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Will rival retailers buy Amazon’s ‘Just Walk Out’ technology?
Amazon.com announced yesterday that it has begun selling the technology behind its Amazon Go and Amazon Go Grocery concepts to other retailers.
As it has done in the past, Amazon is looking to monetize internally-developed technology by selling it to outside parties. The retailing and tech giant said that it has already signed “several” deals to date. It declined to name the buyers. Reports last October said Amazon was in talks with OTG’s CIBO Express stores about utilizing its “Just Walk Out” technology at airports and also with Cineworld’s Regal cinemas.
The development of the Go store concepts was intended to eliminate the single biggest pain point for customers at retail — the checkout line. The data the retailer acquires is seen as a major benefit, giving Amazon and others who deploy it the kind of consumer insights typically associated with online shopping.
Dilip Kumar, vice president, Amazon Physical Retail, told Reuters that his company expects the success of its tech with other retailers to be determined by the customers who shop in those stores.
“This has pretty broad applicability across store sizes, across industries, because it fundamentally tackles a problem of how do you get convenience in physical locations, especially when people are hard-pressed for time,” he said.
Mr. Kumar addressed the elephant in the room in his interview with Reuters. He said that Amazon will not use data collected at other retailers for its own purposes.
The retailer has launched a webpage for its new offer that touts the “effortless” shopping experience it provides. The page reads: “In Just Walk Out-enabled stores, shoppers enter the store using a credit card. They don’t need to download an app or create an Amazon account. Our Just Walk Out technology detects what products shoppers take from or return to the shelves and keeps track of them in a virtual cart. When done shopping, they just walk out and their credit card will be charged.”
Critics of Amazon’s technology have, in the past, suggested that it comes with a number of limitations, including the costs and structural challenges related to placing video cameras and other hardware in store ceilings. Many question the viability of retrofitting stores with the Just Walk Out technology, meaning that its use may be limited to locations where it could be incorporated at the outset.
- Bringing Just Walk Out shopping to your stores – Just Walk Out technology by Amazon
- Amazon launches business selling automated checkout to retailers – Reuters
- Amazon is selling its futuristic cashierless technology to other stores – Vox/Recode
- Amazon is now selling its cashierless technology to other retailers – TechCrunch
- Should Amazon rent out its Just Walk Out tech? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: Will other retailers buy Amazon’s Just Walk Out technology? What do you see as the potential for the technology inside and out of Amazon-owned properties?
Poll
BrainTrust
Nikki Baird
VP of Strategy, Aptos
Ricardo Belmar
Retail Transformation Thought Leader, Advisor, & Strategist
I think other retailers will test Amazon’s Just Walk Out technology – but I’m not sure they’ll buy it. The potential for Just Walk Out technology is significant, however in order to get the ROI to an acceptable level, the technology required to successfully deliver the Just Walk Out experience will need to be significantly cheaper. Until the technology cost becomes more manageable, I expect that we’ll see lots of retailers testing and experimenting, but few buying.
Other retailers would be smart to investigate whether or not there is ANY possibility that Amazon would have access to retailers’ and their customers’ data. If they find that Amazon does have access, they will want to think twice about implementing the technology.
I feel it depends on the retailer in question. If they are focused on providing that offering in order to retain brand and market share they may well do so – in a similar way to how companies outsourced e-commerce to Amazon some years ago, and how small organizations leverage Amazon Marketplace. But in the longer term, retailers may start to understand that the value is in the data that is being collected – and retained by Amazon. Those who decide to go it alone in the short term may do so because they have realized the value of the data and are prepared to invest for the longer term to exploit that value – even if they do not yet know how exactly they will exploit it.
Great move by Amazon. This is Amazon’s effort to converge physical and online retail. Obviously Amazon has a lot more to gain than just being another profit center. This would provide a large scale testing ground, much beyond what they could achieve themselves with their own stores and Whole Foods. Checkout terminals like Square and other POS terminal vendors would be on notice, as Amazon tries to eat up yet another category.
