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Amazon has opened its checkout-free Amazon Go convenience store to the public. The store, located in Seattle, uses ceiling mounted cameras and electronic sensors to track purchases, before charging the shopping to the customer's Amazon account.


Source: IGD Research

In-store experience

To enter the store, customers must scan their unique QR code accessible via the Amazon Go app. The customer's Amazon account is then associated with their physical presence in store, which is tracked via cameras and sensors on shelves, as well as a computer vision system. When an item is taken off of the shelf, the product is automatically added to their Amazon shopping cart. As all transactions take place online, customers are free to put items directly into their shopping bag. When they leave the store, their Amazon account is automatically charged, and an electronic receipt is sent to the app.

Whilst the need for human interaction is removed with Amazon Go technology, there are still members of staff in the store. There are chefs preparing fresh food, stockers who replenish inventory, and an ID checker in the alcohol section. There is also a staff member readily available to answer questions and offer assistance with using the app.

Just walk out technology

Amazon has called the technology 'Just Walk Out'. The technology speeds up the shopping experience by removing the need for queues. Dilip Kumar, Amazon Go vice president of technology, said that the premise of the store is "to be respectful of your time as a shopper".

Raising brand awareness

The Amazon Go store illustrates one of the company's values, a passion for innovation. The 1,800 square foot store mainly stocks food-to-go products and Amazon meal kits, along with some household items, reflecting items available in Amazon Pantry. The store also features a limited range of  Whole Foods Market's products, reflecting Amazon's acquisition of the retailer. Amazon currently has no plans to introduce the technology into the Whole Foods Market stores, and it is unclear whether the online retailer is planning to open more Amazon Go stores.

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The trend for online retailers to establish a “real world” store network continues to gather pace in 2018. Alistair Balderson, IGD's Head of Supply Chain Insight, looks at some recent developments.


Last week the two major Chinese online retailers were in the news. Alibaba announced the expansion of their Hema supermarket chain with 30 new stores to be opened in Beijing during 2018. And JD.com opened their 7Fresh branded store also in Beijing last week, with a range of exciting tech-enabled features.


This follows on from what must have been the biggest global retail story in 2017, Amazon’s acquisition of Whole Foods Market. This was a clear statement that Amazon sees a physical store presence as vital for serious growth in grocery and packaged goods.


Both Alibaba and JD.com are at the forefront of developing new retail features, such as payment by facial recognition, smart shopping carts and personalised services which combine the online and offline offerings. You can find out more in our Retail Analysis service.


What are the supply chain implications of these developments?


Amazon and their Chinese competitors are all creating and rolling out advanced supply chain technology: for example JD.com demonstrated automated warehousing and drone delivery during 2017. So you can guarantee that these store networks are not just about selling.


In my view, a crucial aspect of developing these physical stores is to widen their network of convenient local delivery points. These might be used as customer collection points (one of the first things Amazon did at Whole Foods was to install Amazon Lockers) or as consolidation hubs for home delivery.


This reinforces the idea that for online retail in grocery, the “click and collect” model is likely to become dominant, assuming that it can be made sufficiently convenient for the customer. It avoids some of the negatives of home delivery such as urban congestion, low levels of vehicle fill and failed deliveries.


What about retailers with existing store networks?


Most retailers have a store network already, so their focus is on how to use this space most effectively. It is obviously primarily used for selling, but also to pick and deliver online orders often creating inefficiencies and getting in customers’ way. We have already seen developments such as more shared use of stores (i.e. separating off space as units to let out, or incorporating foodservice offerings), improved click-and-collect facilities, and parcel collection points (eg Asda and Walmart’s recent “parcel vending towers”).


In the future, retailers will need to use their store estate wisely, balancing the selling space with “working” warehouse space. Many stores currently see their warehouse space as low priority: “the back of the shop”, to be minimised. But it could used for a range of different purposes and maybe expanded: a local consolidation centre, partial picking of customer orders, and subletting to third parties as is seen in the main store.


This evolving approach to store space will mean that stores cannot be measured on sales per square metre alone – it will need creative thinking and a different approach to retail metrics.


 


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Amazon is proceeding with an ambitious business plan to launch in Vietnam, according to Nguyen Thanh Hung, chairman of the Vietnam Ecommerce Association (VECOM).

Two-step approach

During a meeting between Amazon's representatives and VECOM, Amazon revealed their strategy to approach customers in the country.

"Amazon's strategy consists of two steps. They want to export goods to Vietnam and then import goods to the country. They also want to support Vietnam small and medium enterprises to export on Amazon," Hung said. He added that this should be seen as a positive for businesses in Vietnam.

Ecommerce players see potential in Vietnam

This move follows growing interest from JD.com and Alibaba in Vietnam's ecommerce landscape. Earlier in November, Jack Ma, CEO of Alibaba Group, expressed his interest to assist Vietnam in developing ecommerce and technology. Meanwhile, JD.com has invested into Tiki.vn, a local ecommerce site.

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We present IGD’s top five online trends that we expect to develop and shape the global market over the next 12 months and beyond.
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Amazon’s innovative new service enables unattended in-home delivery at no extra cost.
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With Amazon announcing plans to acquire Whole Foods Market, we look at the opportunities it provides for both companies, what it means for the future of ecommerce and what suppliers should now be focusing on.

This presentation identifies how food and grocery businesses can increase the resilience of their supply chains, and be better able to absorb shocks and risks in an increasingly volatile and uncertain world. 

In this presentation, we look at the key themes from IGD’s annual Supply Chain Summit and explore supply chain priorities for 2017 and beyond.

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A practical one day workshop for all roles in suppliers, to help develop your understanding of the vital part that supply chains play in underpinning FMCG businesses.