Amazon Go Vs. Unmanned shelves in China

After a year of testing, Amazon Go has launched a store where no checkout is required in Seattle, USA. Though it first launched the idea of unmanned stores at the end of 2016, Amazon Go’s opening is not as early as those of its competitors; many unmanned stores in China opened throughout 2017. At least 30 startups, including BingoBox, Tao Café, F5 Future Store, Xingbianli, and JD Daojia, among others, have tapped into this market. Even Chinese tech giants Alibaba and Tencent have supported some unmanned stores.

Unmanned stores in the two countries are quite different, however. In China, unmanned store startups secured a large amount of money to increase the speed of expansion throughout the country. Amazon Go stores, conversely, didn’t open until they had been tested for a year.

 

A BingoBox unmanned convenience store. Photo from Sohu.com

No lines, no checkout

Compared with other kinds of unmanned stores, the distinctive aspect of Amazon Go is that it offers customers checkout-free shopping services. Amazon Go’s tagline reads as follows: “No lines. No checkout. (No, seriously.)”

In order to buy things at Amazon Go stores, one needs to download and install the Amazon Go app and select a form of payment. Once customers arrive at the store, the app will display a QR code. By scanning this code, one can enter the store and freely choose what they want. After choosing the goods, one exit the store without checking out. The genius of the technology is that it automatically detects what products are taken from or returned to the shelves and keeps track of them. After leaving the store, the consumer will receive a receipt and a charge on his or her Amazon account.

By avoiding checkouts, people save time while shopping. An Amazon representative said that she always buys lunch at Amazon Go and completes her shopping in less than a minute. Within this 1800 square foot store, breakfast, lunch, dinner, and snacks are offered. It is not yet a true unmanned store, however, because there are still some staff working at Amazon Go. The staff prepares ingredients, makes food, stocks shelves and helps customers. From this perspective, the aim of Amazon Go is not to create a store operated without staff. As Amazon claims on its website, its vision is to create a store where customers can simply take what they want and go. It is not about saving human resources but improving consumers’ shopping experience.

Technological differences

In China, the rise of unmanned stores has been very rapid. Unmanned stores have expanded from first-tier cities to second-tier cities in one year. These unmanned shelves are located in office buildings and aim to attract office workers to purchase goods. Compared with Amazon Go, most unmanned stores in China merely use Radio Frequency Identification systems (RFID), which operates through RFID tags.

By using RFID technology, unmanned stores in China cannot achieve the checkout-free shopping experience provided by Amazon Go. Therefore, consumers at most of China’s unmanned shelves have to do self-checkout, and this still requires them to sometimes wait in lines.

On the other hand, Amazon applied rather sophisticated technologies to its no checkout store, including sensing cameras, deep learning algorithms, sensor fusion and so on. These cutting-edge technologies can transmit data instantaneously when consumers pick up the goods on the shelves. Whenever consumers take goods from or return goods to the shelves, the shopping list will update simultaneously. What’s amazing is the application of camera sensors that can detect products on the shelves, in your hands, your bags, or even under a shirt. With this technology, Amazon has almost completely solved shoplifting.

In fact, Amazon filed patent applications for ‘detecting item interaction and movement’ and ‘transitioning items from the materials handling facility’ technology a few years ago. These patents have contributed to today’s generation of Amazon Go stores.

Future predictions

It’s difficult to say if Amazon Go or Chinese unmanned stores will capture the market due to their different locations and because retail is based on local consumption. Amazon’s technology is very advanced, but the high costs make it a little difficult to expand as far as possible. It is estimated that one Amazon Go store costs around ten million dollars to open. Interestingly, Amazon may not aim to be a retail giant despite its investment in checkout-free stores. It is assumed that Amazon’s long-term goal is to be the technology supplier for all online and retail commerce. The company can achieve this ambitious goal by convincing other retailers to trust its technology.

The initial cost to set up an unmanned shelf in China, however, may be as little as RMB 1000 (USD 156.2), and this includes the costs of shelves, consumer goods, and promotion fees. The low operation cost and the short period for return on investment make the rapid expansion of unmanned shelves in China possible.

Despite the exciting rollout of these unmanned stores, both of the models have their own disadvantages. The technology powering Amazon Go still makes some errors when consumers pick up goods on shelves. Some questions still remain: how will Amazon deal with problems such as when shopping lists do not update? And will Amazon Go’s profits balance out the high cost of these checkout-free stores?

On the other hand, unmanned stores in China have fallen prey to shoplifters in some places. Shoplifting may continue to plague unmanned shelves which do not have increased security measures. Some companies, such as Xingbianli, have already laid off employees due to competition in the unmanned shelves market. In this emerging market, each newcomer inevitably faces various challenges. We, the customers, need to wait for the answers.

(Top photo from ifeng.com)

Lena Zhang
Lena Zhang

Lena is our columnist. She is a Beijing-based educator who has previously worked as a finance reporter. Lena is passionate about the social sciences and curious about how technology impacts our lives. She holds a master's degree in Social Anthropology from the London School of Economics and Political Science, and a master’s degree in Communications from Jinan University.

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