Amazon's Shift in Cashierless Technology Strategy
TapTechNews October 8th news, Jeff Bezos, the founder of Amazon, once said in 2012 that Amazon had no interest in opening physical stores as existing physical retailers could serve consumers well already. However, six years later, Amazon launched its first AmazonGo convenience store, adopting a new technology called JustWalkOut, where customers just need to put the items in the shopping cart and walk out of the store without queuing to check out.
Amazon soon expanded the cashierless technology to Fresh supermarkets and two WholeFoods stores. In 2020, Amazon began licensing the JustWalkOut technology to third-party retailers and applying it in places like stadiums, airports, and hospitals.
However, TapTechNews noticed that Amazon has recently changed its strategy. In April this year, Amazon announced the removal of the cashierless technology from US Fresh supermarkets and WholeFoods stores, which is related to CEO Andy Jassy's efforts to control costs in response to the rapidly changing macro environment. As part of this effort, Amazon also re-evaluated its retail plans, closed some retail chains, closed 8 AmazonGo stores, and suspended the new Fresh store opening plan.
In order to replace JustWalkOut, which usually requires ceiling cameras, shelf sensors, and entry gates, Amazon Fresh supermarkets and WholeFoods supermarkets will adopt DashCarts. These shopping carts can track and calculate the items that customers put in the bag, enabling customers to check out without queuing. Amazon continues to use JustWalkOut in Grab-and-goMart and UK Fresh supermarkets.
Amazon once thought that JustWalkOut would become a core part of its in-store shopping experience. Bloomberg reported that the company planned to open up to 3,000 AmazonGo stores within a few years in 2018.
Bezos assigned top talents within the company, including an executive who had long worked at Amazon and developed the first-generation Kindle e-book reader, to take charge of the cashierless technology. This technology was seen as a key factor for Amazon to become a giant in the US $1.6 trillion US grocery market.
The cashierless system requires a large upfront investment to install a large number of ceiling cameras in the store and hire employees to label and review the shopping data. The Walmart team found in a cost analysis in early 2019 that to create a similar computer vision-based checkout system for a 40,000-square-foot supermarket, the retailer would spend $10 million to $15 million.
Many retailers have shifted from computer vision to simpler methods such as mobile checkout through applications.
Although Amazon no longer prominently showcases JustWalkOut in its own supermarkets, the company said it has signed agreements with a growing number of customers. More than 200 third-party stores have paid Amazon for installing the cashierless system. The company expects to double the number of third-party JustWalkOut stores this year.
Amazon's primary focus is to sell the technology to third-party enterprises and deploy it in small and medium-sized stores as the system tends to generate a better 'return on investment'.