Amazon makes big bet on selling cashierless technology to outside retailers | Real Time Headlines

2012, Amazon Founder Jeff Bezos asked TV host Charlie Rose asked whether his e-commerce company would move into brick-and-mortar stores. Bezos It said existing brick-and-mortar retailers have provided good services to shoppers and Amazon is not interested in launching “copycat” products.

“We wanted to do something unique to Amazon,” Bezos said. “If we could find the idea, which we haven’t found yet, but if we could find the idea we would love to open a physical store.”

Six years later, Amazon has come up with a revolutionary retail concept that it hopes will change the way people shop in brick-and-mortar stores. company roll out Its first Amazon Go convenience store uses a new technology called “Just Walk Out.”

In effect, customers can fill their carts and leave the store without queuing at checkout. Amazon was quick to roll out cashierless checkouts in its grocery stores and two Whole Foods stores. 2020The company then began licensing Just Walk Out technology to third parties, signing up with retailers at stadiums, airports and hospitals.

But the company has since turned around.

April, Amazon declare The company is eliminating cashierless checkouts from its U.S. grocery stores and Whole Foods stores, a move that coincides with a move by CEO Andy Jassy. Try to control costs to meet rapidly changing macro conditions.

As part of this effort, Amazon is also re-evaluating its retail plans. company Discontinued some of its retail chains, Closing eight Amazon Go storesand suspend the opening of new fresh food stores. it is roll out Several new fresh food stores have opened in recent months.

Amazon Fresh stores and Whole Foods supermarkets will be outfitted with Dash Carts to replace Just Walk Out, which typically requires ceiling-mounted cameras, shelf sensors and gated entry points. Shopping carts track and count items as shoppers put them into bags, allowing people to skip checkout lines. Amazon continues to use Just Walk Out in its grab-and-go supermarkets and UK fresh produce stores.

Jordan Berke, founder and CEO of retail consultancy Tomorrow, said the main challenge facing Amazon and other startups working on automated checkouts is the need to scale them into enough locations and retail categories to make them Become a natural part of in-store shopping.

“It’s going to be an uphill battle until that happens,” Burke said. “These technology providers, including Amazon, are going to have to subsidize and continue to invest in training retailers, training consumers, training the market, that this is a mainstream experience that we can all trust, regardless of our needs. In and out. shop.

Amazon once thought Just Walk Out had become core part The experience of shopping in one of their physical stores. The company in 2018 planned to open as many as 3,000 Amazon Go stores over several years. Burundi People familiar with the matter were quoted as saying at the time.

Bezos assigned top talent across the company to work on cashierless checkout, including a longtime Amazon executive who developed the original Kindle e-reader. The technology is seen as a key factor in Amazon’s long-term quest to become a giant in the $1.6 trillion U.S. grocery market.

When Amazon first launched Just Walk Out in January 2018, it was a “seismic moment” for the industry, leading to Walmart Burke, who previously led Walmart’s e-commerce operations in China, said “almost every other retailer” has taken action to consider developing their own vision-based checkout systems.

Burke said Amazon and other retailers quickly realized that automating the checkout process was “the hardest problem to solve.” Cashierless checkout systems require a significant upfront investment to install overhead cameras in stores and hire staff to tag and review shopping data.

“That means stores have to significantly increase sales to recoup their investment,” Burke said.

Berke said a cost analysis conducted by Walmart’s team in early 2019 found it would cost the retailer $10 million to $15 million to create a similar computer vision-based checkout system for a 40,000-square-foot supermarket.

Just Walk Out has also become an expensive project for Amazon. Berke said the company spent about $1 billion annually in 2019 and 2020, including R&D costs and capital expenditures, to “learn and expand” the technology. He said the numbers were based on discussions with a former Just Walk Out executive who left Amazon to join Walmart. Amazon did not comment on the data.

Burke said many retailers have moved away from computer vision to simpler methods such as mobile checkout via apps.

Walmart uses Self-checkout app in its stores, while supermarket chain Kroger been trying and Instacart’s Caper connects shopping carts at some locations. retailers like Target and Dollar General yes Rethink self-checkout completely More traditional checkout lanes were added amid fears of an increase in shop theft.

