Check-in on entry using a mobile app; “just walk out” to pay
Amazon Go in US beta, going live early 2017
Challenges are likely to be loss prevention and fall-back
Is Amazon Go “the warning shot that signals an Aussie September launch”?
Commentators suggest “your margin is our opportunity” would be Amazon’s “motto” for Australian retailers
Sources: SecureIDNews; The Street; AdNews; Fortune
Summary: Amazon Go is running beta trials of a new in-store experience – a shopper checks-in on the way into the store, shopping picks are automatically captured and the total automatically charged to their Amazon account on exit. To go live in the US early 2017. Potentially, the approach Amazon will use when its stores come to Australia later in 2017.
Point of View
Amazon is making payments invisible in its stores. Shoppers use the Amazon app to check-in, scanning a barcode on entry into a store. In-store technology tracks items as they are removed from the shelves, or replaced. A payment is automatic triggered when the shopper leaves the store. No check-out, hence the name Amazon Go.
The removal of the check-out step has been tested in a number of retailers over the last few years. One of the most notable being Apple Easypay, which allows shoppers to purchase Apple accessories. Amazon Go is probably more interesting as it seems to target supermarkets, one of the few sectors where Amazon is yet to establish significant market share. Supermarkets in Australia (and elsewhere) have trialled streamlining the customer experience. For example, Woolworths using beacons to improve click and collect, or Coles testing appetite for digital shopping lists.
Australian supermarkets have yet to have Amazon competing in the physical space. This looks set to change as Amazon is reported to be planning entry into the market in 2017. As one commentator says, Amazon’s motto may well be “your margin is our opportunity”.
From the payments point of view, removing the check-out removes the payment brand from the purchase transaction and ties the decision to the identification and authentication of the customer relationship. Amazon is using its, likely long-standing, relationship with its customers for risk management. With the payment brand invisible, the funding product could be more readily switched, for example to a direct-to-bank-account transaction rather than a payment card, if available.
Amazon Go points to a future where establishing the relationship with the customer on entry to a store may well become the most common experience, identifying and authenticating the customer using their mobile device. The check-in approach illustrates how identity can enhance the customer experience - and allow retailers to personalise offers and incentives to customers in store. In Amazon’s case, payment risk management is tied to an established, multi-channel relationship allowing the payment itself to become invisible.
An established wallet relationship (for example, PayPal) can offer a similar experience, but without being directly retailer driven. Ultimately, the impact of Amazon Go may have less to do with payments than with Amazon creating physical stores with a compelling cost model. However, as seen in self-service experiments, reliably and cost-effectively automating the in-store experience is not without its challenges.