Mom, Dad: Please Stop Fighting

On Friday last week, Business Insider posted an article that stated Amazon will stop selling Nest products including thermostats and home security products.  Nest, which is owned by Alphabet (Google), was apparently expecting the call.

This is the latest in a long standing retail feud between the two Internet giants:

• Amazon would not sell the Chromecast for a long time ostensibly because it did not play back Amazon Prime Video in a way that Amazon liked.
• Google pulled YouTube from Amazon's line of Fire products, but then relented when Amazon agreed to start selling the Chromecast... though they still aren't showing up on Amazon three months later.
• Amazon does not stock the Google Home product that directly competes with its Echo line of smart speakers.

On the surface, it appears that Amazon is being the antagonist and using its e-tail power to try and curtail the Big-G.  Dig a little deeper and it is clear that both are holding their own share of the blame-bag.

Amazon Go Shrinkage

Last week, Amazon opened its pilot 'cashier-less' retail store to the public.  It was announced over a year ago and I discussed it then.  Now, people outside of Amazon's own employee base have had an opportunity to experience it.  And mostly it has been positive.

Reviewers like the low (but not quite gone) employee interaction.  Most comment on the novelty of stuffing things into your backpack and walking out.  They all look at the grid of cameras suspended over the store and try and figure out what is actually going on (Amazon is not saying).  All of this is great.

Then they start talking about the implications.  As I don't live anywhere near Seattle, that's where I can jump in.

Amazon Patent Menagerie

When I wrote about the potential Amazon-Whole Foods merger last week, I may not have adequately (or at all) connected it to the nominal subject of this blog: The Internet of Things.  I'd like to take some time this week to correct that oversight.

First, let's all remember that 'Things' are physical and require a physical space in which to operate.  Amazon has had that through its distributions centers (DCs), but not in an publicly accessible space.  At best, they've had a few experiments with Amazon Go and physical bookstores in select metros.  With the Whole Foods thing, this changes.

In last week's post, I mentioned that these 450-ish stores give Amazon an opportunity to observe us shopping.  Not to sell IoT products to consumers, but to use them on us.  To see how we shop in physical spaces and then use that information to improve product placement, to optimize store layout, to optimize product choice.  To improve the shopping experience, not for the shoppers, but for Amazon.

And, on the heels of the merger announcement, we saw a patent that may be the kind of thing that will result from that learning.

Prime Foods

Amazon had a good week last week.  There were a lot of sales on their various signature products (Echo, Kindle, Fire, etc) in lieu of Father's Day, they launched the Dash Wand with Echo so that you can 'say it or scan it', and they agreed to purchase the Whole Foods grocery chain for $13.4 Billion.  A good week indeed.

It is the Whole Food deal that I want to focus on.  As someone who has spent a couple of decades in a variety of retail positions, from floor sales to manager to vendor rep, as well as some opinions on where automation may take us, this deal raised my eyebrows and got me going, "Hmmm."  With that in mind, I read a few articles, starting with two from the Grey Lady:

• Amazon to Buy Whole Foods for $13.4 Billion
• The Amazon-WalMart Showdown That Explains the Modern Economy

Both articles are worth your time (if you haven't already read them), but the focus of both is too narrow.  They both only scratch the surface of why Amazon might have agreed to buy a brick-and-mortar grocery chain.  Yes, they have been dabbling with physical locations for the last year or two: Amazon Go being one and they now have a physical book store or two.  Yes, they want to take more market share from WalMart.  But to swallow a nationwide chain when they have been spending two decades destroying nationwide chains is a different animal all together.

No Jobs Are Safe

Hello, World!  I'm back after a brief hiatus that I spent remembering our troops by taking the Middle School Daughter Unit white water rafting (among other things).

