Why cities resist Amazon Go, first cashless stores

Amazon has bothered to dominate only the online market. After opening their first, unique, Seattle-free store in Seattle early last year, these supermarkets of the IT giant, following your purchases with AI and cameras, began to appear in many major cities in America. The company plans to seize the entire offline retail in general, in the coming years by opening at least 3,000 more of these automatic supermarkets in the United States. But not everyone likes this movement into the future. Many cities and even entire states for some reason try to ban the appearance of Amazon Go on their territory.

Experts fear that the emergence of such a large player in this area could endanger thousands of small stores, large chains like 7-Eleven, and even fast food outlets with pizzerias. Jeff Bezos says that this is an opportunity for Amazon to revolutionize the offline trade industry - just as they did online sales in the early 2000s.

With the news that Amazon Go will expand in all US cities, the shares of the largest supermarkets - Walmart, Target, Kroger - in 2018 fell by 3-4%. With three thousand of its points in America, Amazon Go can become one of the largest retail chains in the country. The expansion plan was also chosen very aggressive: 10 stores now, 50 - by the end of 2019, several hundred in 2020, and right away, a boom, three thousand by 2021. Amazon is going to spend on this plan more than $ 3 billion - on cameras and other equipment necessary for the operation of surveillance systems for buyers. The amount may seem astronomical. But in reality, this is a penny compared to the company's annual operating expenses, which in 2018 alone amounted to $ 200 billion.

And the jackpot here you can get very good. Now in the US there are 156,000 shops and stores. About 125,500 of them - at gas stations. And the products (except for fuel) they are bought annually for $ 350 billion. If Amazon manages to snip off a piece of this pie for itself, and even with minimal labor utilization, its position in the ranking of the most influential American companies will become even stronger.

Crowd of imitators

A year after the appearance of the first Amazon Go, which proved the reality and success of the concept, many countries, states and cities had competitors in it. Young startups and established industry giants work together to prevent Amazon from picking up a new market. Some of them even lobby for themselves in front of city councils (just as local startups for renting electric scooters do in every major US city).

Of course, no one thinks that Bezos can be defeated "head on." Each startup has its own chip, thanks to which they expect to overtake the Amazon. For example, Mighty AI, although based in Seattle, moved to Detroit to be closer to the offices of all car companies. Those are now working on software that allows unmanned vehicles to distinguish objects in the real world. The startup hopes that communication with them will help him improve the software for cameras in the same "unmanned" supermarkets.

Walmart is trying to develop technology on its own, and Kroger has requested the help of Microsoft, and with the new technology expects to increase revenue by at least $ 400 million by 2020.

California AiFi went even further than Amazon Go. Her prototype store, presented a couple of months ago in New York, is fully automatic. Bezos has automatic payment only so that people do not need to carry a wallet or punch through all the goods. But still workers have to fill the shelves in the supermarket, and these are potential human errors. In AiFi, filling is also carried out by a mechanism, as in a large vending machine. The area of ​​the test site is about 15 square meters, and people are needed only at the stage of its installation.

Michael Susval, co-founder of the Standard Cognition startup, who became famous for developing AI to identify thieves before committing theft, says that Amazon simply became a catalyst for the new movement:

Technology stores without cash registers matured in any case. Developments in machine vision and artificial intelligence reached the desired level. Amazon simply attracted attention to this area, brought it into the mainstream. The launch of Amazon Go and the whole purchase of Whole Foods made people, especially the top managers of supermarkets, really think. Everyone understood that it is necessary to introduce innovations more quickly, otherwise you will be left on the sidelines.

Investors also showed a nehily interest in the new field. The startups involved in store automation got $ 111 million (!) In 2018. For comparison, two years before that, the sums were estimated in thousands of dollars, and companies that received $ 400 thousand were considered lucky. And now it has come to the point that now in San Francisco a new test “automatic” shop from another startup opens on average every two weeks.

