Scan and Go Technology
The development of technology in the last decade has positively transformed the way society goes about everyday life. Specifically, phones have become so advanced that individuals are able to browse the internet while getting results in a matter of seconds, create a calendar to organize their days, listen to music, or pay for desired items—all at the tip of their fingers on a small, but enormously influential device. With this idea in mind, a recent trend (referred to as: scan and go) has surfaced where stores have incorporated smartphones and artificial intelligence to eliminate the lengthy check-out processes. Instead of waiting in time-wasting lines, customers can now enter a store, choose the items they want or need, and then simply walk out having paid on their phones.
The Scan and Go trend is important to study because if successful, it will forever change the way that businesses are operated. The introduction of these stores will have an immediate effect by eliminating: jobs, human interaction, and equal competition (McNichols, 2018). However, there is also a great amount of potential. If successful, the trend will create a more efficient way of shopping—saving an immense amount of time for its customers.
The recent development of Scan and Go technology combines the use of technology and artificial intelligence to eliminate the check-out process all together. The trend is mostly seen in grocery and convenience stores. While Scan and Go was not created by a single individual, it was implemented by a few stores around the same general period of time.
Developments in Scan and Go technology is possible with a few steps. First, the customer downloads a mobile app that is specific to the store that they are shopping in and enters in their credit card information. The customer will then log into the app as they enter the store, and simply choose the groceries that they would like. With the use of artificial intelligence, the items that are placed in the customer’s bag are scanned by the surrounding cameras in the store. By the time the customer leaves the store, their groceries have been tallied and an amount has been charged to their card. The introduction of this trend is more efficient and convenient for shoppers because it allows them to use their personal phone and eliminates the checkout process all together (Wallis, 2017).
In 2018, Amazon increased its dominant market presence by opening its first “Amazon Go” store in Seattle. Amazon Go is an example of a company who recently introduced Scan and Go technology for groceries. Amazon customers use a mobile app and do not need to go through the check-out process. Amazon Go is open from 7am-8pm and mainly sells ready-made lunches, drinks, snacks, frozen dinners, and basic groceries (Liao, 2018). The 1,800-square-foot building is filled with hundreds of cameras and sensors to appropriately monitor and charge the customers (Redman, 2018). Then, the customers use the A
mazon app for customer processes. The app opens the door, tallies the items that were bought, and them immediately charges the customer’s card as they walk out the door.
Amazon Go is busiest during the week. The peak hours of operation are on weekdays between 8am and 9am as well as 12pm to 2pm (Redman, 2018), and a study conducted by InMarket on visitation to the store, 44% of shoppers visited the store repeatedly while 56% visited once, and the estimated time of visitation was 27 minutes (Redman, 2018). This is important because it will help predict how customers will be using the store in the future. It appears to be that individuals are treating it as both a grocery store and as a grab and go restaurant (Redman, 2018).
In the last few months of operations, Amazon Go has established itself as a very popular and successful business. Amazon has been able to design a store that, “…maximizes customer throughput and sales to produce exceptional results” (Brick Meets Click, 2018). In fact, it is estimated that Amazon’s annual sales per square foot of the selling area was $2,700, even from the beginning of the store’s opening (Redman, 2018). In addition to sales, Amazon Go has an exceptionally high inventory turnover rate-- a rate that measures how well a company generates sales from its inventory (Brick Meets Click, 2018). Amazon Go is generating about 50 inventory turns per year which is about four to five times more than the typical number. This number is expected to increase over the next few months as more people become aware of this convenience.
Due to the recent success of Amazon Go, the Scan and Go trend seems to be taking off at a high rate. In fact, Amazon plans to open about 3,000 more stores by the year 2021. (Kestenbaum, 2018). That being said, Amazon has the potential to, “...become a dominant force in the non-gas station convenience store business” (Kestenbaum, 2018).
Other industries are going to have to adapt to the upcoming trend of Scan and Go technology. Put simply, if individuals have the option to choose between a tedious line or no line, they will most often choose no line every time. Time is not something that comes easily to busy workers, so if people have the opportunity to save time, they will. That being said, if local convenience stores cannot keep up with this growing business, they will enter a price war with the ones that do offer it. Most likely, this will result in the smaller stores going out of business. (Kestenbaum, 2018).
The development of the Scan and Go technology leaves a great amount of opportunity for all different industries, and many stores have begun joining the trend. Sam’s Club is a store that recently opened and uses the same process to sell produce, meat, and alcohol (Siegel, 2018). In addition to smaller, local stores, many dominant companies, such as Macy’s, have begun testing this type of technology in hopes to implement it in the future (King, 2018). If the trend continues to increase the way that we are seeing today, there is a real possibility customer will never have to wait in line again.
AmazonGo delivers a dramatic increase in retail productivity metrics. (n.d.). Retrieved March 07, 2019, from https://www.brickmeetsclick.com/amazongo-s-retail-productivity--at-least--2700-sq-ft-selling-area---50-inventory-turns-year
Kestenbaum, R. (2018, October 02). The Impact Of 3,000 Amazon Go Stores Will Be Massive. Retrieved March 07, 2019, from https://www.forbes.com/sites/richardkestenbaum/2018/09/23/3000-amazon-go-stores-ibm-cisco-ncr-fujitsu-toshiba-oracle/#11fbdeaf5147
King, J. (2018, March 21). The Future of Checkout Lies with AI, Scan and Go. Retrieved March 07, 2019, from https://www.emarketer.com/content/the-future-of-checkout-lies-with-ai-scan-and-go
Liao, S. (2018, September 17). Amazon opens its first cashier-less Go store outside of Seattle. Retrieved March 07, 2019, from https://www.theverge.com/2018/9/17/17869294/amazon-go-store-chicago-cashier-less
McNichols, J. (2018, January 30). Eliminating Interpersonal Connections at the 'Amazon Go' Store. Retrieved March 07, 2019, from https://psmag.com/news/the-downside-to-amazon-go-stores
Redman, R. (2018, November 05). First Amazon Go locations demonstrate concept's strong appeal. Retrieved March 07, 2019, from https://www.supermarketnews.com/retail-financial/first-amazon-go-locations-demonstrate-concept-s-strong-appeal
Siegel, R. (2018, October 29). It's not just Amazon. Sam's Club debuts cashier-less store in race for the future of shopping. Retrieved March 07, 2019, from https://www.washingtonpost.com/business/2018/10/29/its-not-just-amazon-sams-club-debuts-cashier-less-store-race-future-shopping/?utm_term=.740251945a6e
Wallis, J. (2017, October 09). The rise of Scan and Go technology and how it works. Retrieved March 07, 2019, from https://www.finextra.com/blogposting/14606/the-rise-of-scan-and-go-technology-and-how-it-works