But that's all over now and it's back to banging the what-do-we-do-when-the-jobs-are-all-automated drum.  The jumping off point is a website I discovered through Reddit, called:

WILL ROBOTS TAKE MY JOB

Amazon Go-es After IRL Retail... Again

The biggest news in the IoT this last week was Amazon's announcement of their updated Brick-and-Mortar shopping experience: Amazon Go.  The major selling point is simple: check-in, grab what you want and leave.  There is no check out.  The system simply knows what you have picked up, bills your Amazon account and that's it.  It does all of this in real time while you are in the store.  There is no TSA-style sensor pad at the exit point to walk through, no scanning of bar codes or RFID tags.  It just knows.

The Internet of Retail

What You Think It Will Look Like

When people talk about the Internet of Things, there are two examples that come to most peoples' minds: big corporate logistics and smart homes.  Those seem obvious.  The first is all about how large corporations keep track of their inventory, automate their supply chain, and cut costs around their energy use (and keep track of their employees via key cards and GPS).  There are easy benefits for all of us to understand: if these large corporations can cut costs, then the products or services that they provide will also be cheaper.  The smart home is similar: easy benefits in convenience, energy savings and security.

However, there is another place where the IoT is taking off: retail.  Here's an example of where they will want to go:

(Minority Report, courtesy of DreamworksSKG and 20th Century Fox)

Minority Report was released in 2002 and we're still a long way off from having that level of (intrusive) personalized, targeted advertising.  But we're getting closer.

The Internet of Money

The Internet of Things is a definite revolution in its own right, but it is also part of something bigger: the Internet of Money.  The first real "Big Data" collection was/is financial: stock trades, money markets, consumer debt.  It all got stored on computers.  That led to things like Flash Trading, Mortgage Backed Securities and, more recently, BitCoin and its siblings.  Some of it bad, some of it good, mostly just changes brought about by the increasing access and automation of data without any moral compass beyond "it'll make things easier (and there are fees to earn.)"

From Funnel to Cycle

The Internet of Things fits in here because it starts to expand automation from data automation to thing automation.  Which is why we're all excited about it.  But for the companies that are investing in this buzzword, it goes beyond making it easy for you to set your thermostat or have the lights come on when you open the door.  All of that is the hook.  Ultimately, they want to automate your purchase decisions.

This has already been massively accelerated due to the internet.  If you look at the pre-internet consumer decision journey, it is a funnel:

Source: Business2Community.com

With the rise of the Internet and, more importantly, recommendation engines (based on individual buying data = big data), this turned from a funnel into a cycle:

Source: wearesocial.com

Recommendation engines operating on the "If you like this, then you'll like it again and also things similar to it" mean that we consumers no longer have to start at the top of the funnel for each and every purchase, but can work within a trust circle (that inner, smaller loop.)  But we still have to make the purchase every time.  We have to actually click on "Add to Cart."

From Cycle to Out-Of-The-Loop

The big change to the Internet of Money brought on by the Internet of Things is that now, the cycle only needs to happen once.  Instead of us making that lower re-loop when we need to replace something, the purchase has already been made and we no longer have to be part of the loop.

This has been going on in industry for a while.  "Just in Time"  inventory (keeping only enough parts in stock to last a re-stocking cycle) is a similar process, but had purchasing agents involved.  The newer system that everyone from retailers to manufacturers to restaurants have been working on for the past two decades is to connect their inventory management systems together, allowing purchase orders to be automatically sent out when inventory reaches a critical state.

Here's Where You Come In (Or Not)

What smart home manufacturers want is to create a similar inventory management system for your home.  If your home system knows when you are low on milk (through your smart refrigerator,) then it can order more and have it sent to your home.  It gets charged to your registered account (plus shipping and tax and a fee) and you can cross off a thing you no longer have to worry about.  In theory, the fee is less than the gas that you would use to go get that same milk.

All of this assumes that you have a smart appliance, that you take the time to teach it your tastes in various brands, that it won't start recommending other brands (or simply ordering them) because of some kick back between the various milk cartels, that you have consistent power and a solid internet connection.  Then, after all of that is set up, you won't have to worry about buying milk ever again.

What a world.