WHY IT MATTERS: Digital Transformation

Amazing insights into the mobile industry state and trends.

WHY THIS IS IMPORTANT

Andreessen Horowitz, and Benedict Evans in particular, have been known to spot trends long before everyone else. Here again, it appears they are making predictions about retailing - following in the steps of the print industry when Internet came along. Not certain I agree about the parallel but I agree that mobile and AI and other technologies will impact and transform the retail world in the near future. However, as opposed to the print media, retailers often sell physical goods that cannot, for now, be 3D printed at home. So either you pick them up in the store or get it delivered by FedEx or a drone. 

That being said, retail stores are bound to transform in showrooms and service centers as I wrote about in the past. And this is a major shift that many will fail to take.

Take a minute to watch the video. This is the future of retailing.

WHY THIS IS IMPORTANT

Amazon has disrupted many industries with its online business. Recently, as other digital leaders have done, Amazon is trying to bring digital revolution in the world to blend our physical and digital experiences - think Google self driving cars, Starbuck mobile phone payment and geofencing app, Apple stores that are more showrooms and help centres than stores because eCommerce is there to fulfill orders to your door, etc.

Amazon has been focussed on grocery for the past 10 years to use this weekly recurring, low cost, high volume shopping trip to the supermarket as its pathway to bring digital into the real world and blend it with online e-commerce.

With Amazon Fresh for examples they have been busy putting trucks on the road to deliver groceries to your door overnight with minimal costs. Why grocery? Because its high volume guarantees that trucks will be on the road everyday in all areas. And once trucks are running around carrying groceries they can also bring other items - books, TVs, etc. - at little or no cost, effectively making FedEx irrelevant or at least giving Amazon huge negotiation power.

I wrote about this in many blog posts, just see here: http://www.scoop.it/t/digital-transformation-of-businesses?q=amazon 

Here with Amazon GO, it addresses some of the major pain points of customers in grocery stores: waiting in line at the cash register. As they've done online, Amazon focusses on its customer issues to smash them or make them so irrelevant that they are not issues anymore. See "amazon secret sauce" for insights on this: http://sco.lt/979c4P

Take Amazon Prime for example. It addresses the delivery fee issue: we do not want to have to pay for delivery. So they make it a non issue, providing 2-day delivery for free for an annual fee. Side effect: if you've paid for prime, then you spend up to 5x more at Amazon (300$ annually for average client, 1500$ for prime member), basically becoming a loyal shopper. Wow.

Back to Amazon GO and why it is important. The grocery industry has not seen a major disruption since Costco started top sell grocery in bulk format years ago - grocers ost 10% market share with that new player in the field. But today, grocery stores are the same, the layout is the same, the process is the same than it was 50 years ago. There has been little or no innovation in stores recently (last one may be the barcode in 1970s) but GO shows that there may be a perfect storm of technologies that combine to make physical stores transformation a reality:

1- mobile phones are on every customer back pocket;

2- electronic payment is everywhere, making cash almost irrelevant;

3- loyalty programs and big data allows retailers unprecedented customer knowledge and forecasting trends;

4- artificial intelligence enables real-time image analysis, feature detection, and robotic improvements.

From the concept store video and the Amazon description, all that GO is doing is applying these new technologies on a new problem set: adding and removing items to shopping basket and speeding the checkout process.

Of course, at the end of the day, the winner will not be the grocer with the best technology. It will be the one with the lowest prices and the best selection (best marketing and customer service won't hurt either). On those fronts (price & selection) Amazon GO faces huge headwinds from established grocers that have long standing relationships with suppliers and way more volume than Amazon. But it does not mean Amazon cannot provide customers with a more enjoyable, easy, fast experience - especially to millennials - which may give GO 5% or 10% of the market (the "good" 5% by the way, those that spend more and spend on higher margin items) from established retailers. And this will hurt established grocers like hell.

Also see the analysis from business insider here: http://www.businessinsider.com/amazon-go-grocery-store-future-photos-video-2016-12/ 

and the plans for Amazon to open up to 2000 store in the future if GO concept works: http://www.businessinsider.com/amazon-2000-grocery-stores-10-years-2016-10

If you have kids, have them read this.

Very technical series of articles on deep learning coding techniques. Useful to read even if you have only limited DL coding experience because it pulls the covers from over a very new way of coding - especially for old nerds like me!

part 1: http://online.cambridgecoding.com/notebooks/cca_admin/deep-learning-for-complete-beginners-recognising-handwritten-digits 

part 2: http://online.cambridgecoding.com/notebooks/cca_admin/convolutional-neural-networks-with-keras 

part 3: http://online.cambridgecoding.com/notebooks/cca_admin/neural-networks-tuning-techniques 

A 3 part post that explains what CNNs are. It explains their architecture, and provides plenty of examples and diagrams to help even non technical readers understand the concepts.

WHY THIS IS IMPORTANT

CNNs are essential technologies behind the current boom in artificial intelligence and deep learning that has led us to have very good speech recognition in Google Android phones, amazing image recognition, self driving cars, etc. etc. They are essential components of any digital transformation strategy.

A reference chart of neural network architecture, with detailed explanation of each one. Very useful reference.

Read the article but you can skip the 7min video. For a better - and more relaxed - discussion, consider watching this 1hr interview full of descriptions of self-driving car insights: https://www.youtube.com/watch?v=2zy_07g2IrM

For a more technical speech, view the Berkley presentation, even though there are elements that are redundant it provides additional insights into the technology: https://www.youtube.com/watch?v=Hxoke1lDJ9w

WHY THIS IS IMPORTANT

His approach is radically different than others and more "purist" from an artificial intelligence and crowd sourcing and I believe that makes his approach something to consider in other areas.

For more reading on the subject, this bloomberg paper also brings good insights: http://www.bloomberg.com/features/2015-george-hotz-self-driving-car/

Moreover it appears that Google lead is slowly shrinking: http://www.bloomberg.com/news/articles/2016-09-12/google-car-project-loses-leaders-and-advantage-as-rivals-gain