Amazon said that while it no longer features Just Walk Out in its own stores, it has signed up a growing number of customers. More than 200 third-party stores have paid Amazon to install cashierless systems. Jon Jenkins, who served as Amazon’s vice president of technology for Just Walk Out, said in a recent interview that the company expects to double the number of third-party Just Walk Out stores this year. Jenkins said he left Amazon at the end of September to become a technical lead at electric bike and scooter startup Lime. LinkedIn page.

Jenkins reacts to Amazon’s phasing out of Just Walk Out from its own supermarkets as a setback or A sign of the technology’s demise. He said Amazon has proven the technology is “very powerful” through tests in its own grocery stores, noting that the company has deployed the system in large supermarkets with “600 people in the store at one time.”

Other startups such as AiFi and Grabango have developed autonomous systems for supermarkets, convenience stores and other retailers, but widespread adoption has been slow because the technology remains costly and challenging to operate in large stores.

The testing lab is called “Beverage Base” and is located at Amazon’s Seattle headquarters. It has fake doors that mimic the experience of scanning a smartphone or credit card to enter a Just Walk Out store. The walls are lined with shelves stocked with typical grab-and-go products such as galaxy bars, pita chips and gummies, as well as refrigerated cabinets Cola Canned goods and other beverages.

When Amazon sets up its Just Walk Out stores, it first uses a LiDAR machine or iPad to create 3D scans to help determine where to place cameras to get the clearest view.

“Our goal was to keep the number of cameras as low as possible, so we optimized the placement of the cameras so that we could get enough coverage of each fixture to understand what was going on in the store,” Jenkins said.

The system uses a variety of inputs to determine what shoppers are buying, including 3D scans, catalogs of product images, video footage and weight sensors on shelves. Amazon July updated The artificial intelligence system behind Just Walk Out technology processes all inputs in the store simultaneously.

The new “multi-modal” system can generate receipts faster by more accurately predicting what items shoppers have picked up and put back on the shelves. The company said the changes should make it “faster, easier to deploy and more efficient” for retailers who install the system in their stores.

Jenkins said Amazon’s “primary focus” is on selling the technology to third-party businesses and deploying it in small and medium-sized stores, where the system “tends to generate a better return on investment.” Earlier this year, Amazon Also started selling It connects grocery carts to third parties.

The company said sales at a Just Walk Out store inside Seattle’s Lumen Field, home of the NFL’s Seahawks, increased 112% last season, with transaction volume during games increasing 85%.

“It’s great that we have our own store as a lab to build and launch this product,” Jenkins said. “But over time, like many things at Amazon, the success of this project and product will depend on third-party adoption of the technology. There will always be more third-party stores in the world than first-party stores.”

Amazon has used similar tactics in the past. Amazon Web ServicesThe company’s highly successful cloud computing division stems from the company’s need for IT infrastructure to support its rapidly growing online retail business. In recent years, Amazon has used its logistics and fulfillment network to provide services to third parties.

With Just Walk Out, Amazon’s challenge is convincing retailers that they can trust one of its largest competitors with valuable shopper data.

In 2022, Amazon moved the team behind Just Walk Out from its retail organization to AWS. It’s one of the clearest signals yet that Amazon is serious about selling the technology to other retailers and could help ease some of the concerns of rivals.

“They are clearly in sales mode,” Sucharita Kodali, a retail analyst at Forrester Research, said in an interview.

Kodali said Amazon still has “a long way to go” before the technology becomes widespread. To get there, Amazon investors will need to be patient, and data shows both retailers and shoppers are embracing the technology.

“Over time, there’s almost a viral effect,” she said. “It’s going to take a long time because you have to go through every person in the United States who has had this experience, and for the most part, it’s just Amazon fighting this battle right now.”

Watch the video for a behind-the-scenes look at Just Walk Out: https://www.cnbc.com/video/2024/10/02/amazon-is-making-a-big-bet-on- sell-cashierless-tech-to-outsiders.html