Bloomberg Businessweek July 22, 201946
capacitytodevotevast resourcestoward
applyingthestateoftheartinartificialintel-
ligence toaneverydayproblem. Theyalso
illustrate the company’s tendencytopursue
technology for technology’s sake (see:theFire
Phone), resulting in a store that offersallthe
selection of a 7-Eleven, but withmorecom-
plexity and cost. Scores of cameraspointedat
all angles hang from the ceilings totrackshop-
pers as they wander the aisles, whileprecise
scales embedded in the shelves tabulateprod-
ucts down to the gram to figure outwhichones
have been picked up. Behind the scenes,sophis-
ticated image recognition algorithmsdecide
who took what—with Amazon workersinofficesavailableto
review footage to ensure shoppersareaccuratelycharged.
Each store also has a local staff on handtohelppeopledown-
load the Go app, restock shelves,and,inlocationswitha
liquor section, check IDs.
Will all this work be worth it? SomeGostoresseemalmost
deserted except for the lunchtimerush.Employeesfamil-
iar with Amazon’s internal projectionssaytheoutletsin
Chicago, in particular, are falling shortofexpectations,and
the company has had to resort to rafflesandgiveawaysoftote
bags and other branded goodies. Yet,astheturbulenthistory
of the project suggests, the Go storeisn’tsomuchtheculmi-
nation of the company’s efforts butsomethingclosertoan
ongoing experiment. And the potentialprize—abigpieceof
the $12 trillion grocery industry—isonethatAmazon,with
its limitless resources and appetiteforrisk,maybeinthe
best position to claim.Analysts and investors for years askedBezoswhether
Amazon might open stores. His answerwasusuallysome
variation of “We would love to, butonlyif wecanhavea
truly differentiated idea,” as he toldaninterviewerin2012.
“One of the things that we don’t doverywellatAmazonis
do a me-too product offering.”
It was that summer when he startedtothinkseriously
about the opportunity offered byphysicalretail,which
captures 90% of total retail salesintheU.S.,accordingto
the Census Bureau. Bezos could seethatfora companyof
Amazon’s size to keep growing, it wouldhavetogetintonew
industries. (The development of thevoice-activatedAlexa
assistant and the creation of the AmazonStudiosdivision,
which produces shows such as Boschandtheforthcoming
Lord of the Rings prequel, were undertakenaroundthesame
time.) To lead the initiative, BezostappedSteveKessel,a
senior vice president who’d been inchargeofthecompany’s
efforts to develop the Kindle and dragthepublishingindus-
try into the age of digital books.
Kessel asked Gianna Puerini, who’doverseenAmazon’s
homepage and product recommendations divisionand
who at the time was retired, restoringhousesintheSeattle
area, to lead the development of theproduct. Puerini (whoretiredagainearlierthisyear)setup
ina nondescript six-floor building in
South Lake Union, a few blocks from
Amazon’s headquarters. Because the
project was to be secret even from
other Amazon employees, one of her
first tasks was selecting a code name
so boring that no one would pay atten-
tion to it, a former colleague says. For
thenextfewyears,theteamwould
gobythenameIHM,or“inventory
healthmanagement.”
To oversee engineering, Kessel
recruitedDilipKumar,Bezos’shadow,
ortechnicaladviser—theAmazonemployeewiththehigh-
profile role of essentially following the CEO around and sitting
by his side in meetings for a year. Kumar occasionally dabbled
in stand-up comedy at local open-mic nights, but colleagues
say at work he was known to be intense and combative.
IHM employees say the early months were filled with
open-ended brainstorming and debate. They considered
whether they should do Macy’s-style department stores,
Walmart-style supercenters, or even electronics stores. One
discarded idea involved two-floor stores, with Amazon’s disk-
shaped warehouse robots assembling orders on the top floor
and then conveyor belts and robots delivering them to cus-
tomers’ waiting vehicles below.
After a few months, Kumar, Puerini, and their colleagues
concededthatmoststoresintherealworldalreadyoperate
tolerablywell,exceptforoneglaringexception:thesuper-
market, with its irksome checkout lines. Americans shop for
groceriesanaverageoftwotimesa week,andtheexperi-
enceofwaitingina checkoutlineepitomized—toAmazon’s
crackteamofTypeA disrupters,anyway—thespirit-draining
unproductivity of offline shopping. “We realized that there’s
a lot of good things about shopping in physical stores, but
waiting in lines was not one of them,” Kumar says.
Plentyofcompanieshavetriedtoaddressthishassle.
Applehasemployeesrovingitsstoreswithcredit-card-
reading tablets, and China’s BingoBox offers self-checkout
using RFID chips attached to product packaging. The IHM
team wanted to eliminate the bottleneck altogether. In an
Amazon tradition meant to ensure teams are working back-
ward from customer needs, they started with a press release,
or “PR Faq” in Amazon-speak, announcing the opening of a
store without a checkout line. Then they began working on
the actual technology to make the store a reality.
It would turn out to be much more difficult, and expen-
sive, than anticipated. To figure out who was buying what
in a store without checkout lines, IHM engineers considered
using RFID, tracking customers’ cellphones as they walked the
aisles, and scanning their face with facial recognition technol-
ogy. They also discussed asking customers to quickly scan QR
codes when they selected items, but even though that would
make Amazon’s job easier, it could be weird or unnatural forKUMAR