Amazon plans to disrupt retail again by automating checkouts. Is retail ready?
The company hopes to license its cashierless technology to other retailers, but the sector may need to adapt before it can make use of it.
Amazon has a vision for the bricks-and-mortar stores beyond its own — and they don't involve cashiers.
The company now wants you to be able to grab what you need and go at more than just its own stores: It announced Monday that it's offering to sell its cashierless retail system, branded "Just Walk Out," to other stores. It's the latest move in the company's push to upend retail — again — after helping speed along the demise of local businesses by popularizing online delivery.
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"Do customers like standing in lines?" Dilip Kumar, Amazon's vice president of physical retail and technology, asked Reuters. The news agency reports the company claims it has "several" deals with so-far unnamed retailers that want to license the tech.
And Kumar is ambitious about how far this technology could reach. "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 added.
Wharton School business professor Daniel Raff, who tried out one of Amazon's prototype convenience stores last year, thinks Amazon could be right.
"The experience is one of seamless acquisition," he told Protocol. And from an operators perspective, similar systems could be attractive to operators because they represent an opportunity to transform the variable costs of inventory management and sales into a single, fixed expense, he said.
"It's a superior technology for keeping track of selling and reduces human error," he added.
But not everyone is so enthusiastic.
"I believe cashierless technology is a red herring," said Paula Rosenblum, managing partner at RSR Research. She thinks it's "too soon" for the technology, which could be too complex to be widely adopted by most retailers this early.
The Just Walk Out technology works the same way as the system used in the more than 20 Amazon Go convenience stores and a much larger Amazon Go Grocery store launched in Seattle last month. After checking in at a credit card turnstile, cameras and sensors will track shoppers through the store and automatically add items to their virtual shopping baskets, which get checked out automatically when people leave.
If it and other self-checkout automation innovations succeed, they could have a significant effect on retail employment by reducing the need for cashiers. The Bureau of Labor Statistics projects employment of cashiers will decline 4% from 2018 to 2028 due to technology advances.
Amazon argues that its technologies free up employees to do other work. "Retailers will still employ store associates to greet and answer shoppers' questions, stock the shelves, check IDs for the purchasing of certain goods, and more — their roles have simply shifted to focus on more valuable activities," the Just Walk Out website notes.
But one reason Rosenblum is skeptical about a swift rollout for Amazon's technology is that it would require a different set of skills in the retail labor pool.
"If retailers with a store of any size really do go forward with the technology, they will need more educated people in store," Rosenblum told Protocol. "Given the current employment environment, and the lack of STEM graduates, I just don't see this as feasible."
"It's hard enough getting an in-store employee to help troubleshoot a problem with traditional Point of Sale registers," she said, let alone have them deal with "the cluster of cameras and sensors" that the Amazon Just Walk Out system requires. (Amazon does say it will "offer retailers 24/7 support via phone and email" for Just Walk Out.)
Still, Amazon may not have to wait for other companies to trust its systems: The company bought grocery chain Whole Foods in 2017, picking up a huge footprint of retail stores around the U.S. that could potentially deploy such systems, while also serving as a shadow distribution infrastructure as it has expanded into more same-day and grocery delivery. (Whole Foods did not immediately respond to a Protocol inquiry asking if it is considering using Just Walk Out tech.)
A lot of questions remain. How, for example, will this interface with existing loyalty systems if, as Amazon's website says, the company will only share shopping information for the purpose of receipts? And will other rival retails, some of which are already experimenting with other cashierless or reducing shopping models, want to team up with the competition?
Those questions are especially pertinent because this system will inevitably process a vital commodity for retailers: information about their customers' desires.
Just Walk Out says it will "only collect the data needed to provide shoppers with an accurate receipt," and that information can be thought of "as similar to typical security camera footage."
But, inevitably, "any time someone does a transaction, Amazon will learn more about relevant localized consumer behavior," Raff said. And many retailers might not be ready for that.
(Disclosure: The author of this post was previously employed by The Washington Post, which is owned by Amazon founder Jeff Bezos.)