Amazon ‘Just Walk Out’: What it means for Shoppers, Owners, and Amazon?
Cashier-less proposal: How it works?
In early March, Amazon announced the rollout of its new “Just Walk Out’ technology that provides a cashier-less checkout option to non-amazon retail locations. According to Amazon’s website:
1. Shoppers enter the store through a turnstile using their credit card (no app or Amazon account required)
2. Pick up items in the store which will be added to their virtual cart
3. Walk out of the store and card will be automatically charged
“Just Walk Out” technology combines “computer vision, deep learning, algorithms, and sensor fusion” according to amazon’s official introduction of the Amazon Go stores. However, to the layperson without an advanced technical degree, this means we don’t really know how customers are being tracked in the store.
What does this mean for the shoppers?
Shorter lines: Arguably, the most unpleasant part of the shopping experience is waiting in line. With the elimination of the checkout process, wait times would be significantly reduced if not eliminated.
Risks alienating the unbanked: According to the 2017 FDIC National Survey, approximately 32.6 million households are unbanked or underbanked. This expediency hinges on providing a form of credit payment before entering the store, which is not feasible for many. If a separate cashier is set up, it creates a ‘Poor Door’ effect where people will funnel through a different channel based on their ‘bankability’. The controversial ‘Poor Door’ has been banned in New York to promote equal treatment for low-income tenants.
What does this mean for retail owners?
Higher Sales: Although the data is limited, Amazon Go stores tend to outperform traditional convince stores by 1–1.5x. Some reasons why that maybe be are:
· Higher basket price: Traditionally you have at least two opportunities to make decisions on a purchase. When you pick it up off the shelf and when to checkout. By eliminating the checkout process, people are less likely to see an item moving down the belt and decide that the chocolate bar really isn’t needed.
· More shopping square footage: Retail metrics usually focus on sales per square foot because rent is paid per square foot. By eliminating the space used by the checkout counter and waiting space to support the checkout counter, retails can display more items for sale, therefore, drive up the sale per square foot.
· The Amazon clout (Novelty Factor): There is also a possibility that the novelty factor of this new kind of experience is driving additional one-time traffic to their stores. Generally, each store is opened in a new market, so people may go out of their way for the experience. However, as the technology becomes more commonplace, there will likely be a reversion to the mean.
Security: Because of technological tracking ability, this can eliminate some of the losses associated with shoplifting and in-store consumption. In addition, it also reduces the probability of crime in the store, it especially advertises the store has cameras everywhere and very little or no cash in registers.
Substantial Capital Investment: The average cost of installation and maintenance has not been published; however, based on photos of the existing spaces, it can be assumed that the capital needed is quite substantial. This means while local small businesses will struggle to retrofit their stores. So it is unlikely your corner bodega can implement this technology, while national grocery chains will likely be first in line.
What is in it for Amazon? Your information?
This technology has been implemented since December 2016 when the first Amazon Go store was opened in Seattle. The customer quickly tracking issue became a hotly discussed topic, but has not curtailed continual development by Amazon. Since then Amazon continued to open around 25 more locations across the US, including a traditional grocery store in February 2020. With this version of the ‘Just Walk Out’ technology an application or amazon account is not necessary, which makes it harder to link customer data at other stores to their amazon account.
There are other ways to identify customers such as email receipts or credit card numbers linked to their Amazon account, however, executives at Amazon have attempted to address this issue. Dilip Kumar, VP of Technology for Amazon Go and Amazon Books, told Reuters, “We prohibit the use of Just Walk Out technology data for anything other than supporting Just Walk Out retailers.” That being said, Amazon’s track record when it comes to customer privacy has not been great following the Amazon Echo and Cloud Cam scandals. If you are concerned about personal information, you should still read the terms and conditions carefully before signing up or entering a business implementing this technology.
Actually, probably rapid growth….
Much like Amazon’s initial business strategy of scaling even at determent to profitability, offering a large variety of books online, which disrupted the entire bookstore business. Amazon aims to gets its products and services integrated into as many people’s lives as possible. This likely the reason behind more affordable consumer products like the Kindle tablet, Echo products, and Fire tv sticks, which are generally priced lower than the premium competitor.
By licensing the technology to 3rd party retailers, Amazon is able to grow its exponentially while investing less capital than owning/renting its own physical location. The addition of 25 new Amazon Go locations in two years pales in comparison to the growth of 82 new stores in 2018 opened by small-format grocer Aldi, and 30 new stores in 2018 opened by Sprouts.
In addition, by making its technology more accessible, Amazon can establish a large market share increasing the difficulty for other tech startups (Aifi, Grabango, Standard Cognition, and Zippin) to define parameters of this retail disruption.
Are you on board with ‘Just Walk Out’?
The technology advancement of cashier-less retail is very interesting, albeit, beyond my technical understanding, it has the opportunity to revolutionize the retail experience creating a lot of value to both the customer, the owner, and Amazon. However, its adaptation depends on customer and owner usage. So whether this becomes as widely adopted as ‘Prime membership’, or the next forgotten ‘Dash Button’, is up to you.
