Online sales have taken off exponentially worldwide, led by the likes of Amazon and Alibaba, but they are still a fraction of physical, retail sales. Much of the trade still happens in so-called brick and mortar stores, with real humans at the cashiers and real goods on display. Buying things online is undoubtedly convenient – you can do it from home or even from Antarctica, 24/7. The package arrives at your doorstep. You do not have to move a muscle.
On the other hand, when buying online there is no way to inspect the goods beforehand. Moreover, in a retail store the buyer gets instant gratification – the goods are in his or her hands the moment the cash is given or the card handed over. Most buyers still like to go to a store and browse the aisles, despite the inconvenience.
For many years, online retailers such as Amazon have been trying to take on the physical market, but it is a tough nut to crack. True to the saying “if you can’t beat them, join them” Amazon has quietly ventured into physical stores, first with books, its main product. But online retailers want to go one better – they want to combine the best of both worlds – the physical connection and the convenience of one-click buying in a retail setting.
Retail landscape
Just last week, Amazon took another step forward that may drastically change the retail landscape. The term given to its first technology is “Just Walk Out”. Amazon introduced this concept with Amazon Go, an advanced grocery store with no checkout. Introduced in Seattle, the store uses advanced shopping technology allowing customers to buy products without standing in a checkout line. It is now open only for Amazon employees, but will go ‘live’ for the public next year.
The customers need to use the Amazon Go app while entering the advanced grocery store, buying products and leaving without standing in the checkout line. The app automatically keeps a track of the products chosen and removed from shelves. It also records the products put back on the shelves. When a customer leaves the store after shopping, a receipt will automatically reach his or her Amazon account. A customer only needs a smartphone and a free Amazon Go app to use the service, which has been developed for over four years to make shopping easy.
This is a game changer in more ways than one, because there is no need to wait in a checkout line. There is no need to carry cash or credit cards, just your smartphone. But you can still inspect the goods before buying, ask a salesperson for information or assistance and even chat to a fellow customer, none of which is possible when shopping online from home or office. But it is just like online shopping because you can Just Walk Out with your groceries and other goods. Amazon is not the only company trying to do away with the conventional cash register – fast food giant McDonalds is trialling a similar method.
Amazon and other online retailers are also addressing the other major problem with online shopping – you still have to wait a couple of hours at least before your goods arrive. This could be an interminable wait, if you are desperate to get your hands on that PS 4 video game. But, what if you could cut the waiting time to 30 minutes or less? This is acceptable to most people, because even if you buy goods at a store, you still have to take it home, which takes at least 30 minutes in most cases.
The age of instant gratification has reached new heights, thanks to the impending arrival of Amazon’s Prime Air drone deliveries. In the company’s first trial for its new airborne service, a customer in Cambridge, England, received a package containing an Amazon Fire TV box and a packet of popcorn just 13 minutes after placing his order.
The trial currently involves just two people living close to the retail giant’s Cambridgeshire warehouse. The service involves the use of completely autonomous quadcopter drones that navigate using GPS to deliver items to customers’ homes, flying at heights of just under 120 metres. There are many regulatory barriers to overcome, but there is no doubt that delivery drones will be a part of our busy lives over the next decade. Since laws and regulations vary from country to country there will be no uniform worldwide standard – some countries till ban unpiloted drones – but expect the technology to be broadly adopted.
Amazon’s main retail rival Wal-Mart is at it too - Wal-Mart trying out drones in its warehouses to check inventory. Give or take 10 years, the technology will be advanced enough to do most deliveries. And don’t think that drones have to always fly – Google is trying out self-driving robotic vehicles to deliver packages to homes and offices. There could even be humanoid robots doing the delivery rounds, as predicted in a number of movies.
And in case you fear that the rise of automation will lead to a loss of jobs, think again. History has shown that over the long run, new technology has tended to create more jobs than it has destroyed, while increasing society’s productivity and wealth. The children and grandchildren of the workers who might have tilled farmland in 1900 are now computer programmers, radiology technicians, and pilots - jobs created by technologies that were unknown in 1900. And, nearly everyone is economically better off. The cashier whose job will be redundant will probably find another useful form of employment, because people still crave for some sort of interaction with a fellow human being while shopping. This is why banks still have human tellers, although just about every banking transaction can now be done online. This is why travel agents are still thriving, despite the fact that one can book flights and hotels with a just a few clicks from the comfort of home. People will still want to depend on people when it comes to major purchasing decisions.
But one thing is clear – the retail landscape is in for major changes over the next decade. With huge supermarkets at every junction already decimating the small ‘kadeys’, the retail scene is undergoing seismic changes. With cashless stores and drones coming into the picture, things are going to get even more complicated. These technologies will no doubt enter the Sri Lankan market in the years to come – we already have technologies such as NFC in operation. Retailers, both online and physical, all over the world will watch the latest developments closely with a view to incorporating the latest technologies that will make shopping easier and more gratifying.