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Amazon Cashierless Tech Competitor Grabango Shuts Down After Failing to Secure Funding

Amazon Cashierless Tech Competitor Grabango Shuts Down After Failing to Secure Funding

In a blow to the cashierless checkout technology sector, Grabango, a startup competitor to Amazon, has announced it will be shutting down after failing to secure the necessary funding to continue operations.

The company, which launched in 2016, was known for its checkout-free technology that leveraged computer vision and machine learning to enable seamless shopping experiences.

Despite raising over $73 million in funding and partnering with major retailers, Grabango ultimately couldn’t secure additional capital in a challenging venture funding environment.

Why Grabango is Shutting Down

Grabango had carved out a space in the growing cashierless technology market, competing against Amazon’s Just Walk Out system.

However, a company spokesperson cited funding challenges as the reason for its closure, explaining, “Although the company established itself as a leader in checkout-free technology, it was not able to secure the funding it needed to continue providing service to its clients.”

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The venture-backed company, based in Berkeley, California, had raised $73 million from investors, including Commerce Ventures,

Peter Thiel’s Founders Fund, and the venture arms of Unilever and Honeywell. Its largest financing round came in 2021 when it raised $39 million, but the funding landscape has since become more challenging.

The tech IPO market has seen a decline since early 2022, with limited liquidity making it harder for startups to attract investors.

The Technology Behind Grabango

Grabango’s technology aimed to offer a more streamlined alternative to Amazon’s Just Walk Out system.

Led by founder and CEO Will Glaser, co-founder of Pandora, the company developed a computer vision-based system that allowed customers to grab items from store shelves and leave without stopping at a checkout line.

The system tracked items as shoppers picked them up, calculating totals in real time for a truly cashierless experience.

Unlike Amazon, which relies on shelf sensors in its Just Walk Out system, Grabango opted to focus entirely on computer vision. In a blog post earlier this year, Glaser noted that Amazon’s sensor-dependent system had proven to be “its Achilles’ heel.”

According to Glaser, Grabango’s sensor-free approach had positioned it for more widespread adoption by eliminating the need for retailers to install complex hardware on each shelf.

“This is a classic Tortoise and Hare parable, but with the players taking on surprising roles,” Glaser wrote, highlighting Grabango’s choice of a “fundamentally more capable system” that was supposedly more adaptable for widespread retail use.

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Partnerships and Market Position

Despite its innovative technology, Grabango struggled to secure the level of market penetration achieved by Amazon.

Over the years, Grabango had inked deals with notable grocery and convenience store chains, including Aldi, Giant Eagle, 7-Eleven, and Circle K. These partnerships positioned Grabango as a key player in the cashierless checkout space, with its technology set to be implemented in various retail locations.

However, Grabango was still competing with a much larger rival. Amazon has expanded its Just Walk Out system to multiple venues, including stadiums, airports, and hospitals, as well as its convenience stores.

In April, Amazon announced it would be pulling Just Walk Out from its U.S. Fresh and Whole Foods locations, a decision Glaser attributed to Amazon’s reliance on shelf sensor technology, which he claimed limited the system's scalability.

A Challenging Venture Capital Landscape

Grabango’s shutdown reflects the broader struggles within the venture capital industry, where fundraising has slowed significantly for most startups, particularly outside the booming AI sector.

Earlier this year, Glaser spoke optimistically about the future, telling Axios that Grabango planned to go public within a few years with an anticipated valuation of $10 billion to $15 billion. But with only a handful of notable IPOs this year, that vision never materialized.

The current environment has made it increasingly difficult for startups to raise funds, especially for those looking to scale hardware-dependent technologies like cashierless checkout systems.

The lack of liquidity has not only affected companies like Grabango but has also put pressure on venture firms, as they struggle to generate returns and launch new funds.

What’s Next for Cashierless Checkout Technology?

Grabango’s closure highlights the volatility in the cashierless technology market. As more retailers seek innovative solutions, companies like Amazon, AiFi, and Trigo will continue to drive forward, competing to capture a share of this evolving sector.

The checkout-free shopping trend remains popular among retailers and consumers alike, but the high upfront costs and technical complexity associated with these systems have proven challenging for many companies.

For its part, Amazon has made significant investments in Just Walk Out, despite its decision to pull back from certain venues.

Meanwhile, other competitors such as AiFi and Trigo continue to pursue advancements in autonomous checkout technology, each vying for the opportunity to dominate a market that remains relatively young but ripe for disruption.

While Grabango's approach showed promise, its shutdown underscores the challenges facing companies that attempt to scale cashierless technology in a capital-intensive environment.

With high installation costs and a competitive landscape, the cashierless tech market is proving to be a challenging arena for startups, especially in a tightened funding environment.

The Road Ahead for Checkout-Free Technology

Despite Grabango’s closure, the future of cashierless technology appears robust. Consumers and retailers have shown interest in such systems' frictionless shopping experience.

As tech giants and other startups continue to innovate, we may see more refined and cost-effective solutions emerge.

For now, companies with the financial resources to navigate these challenges, like Amazon, are likely to lead the way as they refine their systems and expand into new markets.

As cashierless technology continues to evolve, the landscape may eventually make room for a new wave of competitors.

Whether these companies can overcome the obstacles that Grabango faced remains to be seen, but the push towards frictionless, tech-enabled shopping is likely to persist.

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