Source: Amazon
Why are there so many employees in a cashier-less store?
Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.
One of the misconceptions I had visiting Amazon Go in Seattle was that there wouldn’t be too many store employees. In fact, there were so many, they got in the way.
Helpers were on both sides of the entry kiosk, assisting new customers to get in and out of the store. More were inside handing out complimentary shopping bags and answering questions from retail nerds like me. But assuming all those helpers may at some point disappear, several replenishment staff were constantly refilling the shelves.
The store is about the size of a fuel and convenience location — and you’re lucky to find more than a couple of employees in those — so Amazon Go certainly isn’t scrimping on the labor spend.
As to the technology, there is a lot in the ceiling — and I would guess far more behind the store’s walls. With gross margins likely similar to other food stores, the labor ratio to sales is likely higher, not lower, than a typical small box. With expenses associated with technology also higher, it leaves me to wonder how this store will ever be profitable.
But maybe Amazon doesn’t care about that. There are differing opinions about what the point of the Amazon Go store really is. Back in 2016, I opined in a column that, “Amazon seems to have learned how to use the media in particular to direct the conversation to what it wants to talk about.” But the message to retailers that should have been clear back then was: “Amazon embraces technology — and it is not afraid to fail.”
The absence of a POS checkout stand may be the biggest contribution to the industry’s thinking about the future store. Imagine a Whole Foods store without a scan-and-bag requirement, no stationery check-stand and no visible POS.
There’s certainly an experimental vibe to the Amazon Go store, since the retailer is applying a lot of technology to figuring out how to enable real-time and accurate visibility to inventory at the store shelf and sending replenishment instructions to employees on an as-needed basis. Whatever the technologies being used are, I haven’t seen anything like it anywhere else.
Discussion Questions
DISCUSSION QUESTIONS: Do you see Amazon Go as more of a testing lab, a marketing vehicle, or a viable concept itself with significant roll-out potential? What do you think Amazon is looking to learn from Amazon Go that may translate more broadly across retail?
Poll
BrainTrust
Shawn Harris
Board Advisor, Light Line Delivery
Cate Trotter
Head of Trends, Insider Trends
Amazon Go is a testing lab and a marketing vehicle. It’s important to remember that Amazon is not bound by the same constraints that most retailers are — like profit or access to capital — so it can afford to freely test new ideas and concepts regardless of financial viability. I do believe that Go and other retail initiatives by Amazon are intended to find new and even revolutionary ways to serve customers, and to this end the entire industry should be grateful for their efforts. But while Amazon’s initiatives provide inspiration for the industry and push the bounds for what’s possible, I caution retailers from trying to replicate Amazon’s efforts — they’re playing an entirely different game.
Cashier-less mobile-first plays have their place, and the Amazon Go model will be at the forefront of this paradigm shift. With the convenience model, the grab and go technique will become the best practice.
However, as you migrate to the fashion, luxury and specialty sides of retail, the store associates or brand ambassadors will continue to play a significant role in the overall customer experience. The combination of art, science and personal aspects of the retail experience will be essential, as the shopping experiences and expectations continue to evolve.
Outside of pure technology strategies, it’s the investments made with your people that will make a substantial impact.
It’s far too early to analyze the staffing model in Amazon’s first Go stores. Everyone of those early customers visiting Go for the first time becomes an “experience ambassador.” Staffing models will change with more stores.
As pointed out, Amazon is overcompensating by educating customers about the store and how to “use it.” There are already highly efficient robots that will be quickly adapted to stock shelves.
Lest anyone forget, Amazon’s “Day One” always starts with the customer. They are not worried about lean staffing right now. They are currently focused on changing customer expectations about ever having to wait in line for a cashier. That’s how you lead disruption and make the rest scramble to catch up.
Amazon Go is a testing lab, a potentially viable concept, and a publicity magnet. Through this store, Amazon will learn more about how consumers interact with various technologies, consumer preferences, inventory control and replenishment, and much more. Some of these learnings will be discarded, while others will become retail standards in the years ahead. Amazon has never been afraid to invest in innovation, something other companies should emulate.
It’s a marketing vehicle and as per usual, Amazon is getting boatloads of free press out of it … worth more than they put into the stores. Today, a huge piece in the New York Times. I simply don’t think it’s a viable concept for retailers. Who’s going to care for and feed all that equipment? What’s going to happen to shrink? Why even consider it?
And then there’s my personal preference. If we think of “frictionless” by this definition, there’s zero reason to go to a store. Just order online and avoid the crowds. For me, an in-store frictionless experience is: I shop, the retailer puts the contents of my cart on the belt, bags it, puts it back in my cart and and an associate accompanies me to my car if I want them to. That’s a frictionless in-store experience.
I feel like we’re all very confused and have lost track of the difference between a viable in-store experience vs. a viable digital shopping experience.
By far Amazon Go is a marketing vehicle. It has garnered worldwide attention, and Amazon is all about attention grabbing headlines. Well done. Naturally, it is also a testing lab. At ShopTalk 2018 it was interesting to hear from the folk running Go about the testing, changes and learnings they have experienced — with a stern message that they are NOT intending to roll this concept out to Whole Foods. Frankly, at this stage, it is probably not yet viable and tested enough.