To me this smells a lot like trying to copy Alibaba’s New Retail concept. The problem is, Amazon has not been a friend to other retailers or brands for so long that I just don’t know that they can overcome the trust factor by simply saying “we promise we won’t use your data.”
With Alibaba, they came up with an offering that helps the SMB retailer become more connected, and then separately also helped much bigger chains put more digital experiences in stores. To me, Just Walk Out feels more like something that addresses the former – the mom-and-pop shop – rather than having an impact at a chain store of significant volume. But they’re going to have to be turnkey if they’re offering it to mom-and-pops – there’s no way they can implement this on their own.
And that bodega in Manhattan might not have the power or the internet access to realistically make it work anyway.
I agree. Based on Amazon’s history of learning about, copying and then competing with everyone that does business with them, I find it hard to believe that any retailer would trust them to not do it to them too.
Retailers will be reading those “Amazon won’t use your data…” clauses very carefully. As for the cost, retrofitting stores will only pay out with reduced labor expense. Sales increases due to convenience, if they materialize at all, will be mitigated as surrounding retailers also adopt the technology. I think this is a classic case of the right strategy being “fast follower” — at least for existing stores. New stores are a different matter. Not equipping them for no-checkout technology from the beginning will eventually prove short-sighted.
Do I see widespread adoption of “Just Walk Out” technology – from Amazon or anyone else? Not in the near future, for most categories. It’s so expensive to implement, and while the benefits to all retailers – specifically the detailed data the technology delivers – are not insignificant, I am still not convinced that the value proposition to shoppers is as powerful in most retail categories. And right now I think most retailers are prioritizing investments that deliver high value to shoppers. Factor in the fact that Amazon would reap the financial benefits of investing in Just Walk Out, and I don’t see high adoption anytime soon.
This is a no-brainer. Why develop this when it already exists? Use the products, assortments and shopability of your store to stand out. Having a slightly different system that has not been proven does not make sense. I do understand that retrofitting the equipment in anything other than a new store may be challenging. Developing this type of technology internally and having to retrofit existing stores will only make this process more challenging and more expensive.
I would want the language around protecting the data however, to be locked down pretty tight.
I actually see this offering as a conflict of interest on the part of Amazon.
I’ve been following Amazon’s exploration and use of the various technologies and processes integrated into the Amazon Go store concept since its public debut with great interest. I can only imagine the depth of insights they’ve made. Amazon has disrupted and changed the fabric of shopping and consumer expectations. While the evolution and processes are certainly compelling, it’s hard for me to imagine a competing retailer would integrate Amazon technology into their core infrastructure unless there was a very compelling financial incentive to do so.
Kohl’s accepting Amazon returns may have been the beginning of this evolution. Perhaps this is Amazon’s way to gain a broader brick-and-mortar presence?
It remains fascinating to me that Amazon is still pushing this technology, even as it installs traditional self-checkout machines in at least 10 percent of its Whole Foods Markets (and this technology in none of them – I asked!)
I can’t stress enough how challenging I believe keeping this technology up and running will be for retailers. Small box retailers like convenience stores, won’t be able to afford the employees to care for and feed the cameras, sensors, etc. Large box retailers will deal with shrink, customer complaints (I didn’t buy that!), and more maintenance woes.
This is without getting into the customer-facing side of the equation. Let me just say that how it became “frictionless” for a shopper to do the work that two to three in-store employees used to do is quite beyond me.
There is clearly an attempt here for Amazon to monetize their investment in this technology but I don’t think they will monopolize the space. They are simply aggregating technologies that others can do on their own, like 7-Eleven is doing. The bigger question is when and where this is even feasible. The potential loss prevention implications make this a limited option in today’s market.
