The Future Is Frictionless

NACS writer Frank Beard shares three insights on the future of on-the-go, checkout-free retail.

Checkout-free retail seems to be on everyone’s minds—and for good reason. Not only is it exciting (skip the checkout counter and just walk out), but this technology brings many benefits to consumers and retailers.

I’ve written previously about Amazon Go, Zippin, and Standard Cognition, and I recently spoke to representatives of CloudMinds. As a provider of cloud-based artificial intelligence systems, CloudMinds has extensive experience in this space—including in the Chinese retail market, which Bloomberg recently described as “the world’s retail laboratory.”

Here are three takeaways from our conversation:
Retail Disruption and the Go-Box
Founded in 2015 with headquarters in San Francisco and Beijing, CloudMinds develops cloud-based artificial intelligence solutions for many applications including retail. While it’s extraordinarily difficult to replicate human-like intelligence in a robot or small device, similar capacity can be developed and distributed through cloud-based applications. This assists with a spectrum of products and services, from delivery robots to better product recommendations to virtual mascots providing customer service.
“In the retail industry, we see a huge potential for technology disruption—especially within the checkout-free, grab-and-go space,” says Melissa He, vice president of products and marketing. “So, we put together a vertical solution using the Go-Box.”
Announced at Mobile World Congress Americas 2018 as part of a go-to-market collaboration with Sprint, the Smart Retail Go-Box is something of a cross between Amazon Go and a vending machine. Customers gain access through facial recognition or a QR code on their mobile device. The Go-Box leverages cloud-based AI to offer product recommendations, discounts, and track who removes which items. Payments are processed automatically.
At the present time, CloudMinds focuses much of its efforts on the Chinese retail market. “Deploying in China is much easier than the United States,” says David Klinkon, CloudMinds’ director of business development. “The mobile payments ecosystem is already built. WeChat or Ali? Pick one.”
Melissa He describes the ideal Go-Box customer as living a fast-paced, on-the-go lifestyle—people walking through airports, transit hubs, office complexes, and the young and tech-savvy. In China, the proliferation of larger urban centers with subway systems and underground shopping centers has led to numerous vending machines.
“It’s not just traditional water, Coke or Pepsi,” she says. “You can actually buy anything. Any shape or form. We realized you could put computer vision on those machines, sell higher-value products, deliver targeted ads, and provide smart inventory management.”

Today’s Customers Expect More
How many of us visit retailers who miss the mark on customer engagement? Perhaps it’s a grocer who asks the same questions every time you check out, or a big-box store that constantly asks if you need help finding anything, despite no indication that you do. I was recently at an airport technology store where I was swarmed by employees who peppered me with questions before I even had a chance to look at the products. These interactions feel forced and inauthentic; they also seem outdated in an environment where many of us are used to self-directed, personalized shopping experiences online.
Klinkon shares a story from a recent trip to Japan. He stood in line at a convenience store, behind a customer who had grown tired of being asked if he wanted bags. Affixed to his hand was a label that read “NO BAGS.” When the cashier asked if he needed one, he simply raised his hand.
“People are used to the Amazon, personalized shopping experience,” says Klinkon. “They know your habits, what you bought before and what you’re searching for now. People have come to expect that at brick and mortar. But often times, it’s like ‘why are you here? Let me show you 16 different options.’ But this is 2018. You should already know what I want.”

Technology Can Enhance Customer Engagement
Let’s return to the airport technology store. The truth is I’ve actually avoided going to many of these stores because I prefer to be left alone. I want to browse the products in peace, look up customer reviews on my phone, compare prices to Amazon, and control the entire shopping process from start to finish. I suspect many people feel the same way.
But what if a Go-Box or similar solution was deployed in airports? I could open the door using facial recognition or a QR code, look at the products, remove what I want, and be charged automatically for whatever I take. Perhaps the screen on the door might offer me the chance to win discounts by playing games, or maybe there are demo products that I could try while I’m waiting on a layover. There might also be the option to rent a pair of expensive, over-the-ear headphones if I’d rather go that route.
I’d certainly find the experience more engaging. The good news is that it may arrive sooner than we think. “We’re a technology company,” says He. “We’re using AI to transform the retail experience, but we’re really transforming customer engagement.”
For more insight into what’s driving innovation in Asia, attend the NACS Convenience Summit Asia, taking place March 5-7, 2019, in Shanghai, China.
Frank Beard is a speaker, writer and industry advocate who serves as an analyst/evangelist for convenience store trends at GasBuddy. Beard regularly contributes to NACS Daily and NACS Magazine. Follow him on Twitter or LinkedIn.