18 March 2019
US online retail giant Amazon has revealed a real-world grocery store that comes with a twist: -- there’s no checkout process. Photo: Amazon
US online retail giant Amazon has revealed a real-world grocery store that comes with a twist: -- there’s no checkout process. Photo: Amazon

Cashierless stores: A new gold rush in data

Chinese e-commerce giant Alibaba is rumored to be building its first offline shopping center called More Mall in Hangzhou. It is expected to officially open to the public in 2018.

It is said that More Mall will integrate a series of new retail technology and will introduce both online and traditional brands, with featured stores and a cinema.

US online retail giant Amazon revealed a new concept store in Seattle last December. Without lines or checkout counters, Amazon’s machine-learning technology automatically identifies when a product is added to shoppers’ carts. When shoppers walk out of the store, Amazon automatically charges the credit card on the shoppers’ Amazon account.

The futuristic concept is creating the ultimate shopping convenience by deploying the latest technology along with big data analytics from customer data in the last two decades. It is the right time for Amazon to take a significant step to disrupt the traditional retail business.

As the latest talking point of the global business world, Amazon once again surprised the market with its acquisition of grocery retailer Whole Foods Market for US$13.7 billion announced last month.

The acquisition of physical stores struck some observers as strange to Amazon’s online-only business. But Amazon’s accurate foresight has been way ahead of its rivals. This is a company that saw the power of online retail in 1994, and of cloud computing in 2006, and recently started to provide Artificial Intelligence (AI) as a service to enterprises. To me, its purchase of Whole Foods represents a similarly far-sighted incursion into a lucrative new frontier.

Alibaba has invested heavily in brick-and-mortar stores over the past two years including privatizing Chinese luxury mall Intime, working with partly owned electronics retailer Suning, as well as launching Hema supermarkets. The company also operates AliCloud, one of Asia’s largest cloud computing businesses, along with big data analytics and AI-based technology.

Both Amazon and Alibaba recognize the significance of incorporating synergy in both online and brick-and-mortar stores. They believe their big data and technological prowess can help integrate both online and offline retail spheres into a new way of doing business and pave the path to future growth.

Far more radical changes are coming up to transform the traditional retail landscape.

Recently, three of the largest supermarket chains in the UK have rolled out surge pricing in select stores, which means prices will rise and fall over the course of the day in response to demand. Shopping in supermarkets after work will be like ordering an Uber at rush hour.

The futuristic retail concept requires the capability of big data accumulation and continuous data update, in which Amazon is an expert, providing a huge opportunity for cooperation between asset-light tech businesses and asset-heavy traditional companies.

AI learns from past behavior, as well as from trial and error to come up with more intelligent and mature solutions. The emergence of the cashierless store is a good example. As one of the classic principles in Chinese kung fu goes, “speed defines the winner”.

This article appeared in the Hong Kong Economic Journal on Sept. 5.

Translation by Ben Ng

[Chinese version 中文版]

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Venture Partner of Sequoia Capital China, former head of the data committee and vice president at Alibaba Group.

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