Innovation and digital transformations take time, effort, and could be potentially disruptive to retail businesses. Why recreate the wheel when Amazon has been investing significantly in Just Walk Out technology and has a working business operating model with their convenience store and now larger scale grocery store? The “Just Walk Out-as-a-service” Amazon model could eventually become a significant recurring revenue stream for the company, especially in the convenience, pharmaceutical and smaller grocery space.
As retailers continue to struggle with one of the more significant points of friction, the checkout process, perhaps the Just Walk Out service could serve as a solution for some major retailers as they move to a more customer-centric, digital-first model. The one consideration is that the RFID camera technologies do not work in the larger, big-box format stores as effectively as the smaller scale convenience stores.
This could potentially be a win-win for both Amazon and its customers/competitors.
I will reinforce what was said in the comments above. I think that retailers will test the technology, but I think they will not buy it as they will either need to justify the ROI or learn how to develop the technology on their own to make it more affordable and scalable to bigger store locations.
With concerns about privacy, Alexa recordings, and the way Amazon has used data to create private label versions of brand items, does anyone really believe Amazon won’t find a way to use the data collected in these licensed Just Walk Out stores?
It’s tough to reconcile “salespeople have the potential to be the best possible brand ambassador” with “let’s replace salespeople with ‘Just Walk Out’ technology.” So even if the cost is the same, what drives the decision? Convenience store or movie theater? Easy choice — make them ‘Just Walk Out’. Best Buy and Home Depot? Salespeople please. Old Navy and Ann Taylor? There’s rarely anybody on the floor at Old Navy. There’s always somebody on the floor at Ann Taylor. Sounds about right.
We all knew this would happen. It was just a matter of time. It’s still early, but like any other software or technology application, updates will be forthcoming, and I’m sure frequently. Early adopters of Amazon’s technology will reap the benefit of the customers craving convenience. And, like any other technology, we’ll see competitors coming in that will level the playing field.
There will be a point in time that all stores adopt this technology. It is convenient for all stakeholders. Saves labor, gets data, makes the customer happy. I cannot predict when it will be universally adopted, but I can predict that in the end the technology will be cheap enough for the smallest independent retailers.
Several developers have and will develop competing systems to Amazon. The retailer should choose the system that is best for them. If it is the Amazon system and they forego it because it has the name Amazon, then it is a stupid business decision. I have no doubt there will be retailers that make just such a decision.
Testing makes sense. Buying maybe not so much for most other retailers. The potential inside Amazon is still fairly high, not sure why other retailers would help Amazon out by buying their version.
While this technology is recent, it’s not exactly new, and there are other high quality less expensive options than Amazon. If this mode of self service makes sense for specific retailers, then they have choices about where to acquire it. At the moment the line up to buy seems a bit short. Perhaps that will change over time.
Who is asking for this? Shareholders? Check. News media? Check. Customer? Um. No.
And that’s the problem. Amazon is attempting to create for itself another feeding frenzy. But I just don’t see it.
This story overplays the “pain point” theory of checkout. Are long checkout lines a problem? Yes. But how often does that happen? What is the trade-off from losing the personal contact? How many hurdles will customers have to overcome simply to use it? (My son’s Amazon Go experience was that it turned walking into the store, signing up for the tech, verifying that he had the tech, etc. into a MAJOR pain point.)
Once again, Amazon is using prestidigitation to distract the market. What we really should be asking is what Amazon is doing behind its back and why they’re hyping this so much. The straight answer? There’s no chance of them ever making profit off their retail-like online sales. That’s what they’re hiding.
What a great opportunity for Amazon to learn how its “Just Walk Out” technology performs across retail categories, formats and store sizes. I see this as a way for Amazon to greatly accelerate and expand their own R&D and have someone else not only cover their cost, but generate a new revenue stream. Retailers ought to tread with care.
