Should Amazon rent out its Just Walk Out tech?

Discussion
Photo: Getty Images
Oct 07, 2019
Tom Ryan

Amazon.com is “in talks” to bring the Just Walk Out technology it uses to support its Amazon Go stores to OTG’s CIBO Express stores at airports and Cineworld’s Regal cinemas, sources told CNBC. Amazon is also exploring deals with concession stands at stadiums and baseball parks.

Amazon sees the potential to have “hundreds” of third-party locations using its check-out free technology by the end of 2020.

The two purposes of the move for Amazon are said to be:

  • Reducing its reliance on online shopping by expanding its brick-and-mortar presence at a faster pace and lower commitment than building its own stores;
  • Supporting Amazon Web Services (AWS) and other services by forming bonds with companies that would ordinarily consider Amazon competition.

The move would also enable Amazon to further test its cashierless technology amid reports that the pace of Amazon Go openings — 16 current locations — has gone slower than planned.

The CNBC report also indicated that only Seattle, Amazon Go’s first location that opened in January 2018 on Amazon’s campus, is profitable. The heavy infrastructure costs, including sensors and cameras to track what shoppers pick up, has been raised as a concern for the Go locations.

While Amazon is seen having a lead over most others, selling its Just Walk Out technology to others will face competition from Microsoft, a slew of technology start-ups, as well as homemade solutions from Walmart, 7-Eleven and others.

A bigger priority may be making retailers more comfortable signing up for AWS, the biggest contributor to Amazon’s bottom line. AWS, which controls about half of the cloud computing space, works with many suppliers to retailers but apparently few retailers themselves due to competitive concerns. Microsoft Azure clients in the retail space include Walmart, Walgreens, Kroger and Gap. Target in 2018 moved from AWS to Google Cloud.

A list of clients highlighted on AWS’ retail solutions website page includes Sainsbury, but largely it is fashion retailers selling their own brands that use the service, including Fast Retailing (the parent of Uniqlo), Levi’s, Lululemon and Tapestry.

DISCUSSION QUESTIONS: What do you see as the biggest motivation behind Amazon’s reported exploration of leasing its Go technology? Will the wariness of third-party retailers to work with Amazon get in the way of large scale rollouts?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Retailers, beware the latest Trojan Horse from Amazon!"
"Leasing the technology would get it in the marketplace faster. Amazon certainly has the money, so it sounds like Amazon is struggling with store build-out red tape..."
"There is a reason Amazon have slowed their stores program. Let’s not kid ourselves that they are now doing this out of the goodness of their hearts to help other retailers."

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17 Comments on "Should Amazon rent out its Just Walk Out tech?"


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Mark Ryski
BrainTrust

While Amazon’s stated goal of diversifying revenue streams by offering Go technology to other retailers seems reasonable, I wonder if there are not additional motives – like acquiring even more data on shoppers’ behaviors and preferences. It’s not lost on anyone that the insights that can be extracted from the massive amount of data that Go-enabled stores can acquire could very well be used by Amazon to refine their own offerings, putting other retailers at a disadvantage. I think retailers are right to be skeptical and cautious in their dealings with Amazon as it tries to strike a delicate balance between service provider and competitor to retailers.

Bob Amster
BrainTrust

Unless retailer renters of the technology stipulate in their contracts with Amazon Go that data processed by Amazon is not usable by Amazon, but only by the retailer renting the technology.

Laura Davis-Taylor
BrainTrust

Agreed Bob. They’ll make it cheap, easy and efficient. And any retailer that buys into it is basically letting the fox in their hen house. Amazon is never about just income–but they are ALWAYS about data. As my mom always said, “actions speak louder than words”…and their actions have been loud and clear.

Neil Saunders
BrainTrust

In many ways this makes sense. Allowing third parties to use the technology brings in additional revenue and also allows Amazon to learn more about and invest more in the systems it is developing. I also wonder whether Amazon would retain rights to use data that the technology gathers: that would be extremely lucrative.

Shep Hyken
BrainTrust

The obvious motivation behind Amazon leasing Go technology is another stream of income. This is a great opportunity to capitalize on the investment Amazon has made by “sharing it” (with a fee, of course) with others who can’t afford to create their own version of it. Amazon is smart to diversify their deliverables, especially when it is synergistic to what they are known for, which is retail.

Dave Bruno
BrainTrust

Retailers, beware the latest Trojan Horse from Amazon! In exchange for their (cumbersome, expensive and high-maintenance) cashierless technology, you will be giving Amazon revenue for AWS, and access to all your shopper data!

Cynthia Holcomb
BrainTrust

Stadiums and movie theaters equate to very handy access to millions and millions of faces over time. Another prong into everyday life — Amazon facial recognition technology now scanning everywhere! Describing Amazon as a competitor seems sort of silly considering the vast depth of individual intelligence Amazon has acquired about almost every aspect of our personal lives, including how we think. AI on steroids. Privacy is so old school. Alexa are you listening?

Bob Amster
BrainTrust

The question is: Is there more money for Amazon in renting the technology – as in the AWS case – or in keeping it to itself as long as possible in an effort to keep the competitive advantage?

