Amazon, initially hesitant to enter the brick-and-mortar realm, launched its revolutionary “Just Walk Out” cashierless checkout technology in 2018, aiming to disrupt the retail landscape. Initially hailed as a game-changer, this technology, used in Amazon Go stores and later licensed to third parties, has seen a shift in Amazon’s strategy. Recently, the company removed Just Walk Out from its US Fresh and Whole Foods locations, opting for Dash Carts instead, while simultaneously expanding its licensing of Just Walk Out technology to external businesses. This strategic pivot raises questions about the viability and scalability of fully automated checkout systems within the grocery sector and highlights the evolving challenges faced by tech giants in the physical retail space.
Amazon’s Cashierless Ambitions: From Internal Rollout to External Market Domination
Key Takeaways:
- Amazon’s initial foray into cashierless technology with “Just Walk Out” was ambitious, but its rollout in Amazon’s own stores has been scaled back.
- The high cost and complexity of implementing “Just Walk Out” led to its removal from many Amazon Fresh and Whole Foods locations.
- Amazon is now focusing on licensing its “Just Walk Out” technology to third-party retailers, aiming for a broader market presence.
- The shift highlights the challenges of scaling sophisticated cashierless technology and presents a lesson learned in the high cost and complexities of implementing it at a massive scale.
- Despite setbacks, the technology shows potential and is being adopted by an increasing number of third-party retailers. Amazon’s ultimate success will hinge on this broader adoption.
The Rise and Fall (and Rise Again?) of Just Walk Out
In 2012, Jeff Bezos famously expressed skepticism about Amazon opening physical stores, prioritizing a uniquely Amazonian approach. Six years later, that unique approach materialized as Amazon Go, showcasing the “Just Walk Out” technology. This allowed customers to grab items and leave without checking out, a marvel of computer vision and sensor technology. Amazon quickly expanded this to Amazon Fresh supermarkets and some Whole Foods locations. The company even began licensing Just Walk Out to external retailers in 2020, placing it in stadiums, airports, and hospitals.
The Unexpected Turn
However, in a surprising move, Amazon announced in April 2024 that it was removing Just Walk Out from its U.S. Fresh and Whole Foods locations. This decision coincided with CEO Andy Jassy’s cost-cutting measures in response to changing economic conditions. This retreat was further solidified by the closure of several Amazon Go stores and a pause on new Fresh store openings. The company is now deploying **Dash Carts**, which scan items within the cart, effectively eliminating checkout lines, a simpler and potentially more cost-effective alternative in its large-format grocery stores. The technology remains in use in Amazon’s smaller grab-and-go stores and in its UK Fresh locations.
The Challenges of Cashierless Checkout
The experience with Just Walk Out underscored the inherent challenges of scaling cashierless technology. Jordan Berke, CEO of retail consulting firm Tomorrow, highlights the difficulty of scaling the technology to enough locations and retail categories for it to be mainstream. The technology needs much investment to be successful and used on a regular basis.
High Costs and Complexities
Amazon’s initial ambitious plan to open up to 3,000 Amazon Go stores within a few years revealed the substantial investment required. Berke estimates that Amazon spent approximately $1 billion annually (2019-2020) on research, development, and implementation to learn and scale the technology. Walmart’s internal analysis further supports this, estimating the cost of implementing a similar system in a 40,000-square-foot supermarket at $10 million to $15 million. This highlights the significant financial hurdles that autonomous checkout systems present, even for a company with Amazon’s resources.
Alternative Approaches
Many retailers have shifted focus from computer vision-based systems like Just Walk Out to simpler alternatives, like mobile checkout apps. Walmart uses its Scan & Go app, while Kroger experiments with Instacart’s Caper carts. Even giants like Target and Dollar General have reevaluated self-checkout due to theft concerns, reinstating traditional checkouts.
Amazon’s Pivot: A Focus on Third-Party Partnerships
Despite the scaling back of Just Walk Out in its internal stores, Amazon remains committed to the technology. It has licensed Just Walk Out to over 200 third-party retailers, with plans to double that number. This shift signals a strategic pivot from internal deployment to external licensing, turning the technology into a revenue stream.
Inside the Lab: Refining Just Walk Out
Amazon continues to refine its Just Walk Out technology. A recent CNBC visit to Amazon’s testing facility revealed ongoing efforts to optimize camera placement and improve the system’s accuracy. The new “multi-modal” system enhances speed and efficiency by processing multiple data inputs simultaneously, making it more appealing to third-party retailers. Amazon is notably focusing on smaller to medium-sized stores where the return on investment (ROI) tends to be stronger.
Leveraging the AWS Model
Amazon’s approach echoes its successful Amazon Web Services (AWS) model. Originally built to support Amazon’s internal needs, AWS became a hugely profitable business by licensing its infrastructure to third parties. Similarly, positioning Just Walk Out under AWS indicates a determination to make it a successful B2B offering. This shift might mitigate concerns among competitor retailers, potentially making these types of partnerships more widely accepted moving forward.
The Future of Cashierless Checkout
While Amazon’s experience with Just Walk Out demonstrates the hurdles in widespread adoption, it also showcases the ongoing innovation in the sector. The company’s decision to shift its focus to third-party licensing highlights the belief in the technology’s long-term viability. Success, however, will depend on wider acceptance among consumers, retail partners and Amazon’s ability to manage the trust concerns of rivals handing over valuable data.
Challenges Remain
Sucharita Kodali of Forrester Research rightly points out that there’s a “long way to go” before cashierless tech achieves ubiquity. Building consumer trust and showcasing a clear success narrative for partner retailers remains a major hurdle. The long game means extensive continued investment, and a slow but steady expansion of the technology. Amazon’s success in the sector won’t come quickly or cheaply.
Essentially, Amazon’s journey with cashierless checkout showcases both the promise and the challenges in bringing cutting-edge technology to the physical world. While its internal implementation has undergone restructuring, the company’s bet on third-party partnerships could redefine how we shop in years to come.