The minimum program for each of them, says Michael Susval, is to be sold by the same Amazon. The maximum program is to create and patent such a technology, which no supermarket can do without in the near future.

Why cities are against

Many cities and states are resisting the discovery of Amazon Go or its followers. Critics say the technology widens the gap between the rich and the poor. And there are three problems at once. Firstly, there are no cashiers in them, and sometimes many other categories of workers, such shops are only interested in IT staff to improve the quality of software. And that means even less work for those who are so tight with her.

Secondly, many people do not like total surveillance of citizens, especially from private companies. After the scandal with Facebook, who will guarantee that Bezos will not one day want to sell videos of all your visits to his supermarkets? Suddenly you will become famous for something, and then it turns out that you bought baby food when you do not have children? Or do you take alcohol regularly on Fridays? Or once ordered a pack of super-small condoms? Here you have a little article for the yellow tabloid!

Finally, thirdly, and most importantly, such stores do not accept cash. This is their essence: to provide the most simple shopping experience. As a result, city councils worry, homeless and disadvantaged (as well as young children) cannot even buy anything from them.

In March, the state of New Jersey banned most types of strictly non-cash stores. In February, the same law was adopted by Philadelphia . Massachusetts since 1978 has banned any “discrimination” against customers using the cash. San Francisco, Chicago, Washington and New York are going to join this year.

Their main argument against "auto shops" is that the most disadvantaged segments of the population have no applications in smartphones or credit cards. Yes, digital payments reduce transaction time, they are convenient, the risks of theft are reduced, and the speed at which customers exit is increased. But all these are issues of small convenience for the middle class, while poor people face a real problem. Now, not only do they not have enough money for food, the number of points where they can physically buy it is reduced.

In 2018, 6.5% of American adults did not have a bank account. Another 19% owned an account, but did not use it for any operations other than receiving microloans and cashing checks. Even people with a stable income often decide not to open an account - in order not to succumb to the temptations of lending or not to pay a monthly fee. For the homeless, the problems are even worse: many simply do not have the documents to open an account. Getting a new ID can take several months, and about three million Americans involved in survival, decide not to stick in this red tape.

City councils are afraid that if stores like Amazon Go start winning ordinary supermarkets, cash will remain the lot of street stalls, and then only for a short while. Many restaurants already do not accept cash as well - this allows reducing up to 10% of overhead costs. In five years, analysts at Crone Consulting predict, more than a third of retail will become non-cash (instead of 17% in the US at the moment). Restaurants and automatic supermarkets will be opened only for "wealthy" - with a bank account and a good credit history. Economists in the States even suggest introducing a special term for this - “discrimination of the poor.”

Many countries openly welcome non-cash payments and cashless supermarkets. Nearly half of Chinese use mobile phones to pay for purchases. In India, the government is promoting digital payments as a way to fight corruption. In Sweden, the most cash-free country in the world, in 2018 only 25% of citizens at least once a week paid for something with paper money. The remaining 75% cost only bank transfer.

The United States, despite the seemingly general technical advancement of the population, is not one of these countries. Why - explains Mersa Baradaran , a professor at the University of Georgia and the author of the popular book on the financial system "Color Money":

America is quite a strange state in this regard. Historically, we have a lot of competition, and banks do not give bills to many low-income people. In many places outside the city, there are simply no bank branches. We have a largely divided society in which poverty is more pronounced than in most other countries. There are poor countries where, on average, the Internet is better, the quality of mobile communication is higher, or there are more non-cash payments. Our state does not prioritize this infrastructure.

Too fast transition to new technologies, like automatic shops and contactless payments, leaves certain segments of society behind. To press on the brake now wants even Sweden. Two weeks ago, the government decided to issue a decree obliging banks to process and issue cash currency. People in the country are afraid that cash will disappear too quickly from use, and this can create difficulties for those who did not have time to “go into the information age,” for example, for the elderly and people in remote places.

And how do you think it worth it? Do we complicate life for those who have it so difficult? Or are all these bans of promising technologies - is it modern Luddism?

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