Oliver Guy
BrainTrust
In many respects it is a little bit like AWS. Amazon work out how to do something well and they offer it to the market for others to use. We have seen some concern by retailers saying they will not use it because they are “feeding their competition.” There have been rumors around Amazon doing this with the Amazon Go model since it first started, however it is entirely possible that as we move to a world of platforms we have brand owners who simply do that – own and manage a brand – and they outsource the operational side to someone else, be it Amazon, Ocado or someone else. We are already seeing Ocado selling their know-how around the world. For a CPG company looking to sell direct to consumers it could well be a huge accelerator. There could be an argument that this is no different to a company outsourcing their manufacturing – in the way that Apple do. The tricky thing is that Amazon will want to collect the data associated with… Read more »
Brandon Rael
BrainTrust

Carryout As A Sevice (CAAS), has a nice ring to it and could become the next AWS services extension for Amazon. We have all seen the reports of thousands of Amazon Go stores opening up in the near future, however, it appears as though Amazon is taking a conservative approach.

Just as retailers are leveraging Amazon’s online marketplace as another channel in a frenemy-like relationship, we live in a world where Amazon’s reach in the U.S. extends well beyond online shopping. For convenience-focused retailers, why recreate the wheel of a cashierless model if Amazon is already working on perfecting this? Retailers should tread carefully, as they would enable Amazon to have access to their customer insights and transactions.

Amazon, with its focus on diversification, could potentially have another significant revenue stream on their hands if this becomes a reality.

Andrew Blatherwick
BrainTrust

It’s interesting that just as we hear that the Amazon roll out of its Go stores is going slower than expected we now see them considering leasing their technology to other retailers. Is that because they are finding traditional retail hard and would prefer others to do the hard work while they remain a technology business? Do they want to have others finance and debug their technology or is it that they just want to increase the use of AWS that is profitable for them?

The article says it all. They are competition to other retailers and they are not trusted as such. Why should any retailer queue up to assume the very high costs of their Just Walk Out technology to provide even higher profits for AWS? There is a reason Amazon have slowed their stores program. Let’s not kid ourselves that they are now doing this out of the goodness of their hearts to help other retailers.

Rob Gallo
BrainTrust

Leasing the technology would get it in the marketplace faster. Amazon certainly has the money, so it sounds like Amazon is struggling with store build-out red tape – permitting, etc. However, if Amazon is struggling with store profitability, I am wondering how they can make the lease price attractive enough for other companies to want to use it versus waiting for a cheaper solution (prices will come down) from a less competitive provider like Microsoft.

Kai Clarke
BrainTrust

Amazon’s goal of renting out its Just Walk Out technology is clearly to grow Amazon Web Services (AWS) or its “cloud” offering. Amazon’s own efforts to make the Just Walk Out technology profitable, and failing, demonstrate that it is not a reasonable effort for any retailer to use it. Frankly, it is a solution that is looking for a problem — at any cost. Most retailers will see this from the beginning and will opt for less costly, (i.e. more profitable) solutions from less competitive alternatives. This is a very expensive solution that has been tested and failed at offering profitable solutions at retail. Why would anyone else want to utilize this?

Ricardo Belmar
BrainTrust
First of all, I don’t think we should be surprised by this move. One of the challenges Amazon has in opening more Go stores is finding the right real estate for new stores. Amazon Go stores are best suited to locations where the convenience factor isn’t just desirable to the consumer, but actually an imperative. This has been in very busy urban areas where people are very much “on the go” (no pun intended there!). Airports, movie theaters, stadiums, are a good extension to that. Working with an established retailer to deploy their “Just Walk Out” technology is a quicker way to solve that problem. CIBO is in 10 airports I think and has around 100 stores. It’s not the 3,000 Go stores once reported but it’s definitely more than the current 16 and a quick way to expand. I suspect the original Go store is the only profitable one today because it has been around the longest and may have the highest foot traffic generating sales. The CNBC article also mentioned the offer from… Read more »
Jasmine Glasheen
BrainTrust

Amazon Go technology is barely usable by Amazon itself, much less ready to be rented out to the highest bidder. I’d argue that “just walk out” tech that doesn’t work correctly and results in alarms sounding and “staff” running over to ensure nobody is stealing is much more stressful than just purchasing from an associate in the first place.

Grab and go technology definitely has potential, but until it lives up to it I consider the concept more of a deterrent than a draw.

Kenneth Leung
BrainTrust

Good deal for Amazon who is ultimately a tech service provider. Would be curious to see the fine print on who has access and owns the data generated by these systems, as other panelists point out, the data is worth more than the system.

Ananda Chakravarty
BrainTrust
Biggest motivation = concept viability (although money comes a close second). For Amazon, there are substantial challenges with scaling its Go concept. Why? It’s a closed concept. Only Amazon could deliver it and it would guarantee Amazon enormous market potential as Brandon writes. Amazon’s retail business is lower margin and driven by their marketplace relationship, which they’re hoping to replicate again but in this case, the retailers are already wary and “Just Walk Out” is not the flavor of the month. Whoever Amazon pays (through incentives and low cost) to roll out these solutions will be in an unenviable position of being a scalability test case. Even if adoption becomes more widespread, there will be new competition from players in the IoT and sensor areas that will present options that are more open and less dependent on Amazon as a central piece to the model. Lastly, some tech such as scan and go will be a far cheaper, less risky and almost as sufficient a solution for retailers taking the cashier-less model seriously. Narrow market… Read more »
wpDiscuz
Braintrust
"Retailers, beware the latest Trojan Horse from Amazon!"
"Leasing the technology would get it in the marketplace faster. Amazon certainly has the money, so it sounds like Amazon is struggling with store build-out red tape..."
"There is a reason Amazon have slowed their stores program. Let’s not kid ourselves that they are now doing this out of the goodness of their hearts to help other retailers."

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