Ultimately this leads to the last question. The ideal state for Amazon is that they do get to the cashier-less Whole Foods environment. As stated above, they still have much work to do in terms of educating the market and figuring out how to make this work with less human attention. This is a brave new world — no doubt.
The present staffing arrangements of Amazon Go reflect the fact that it is a concept store that’s still being tested and that consumers are still getting used to this way of shopping. Should the store go mainstream, I don’t expect this level of staffing would be necessary.
That said, I do not think Amazon Go would ever be devoid of staff entirely. As fantastic as the technology is, a staff presence is still necessary to deter shoplifters, give consumers peace of mind and to answer queries and sort out problems or issues.
The labor in the store isn’t the issue. With any dramatically new concept one needs to make the customer aware and comfortable. Once the shoppers get used to the concept the extra labor will disappear.
I can’t say if this this first of many Amazon Go stores (will Amazon’s next acquisition be a large c-store chain?) or if it is a showcase for technology that Amazon will sell to other retailers, or both. Both strategies seem logical to me. If successful, other retailers will move in that direction with the choice to develop their own technology or simply buy Amazon’s.
Retailers overplay the idea that they should get rid of checkstands. Just watch what people do at a checkstand — and how the “friction” provided there is a benefit to their controlling their money.
They verify that items rang up correctly, they re-examine their purchases to ensure they want all the items, they are able to double check the total against their budget and return items if over budget and more.
Most interesting in this article is the idea that perhaps the Go concept is more about technology for inventory and re-stocking. Had they announced it as such, this Amazon effort would have been relegated to the back pages. But as cashier-free checkout, the headlines were huge.
Remember to consider Amazon like a magician. When they direct you to look at one thing, that’s probably NOT what you should be looking at.
Amazon Go is all the above; it’s a testing lab, marketing vehicle and a truly viable concept. The fact that there is a large number of employees speaks to Amazon’s continued desire, even in the real-world, to make sure the customer experience stellar. It’s a transformative concept, so shoppers will need guides. Also, with the exception of the employees in the prepared foods section, as this humanizes the experience, I can see this concept going fully autonomous to include replenishment activities. Also, don’t forget Amazon is a hardware company too. The cost to R&D the tech was certainly significant; the “tooling” is now done. Amazon Go will extract out the most significant cost in retail, labor; the ROI is clear to me. It does this while also increasing the customer experience, a classic retailer’s dilemma solved.
I would absolutely concur with Paula’s observation that we’re blurring the lines between a viable in-store experience and a viable digital shopping experience. One reason for this is that more often than not we rationalize and view the shopper journey through the eyes of the retailer. In effect making it the retailer’s shopper journey. As shoppers, we don’t conscientiously select a channel — we simply shop. Period. We shop using the path of least resistance and greatest joy. I used to be a believer in “surprise and delight.” I now believe we should drop the surprise and focus on delighting the shopper throughout their journey — before, during and after their purchase — regardless of the path they take.
Amazon Go is certainly a testing lab and Amazon has the money for such an experiment. Right now I don’t think the ratio of staff or the cost of the tech is the biggest concern. It’s more about the concept and the implementation of it, and of course it makes sense to test that in action in a small store environment. But I don’t think we should ever assume that this isn’t being done with a greatest purpose in mind. Amazon is going to apply everything it learns to its other activities, which includes physical retail in the form of its Whole Foods and other stores. And if it can crack the tech and the cost challenge then I have no doubt it will be taking this idea wider. Let’s not forget how many companies already use Amazon tech, whether they are using Amazon Web Services or have a presence on Amazon’s e-commerce site. Perhaps this will be another incarnation of that.
While I’m sure Amazon is using the opportunity for testing, I predominantly see this as a marketing vehicle. They had people lining up to purchase items they could just as easily do in a convenience store — from pure interest alone. I imagine the abundance of staff has more to do with ensuring the launch comes off smoothly, rather a long-term strategy.
A cashier-less store does not mean employee-less. It may mean fewer employees and/or a change in their roles. In Amazon Go an employee was required in the wine section to ensure the person was of legal age. In a typical c-store that would also mean someone would have to assigned to handle the sale of tobacco related products. In those that sell gas there has to be someone who can observe that fueling area. The impact on other forms of retail may be greater where there are not laws that govern the sales process.
Do you remember when the airlines first went digital? They literally had dozens of people there to help every single person that walked up. Same with this. When consumers do things by rote, it is wise to make the transition as human as possible. I know, unfortunately, as in design, we too often take for granted that our ideas will be “so obvious.” Not true. It’s more like Murphy’s Law when it comes to radical new ideas.
As time goes by, you’ll see the numbers of associates reduced drastically, but there will always be people there to help you, just like the airlines.