It’s all about the data! I for one am less concerned about how Amazon may nefariously use retailer data from Just Walk Out deployments. I see this as the AWS model. Despite what many in the industry say about the perceived risk of using AWS as your cloud provider, (granted, you are funneling dollars into someone who is likely your competitor, but…) many retailers still do so. Are they concerned that their AWS data is being used by Amazon to compete against them? I don’t think this is happening. Now, is Amazon using sales data from their marketplace sellers to understand what product categories they could enter with their own private label designs? Yes, I think that is happening. Amazon is not blind – they know that if they leveraged the JWO data on their own without retailer consent in any way that would be perceived as competitive they would not sell JWO technology. For that reason alone, I believe this concern is a red herring. Think of it as what the analytics vendors did in the Wi-Fi and video space. Solution providers like RetailNext or Euclid Analytics provide retailers with rich analytics around Wi-Fi and video. They also use this data in aggregate to produce their own industry reports about foot traffic, dwell times, etc. Retailers continue to buy from those vendors without fear. JWO will be similar.
So yes, I believe there will be several mid-size retailers, with small-format stores that will be interested enough to test this solution with the intent to deploy it. Cost will be the real determinant as to adoption. While Amazon continues to make it sound like the cost is not as high as we all think it is, I am doubtful about this.
Also noteworthy is how many media articles I see concerned about cashier job loss. Amazon is quick to point out that employees in cashier roles would migrate to other roles. Depending on store size, I don’t see this being as dramatic as some of the reports make it out to be. If we’re talking about convenience store formats, I don’t expect to see a reduction in staff. It’s true, however, that without a big labor reduction, the cost issue could be more challenging. I don’t know that retailers can expect a significant sales boost just from having this technology deployed unless they are somehow stealing market share away from a nearby store that doesn’t have it and carries the same product categories. More reasons why this is such a great fit in airport environments!
You just walk in, take what you want, and walk out? I get why Amazon is selling it to grocer competitors! Haha. Skepticism aside that this technology leads to huge loss, Amazon’s move is an obvious extension of its strategy. The potential for this technology is enormous.
Some retailers may find usefulness in the Amazon Go technology, especially those that can eliminate labor. However with the number of cameras and amount of infrastructure required to implement Amazon Go, the cost to implement is high, so the return will depend on the store volume and the price of the items sold. In addition, Amazon will use its own cloud at cost for the data while other retailers will have to pay Amazon retail prices for the cloud technology. The potential for use in Amazon stores is higher, but some chains of stores may find the technology to have an ROI. I suspect the “deals to date” are test sites for the technology and no retailer has signed up for production use just yet.
The technology may be too expensive for many grocers. It may work in a convenience store with a few items. However I don’t believe shoppers will want to bag $200 worth of goods while walking around the store.
Of course it depends on many things, but I would. No checkout is the best invention since, um, e-commerce. The un-cost of shifting people to customer service vs just ringing people up might pay for itself over time.
I have no doubt that other retailers will buy Amazon’s technology. They’ve purchased their ecommerce capabilities (think Toys “R” Us in 2000). They’ve purchased their fulfillment tools. They’ve partnered as Amazon return locations. And now some of them will buy the just walk out technology. There are countless other tech companies working on the just walk out technology — the concept itself will eventually be a must-have. However, it remains to be seen if working with Amazon to do it is the best approach for other retailers.
The just-try-it-out option makes sense. Few retailers want to be the first to market with any tech, much less one with no scale and applied at fewer than a dozen stores. The costs are not clear and even if subsidized, it will be a risky venture for any retailer to make it mainstream. The benefits, while novel, have also little support data to show that it will transform customer habits and drive growth or new business — even less so for c-stores and grocers. As a retailer, I’d be very hesitant to make any leap beyond testing it out in a store or two. Picks and shovels are useless if the mountain has no gold.
There is no question that “Just Walk Out” technology will become common at retail. But the barriers to this technology, which are similar to the reasons that POS systems have remain antiquated, are about cost, implementation and lost productivity during the transition. Since Amazon started this effort from scratch, I am sure that the lack of a true measure of incrementality also slows down this effort. But when the first major player successfully implements, then I imagine the dike will break.