In recent years, Amazon has made headlines for revolutionizing the retail landscape with its cashierless technology, known as “Just Walk Out.”
However, the e-commerce giant is now shifting its focus from implementing the technology in its own stores to selling it to third-party retailers, a move that marks a significant change in strategy.
The Rise of Amazon’s Cashierless Vision
Amazon’s journey into physical retail began with a visionary idea. In 2012, when Jeff Bezos was asked whether Amazon would enter the brick-and-mortar space, he expressed hesitation, stating that physical retail was already well-served.
Bezos, known for his innovative mindset, made it clear that if Amazon were to enter the space, it would have to be something uniquely Amazon.
By 2018, Amazon had found that vision with the launch of its Amazon Go stores, featuring the groundbreaking “Just Walk Out” technology.
The concept allowed customers to grab items and leave the store without the need to stand in checkout lines.
The technology, powered by overhead cameras, shelf sensors, and gated entry points, promised to transform the traditional shopping experience.
Soon after, Amazon expanded cashierless checkout to its Fresh supermarkets and select Whole Foods locations, even licensing the technology to third-party retailers in stadiums, airports, and hospitals.
A Strategic Shift: Scaling Back in U.S. Stores
Despite the initial enthusiasm surrounding Just Walk Out, Amazon has recently scaled back its technology deployment in the U.S.
In April, the company announced removing the system from its Fresh stores and Whole Foods locations.
This decision came as part of CEO Andy Jassy’s broader effort to rein in costs amid changing market conditions.
In place of the expensive Just Walk Out system, Amazon introduced Dash Carts in these stores.
These smart carts track items as shoppers place them in bags, offering a more cost-effective way for customers to skip checkout lines.
Meanwhile, Just Walk Out technology remains in use in grab-and-go marts and Fresh stores in the UK, but its presence in the U.S. is waning.
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Challenges of Scaling Cashierless Technology
The move away from Just Walk Out in Amazon’s stores highlights the challenges of scaling autonomous checkout technology.
According to Jordan Berke, founder and CEO of retail consulting firm Tomorrow, making cashierless systems a mainstream part of in-store shopping remains an uphill battle.
These systems require significant upfront investment, including expensive overhead cameras and data management tools, to work efficiently in large-scale grocery stores.
Amazon’s financial investment in Just Walk Out was substantial, with the company spending roughly $1 billion annually in 2019 and 2020 on research, development, and capital expenditures related to the system.
However, Berke noted that the challenge for retailers is not only in adopting the technology but also in proving its return on investment.
Retailers like Walmart and others found that implementing similar systems could cost between $10 million and $15 million per store, making widespread adoption financially prohibitive.
A New Focus on Selling the Technology
Despite scaling back its deployment of Just Walk Out, Amazon remains committed to the technology—albeit with a new focus.
The company is now concentrating on selling the system to third-party retailers, where it sees greater growth potential.
More than 200 third-party stores have already adopted the system, and Amazon expects that number to double shortly.
Jon Jenkins, who previously served as vice president of Amazon’s Just Walk Out technology, noted that while the technology is no longer a focal point in Amazon’s supermarkets, it remains a valuable product.
According to Jenkins, Amazon’s use of Just Walk Out in high-traffic venues, like Seattle’s Lumen Field, has yielded impressive results, with a 112 percent increase in sales and 85 percent more transactions during events.
Amazon’s strategy of using its stores as a testing ground for the technology mirrors its approach with Amazon Web Services (AWS), which started as an internal IT infrastructure before becoming a multibillion-dollar cloud computing business.
Similarly, Amazon’s fulfillment and logistics network was developed for internal use but has since become a service offered to third-party sellers.
Challenges and Opportunities Ahead
While Amazon’s Just Walk Out technology holds promise, the company faces challenges in convincing retailers to adopt it.
One major hurdle is the trust factor: many retailers are hesitant to hand over valuable shopper data to a competitor as formidable as Amazon.
To ease these concerns, Amazon moved the Just Walk Out team to its AWS division in 2022, signaling a more neutral sales approach.
Retail analyst Sucharita Kodali from Forrester Research believes that while Amazon’s pivot toward selling cashierless technology is a smart move, the company has a long road ahead before it becomes ubiquitous.
Kodali pointed out that it will take time and patience from both Amazon and its investors to demonstrate that this technology can become a mainstream retail experience.
However, the potential is there. As more consumers become familiar with cashierless systems, and as retailers continue to face pressures like rising labor costs and theft concerns, the demand for automated checkout could grow.
If Amazon can continue improving the technology and make it more affordable for retailers to adopt, Just Walk Out could become a staple in stores worldwide.
The Future of Cashierless Shopping
As Amazon continues to fine-tune its Just Walk Out system in its Seattle testing lab, the company’s primary focus remains on expanding its partnerships with third-party retailers.
The technology is still in its early stages, but its potential to revolutionize in-store shopping is undeniable.
While it may be some time before autonomous checkout becomes a common experience for shoppers, Amazon’s efforts are pushing the industry forward.
With continued innovation and a strategic approach to partnerships, Amazon is betting that cashierless technology will eventually become a seamless part of the shopping experience across a wide range of retail environments.
