnerships. But so far none of them have been successful. Until when?
 
 

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