Retail: Go shopping with less fuss
It may be a while before Amazon Go comes to SA, but its launch will herald greater disruption in retail, which is good for the SA consumer
Global online retailer Amazon has launched what could be any shopper’s dream. In our increasingly busy lives, the last thing one wants is to stand in a long queue at a retail store after a full day of work.
With technology, shopping as we know it is being totally revolutionised.
The e-tailer unveiled its Amazon Go grocery shop in Seattle in the US, which has no checkout points. Shoppers can walk into the store, take what they want and leave with their purchase immediately after. The system has completely removed the need to wait to pay for your goods.
To do this, customers will have to download the Amazon Go app, and open an Amazon account for payment.
Amazon Go explains that it uses technologies found in self-driving cars, such as computer vision, sensor fusion, and deep learning. Its "Just Walk Out" technology automatically detects when products are removed from or even returned to shelves and keeps track of them in a virtual cart. When you’re done shopping, you leave the store, and are charged electronically.
The store is already in use by Amazon staff members and will open to the public early 2017.
Will this trend pick up in SA?
In SA and abroad, most consumers still prefer to go to a store to do their shopping and physical sales still make up 90% of retail sales. Online stores are used by only a small percentage of the population. Online shopping is still largely limited to clothes, electronics and other household goods.
But in stores, the pressure has fallen on retailers to make the experience easier and more convenient.
Amazon’s move into the grocery space is no surprise, says US-based Forrester Research principal analyst Brendan Witcher.
He says Amazon has done to retailers what NetFlix did to the TV industry and cinemas years ago.
"They broke the mould, threw it in the garbage, and said: ‘How can we rethink this experience completely?’" he says. The retail industry is ripe for disruption, so more retail tech trends may be on the cards.
"Retailers who sit on their hands and fall too far behind this potential game-changing way of shopping might never catch up," says Witcher.
A report released by Nielsen on mobile shopping, banking and payment says retail owners will need to recognise and cater to the needs of different shoppers, including those who use their mobile phones to transact.
This may mean incorporating more mobile strategies.
The report shows that one in three South Africans uses an app to make a purchase and more than one third of South Africans use their devices to look for deals. It says 44% use phones to make better shopping decisions or make shopping trips quicker.
Nielsen SA country head Bryan Sun says mobile commerce has enormous implications for the entire retail ecosystem.
Mobile devices are not only bringing new consumers into the modern, connected economy, but are also enabling a more customised experience, as products and services can be more closely tailored to behaviour, needs and preferences, he says.
To drive higher adoption, retailers will have to understand shopping habits and transacting in a digital world and use that information to design their strategies around customer habits and preferences.
Though it’s still early days to determine whether Amazon Go will be a success and whether it will be rolled out in other countries, Amazon’s products have generally received a positive reception from consumers.
"Many might be wondering why Amazon is experimenting with groceries, a low-margin, fully commoditised, crowded market. But for a company like Amazon, which thrives on efficiency and high-frequency purchases, it makes perfect sense as a strategy for building its brand in the physical space," says Witcher.
As more of the technical and operational aspects are revealed, retailers may get a better understanding of how this model for physical retail can play into their overall strategies.
"The Amazon Go solution takes retail in the right direction: providing value and convenience for today’s mobile and digitally savvy shopper," says Witcher.