Though I believe it to still be a testing platform, the idea that the the human element can shift from money taker to product helper could be the concept that becomes reality. As the shopping demographic for retail changes, so do its needs and a well-informed personal shopper could be a competitive advantage for a brick-and-mortar store when a customer is making buying decisions.
Amazon Go is all of the above — marketing vehicle, test lab and viable concept. We shouldn’t pay so much attention to the labor count today — it’s still Day One in Amazon’s book and they’ve always made it clear how critical the Day One experience needs to be. Once they feel customers are comfortable with the concept, this count will go down. In the meantime, Amazon gets amazing press as a benefit. Does anyone remember that Alibaba has been running similar concepts in China for longer than Amazon Go has been around? No, because Amazon keeps us talking about Amazon!
They will no doubt learn many things about automating inventory and replenishment as well as cashier-less checkout. I don’t expect the goal is to scale to a Whole Foods store — the checkout-less concept isn’t for every store format. We should, however, expect to see Amazon create more concepts in the future based on the Go learnings as they have no constraints as other retailers do on experimentation.
Early days of a very nascent concept. It’s no surprise that for both operational and educational reasons the store is heavily staffed. In time, if the concept continues, streamlining is inevitable. It’s not unlike comparing Amazon Go in 2018 to an Apple 2 in 1981 and then considering what Apple offers today.
Surely near term profit is not a motivation. Testing consumer reaction, technology, and PR manipulation are more of what they’re interested in.
Amazon likes to throw things at the wall to see if they stick and they can afford it through AWS. Not knowing the numbers, I can only guess how expensive this little adventure has been but it surely has gotten Amazon a lot of press. I do think there is merit in seeking alternative ways to move and check people out of the store but this technology, IMHO, may not be as sustainable as others. And that’s my 2 cents.
This store concept is simply a design that is being tested by Amazon. It is not intended to make money, but only to serve as a real-life test vehicle (and PR bonanza). Demonstrating proof-of-concept requires a great amount of resources, both human and financial, which this store appears to require. I liken it to a concept car in the auto industry. There are many new ideas for such cars but rarely do they see a production line, yet some of the features do appear in later models. We can enjoy this concept and see which features appear in newer versions of the stores (if there are any), as it changes in response to usage and market demand.
This is a perfect example of technology being used for what it’s good at (repetitive, monotonous tasks) and people supporting in areas they’re good at (talking with other people and more dynamic tasks). What store wouldn’t benefit from a few more people on the floor instead of just being there to check you out? A lot of these emerging technologies actually enable us to be more human. Amazon is not only learning a lot, but they’ll start rolling out the best tech and best practices.
Amazon Go is a test lab. The idea of being able to check out and go is appealing, but there are so many other store functions which Amazon Go is not automating, like shelf replenishment, customer service, associate advice, etc. that the cost to run the store has not been lowered. Also, the reason the check out function problem has not been solved in retail stores is there must be a method for identifying all products in the store, RFID, optical scan, etc., so they can be charged for correctly at the check out. The only method used so far is bar codes which require labor to read from the items.
It will be a long time before all items in a store will be marked and can be read with RFID or optical readers accurately. Amazon is investing in learning how to do automated checkout with Amazon Go, but it will be a long time before just automated check out works perfectly in stores of any size.
Amazon Go is the future, and some would say the future is already here. It is still an early concept and the extra people needed may be to answer questions or deal with issues until 1) all the “kinks” are worked out of the system, and 2) customers are comfortable dealing with the “self-service” concept of the experience.
Amazon is creating a brand new experience. This is just a prediction, but once there is a tipping point and the public/consumer accepts it as somewhat normal, you will probably see less support.
For what is essentially a tech-enabled convenience store experiment, Amazon Go is garnering a huge amount of attention. Most of it is deserved. The presence of so many helpful humans has at least two crucial purposes: They train and reassure shoppers who are still learning how to use the store. They perform stocking and merchandising tasks that cannot (yet) be automated.
The absence of checkout lanes and registers may be the most visible departure from the retail norm, but check-in-and-walk-out transactions are just the beginning.
The tech in the ceilings and behind the walls is about in-store sensing. Amazon wants to know as much about its shopper behaviors and store conditions as it knows about its online environment. It’s this digital-first orientation that store-first retailers should take to heart if they want to be among the survivors.
I see the store as a live action physical research vehicle that they currently can’t get from monitoring online behaviors. I don’t envision a rollout of the full concept, but rather a rollout of the elements that maximize customer delight and spending.
If we question any store’s profitability in the first few months, we are missing the point. The famous Amazon flywheel starts with the customer, hence why a majority of their staffing resources are going toward human touch and not traditionally automated tasks. With a constant influx of new customers, their staff is going to have to continue training a new behavior. “Walking out” isn’t shoplifting!
If I had to guess, I imagine that their hiring process was very different than other grocery stores, hiring for a variety of skill sets that could adapt throughout the year. It will go something like this: A store associate with a passion for charcuterie will receive a notification that a customer is alone in the cheese aisle. The associate arrives along with a recipe to educate the customer on the best pairings. Delighted by the personalized service, they buy all of his suggestions and “just walk out.”