The Genius of Amazon Go

 In early December, 2016, Amazon took the wraps off Amazon Go, a real-world grocery store that comes with a twist: there’s no checkout process. You just grab the stuff you want and walk out; the order posts to your Amazon account afterwards. There are no cashiers, no lines, no fumbling for a credit card.

“Four years ago we asked ourselves: what if we could create a shopping experience with no lines and no checkout? Could we push the boundaries of computer vision and machine learning to create a store where customers could simply take what they want and go? Our answer to those questions is Amazon Go and Just Walk Out Shopping.” – Amazon

Amazon posted this video on YouTube, and it outlines what Amazon Go is all about.

The video now has over 7.7 million views.

Have I piqued your interest yet?

So, how did Amazon Go start and how does it work?

In 2013 and 2014 Amazon filed two patents that described most of the technology that the Amazon Go store is depicted to have.

The first patent talks about “Detecting Item Interaction and Movement” (Principle Inventor: Dilip Kumar, Seattle) and it describes a system for tracking removal or placement of items at inventory locations (such as the Amazon Go store). It uses a variety of sensors and cameras with object recognition software, can detect which user picks up or replaces what object in the inventory location, and can autonomously update an item list associated with the user (a checklist of say, groceries the user intends to buy, for example).

The second patent expands on the first concept, covering the payment of items when you leave a designated idea. When the users enters and/or passes through a transition area (entrance/exit of the store), the picked items are automatically transitioned to the user without affirmative input from or delay to the user. For example, if the materials handling facility is a retail store, users may pick items from within the facility, place the items in a cart, bag, pocket, or otherwise carry the items and the items are automatically identified and associated with the user. When the user exits the facility, the items may be transitioned from the facility to the user and the user charged for the items, wirelessly, instantly, and without the need for a check-out with a cashier.

As for how its “Just Walk Out Shopping” experience works, Amazon seems emphatically not to want to share details. It steeps its description of how the system works in buzzwords: ‘computer vision’, ‘sensor fusion’, and ‘deep learning’. It uses sensors throughout the store and artificial intelligence to tell which direction customers are looking, even in a crowd, and can identify partially blocked labels. Beyond that, details are hazy.

Amazon originally filed these patents with a view of using these systems in the warehouse areas, but dropped a few golden nuggets of foreshadowing regarding their plans of using these systems. Upon reading these patents and the abstract associated to them, it is clear that Amazon Go has been in the pipeline for a long time, and upon reading more about this topic, it has become clear to me that Amazon Go is way more than a seamless grocery-shopping experience. Amazon is going for the big kill and Go is a means to that, and not an end in itself. But we will get to that in a short while.

Amazon even dropped the video very cryptically, disabling comments on the video and they declined to take questions from reporters after the announcement. They probably wanted the idea to swirl around in people’s minds, gestate and make us think about how convenient and awesome such an experience would be. Internalization and subconscious gestation of ideas such as these breeds expectations. Based on all that we have and will see and hear about Amazon Go, our expectations are shaped before we ever experience it for the first time, and as any economist worth his salt will tell you, expectations are a catalyst of change so strong, they can alter markets.

And that brings us to the endgame that I believe Amazon Go is aimed at reaching.

There is a need for a tiny prologue that explains this endgame and this prologue centers around Amazon’s Web Services (AWS). AWS began as an online infrastructure that Amazon created to host and manage its own site. Over time, the systems AWS provided, rose in demand for other companies and therefore Amazon licensed this infrastructure and today online organisations such as Netflix, NASA, Reddit, The Obama Campaign, Pinterest, Dropbox, Zynga, Expedia, Instagram, Foursquare, AirBNB, Getty Images, The Guardian and the CIA, among a lot more, are all hosted on AWS’s servers. The internet as we know it wouldn’t exist without Amazon Web Services and its online cloud computing-based infrastructure.

The value and revenue of AWS is growing fast and to put that into perspective, here’s a metric: It is 10 times in size, as compared to its next 14 competitors, combined. The patents and the introduction of Amazon Go against the backdrop of Amazon Web Services can indicate that the company is trying to replicate in the retail industry what they pulled off in the online web services industry - backseat monopoly, of sorts.

Amazon’s long term goal is to be the technology supplier for all online and retail commerce. It seems clear that Amazon will license this technology to small and large retailers just as they have licensed AWS technology. Once Amazon Go has a few functioning outlets over the US and, maybe, the world, and the bugs have been ironed out, the sheer amount of user data this system will generate and store will make this model irresistible for other retailers. They will inevitably approach Amazon Go in an attempt to earn the same kind of benefits. Amazon will wait until then, and then cash in. Big time.

Amazon is out to gain domination not just over grocery stores and supermarkets, but over a retail industry worth $25 trillion in the US alone. It is out to derail a dynasty.

-Jai Vyas