Last week I stopped outside a new Amazon Fresh Store where I live that had literall​​​​​​​y just opened that day. I was curious and asked the two Amazon representatives outside the store what I had to do to buy something. They explained that I needed an Amazon account (which I do) and then I needed to scan in a QR code next to the front door of the shop (which I did).

I then swiped my phone to enter the shop, picked up a litre of milk and a box of dishwasher tablets, and walked out. About an hour later my bank account was debited for the cost of the items. I would never identify myself as an ‘early adopter’ (people who buy new products before the majority of others) but I might just have embarked on some ‘early adopter’ behaviour.

Amazon Fresh stores are based on extensive use of advanced IT.  The shops use the same type of technology found in self-driving cars, such as computer vision cameras, sensor fusion, and deep learning AI. Shoppers can pick up any goods from the shelves and leave the store without scanning them or visiting a till. There are sensors on the shelves that detect when an item has been taken or returned to a shelf and keep track of them in your virtual cart. When a customer leaves a store with their purchases their Amazon account is charged, and they receive an electronic receipt.

As a physical retailer Amazon’s presence is still relatively limited. In the US it has just over 600 outlets trading under brand names such as Whole Foods Markets, Amazon Fresh grocery stores, and Amazon Go grocery stores. Its physical presence is dwarfed by its online business.

In Economics we focus on the importance of technological innovation as a key driver of development on the supply-side. In simple terms, shops that replace cashiers and tills with advanced IT should shift the long-run aggregate supply curve to the right and lead to an increase in real GDP and a fall in the average price level. This might happen because retailers can replace workers (cashiers) with sensors, AI and online payment which leads to greater productive efficiency. Shoppers might notice this through lower prices and a more efficient service (no more check-out queues).

Some people might argue that there are downsides to Amazon Fresh shops. The workers who work at the check-out lose their jobs leading to structural unemployment. The loss of human interaction in outlets dominated by cameras and sensors could make the whole shopping experience a rather ‘soulless’ experience. 

I’m not sure what I made of my Amazon Fresh experience apart from it being something of a novelty, but thinking of myself as an ‘early adopter’ put a spring in my step.

Some possible points to discuss with a class

1. What do you understand by technological innovation?

2. What are the possible benefits of Amazon Fresh shops to different stakeholders?

3. What are the costs of Amazon Fresh shops to different stakeholders?

4. Are Amazon Fresh shops good for economic well-being?