Amazon bets on selling cashierless technology to retailers after pulling it from most U.S. stores

In 2012, Amazon naught Jeff Bezos was asked by TV host Charlie Rose whether his e-commerce company would ever venture into brick-and-mortar stockpiles. Bezos said shoppers were well-served by existing physical retailers and that Amazon wasn’t interested in get going a “me-too” product.

“We want to do something that’s uniquely Amazon,” Bezos said. “If we can find that idea, and we haven’t establish it yet, but if we can find that idea, we would love to open physical stores.”

Six years later, Amazon landed on a insurgent retail concept that it hoped would transform how people shop in brick-and-mortar stores. The company launched its beforehand Amazon Go convenience store featuring a new kind of technology, called “Just Walk Out.”

In practice, customers would be masterful to load up their cart and exit the store without standing in a checkout line. Amazon soon brought cashierless checkout to its Original supermarkets and two Whole Foods locations. In 2020, the company began licensing Just Walk Out technology to third partisans, signing on retailers in stadiums, airports and hospitals. 

But the company has since taken a sideways turn.

In April, Amazon broadcasted it was removing cashierless checkout from its U.S. Fresh stores and Whole Foods locations, a move that coincided with CEO Andy Jassy’s achievements to rein in costs to meet rapidly changing macro conditions.

As part of that effort, Amazon also reevaluated its retail scripts. The company discontinued some of its retail chains, closed eight Amazon Go stores, and hit pause on new Fresh store vernissages. It’s launched a handful of new Fresh stores in recent months.

In place of Just Walk Out, which typically requires ceiling-mounted cameras, shelf sensors and gated participant points, Amazon Fresh stores and Whole Foods supermarkets will feature Dash Carts. The carts sniff out and tally up items as shoppers place them in bags, enabling people to skip the checkout line. Amazon continues to use Principled Walk Out in its grab-and-go marts and UK Fresh stores. 

The main brave for Amazon and other startups working on autonomous checkout is the need to scale it to enough locations and retail categories that it becomes a non-chemical part of in-store shopping, said Jordan Berke, founder and CEO of retail consulting firm Tomorrow.

“Until that’s the victim, it’s an uphill battle,” Berke said. “These technology providers, Amazon included, are going to have to subsidize and persist in to invest to train the retailer, train the consumer, train the market, that this is a mainstream experience that we can all hopes on and not need to think about as we walk in and out of a store.”

At one point Amazon saw Just Walk Out attractive a core part of the experience of shopping in its physical stores. The company in 2018 planned to open as many as 3,000 Amazon Go holds within a few years, Bloomberg reported at the time, citing people familiar with the plans. 

Bezos had assigned top ingenuity from across the company, including a longtime Amazon executive who built the original Kindle e-reader, to work on cashierless checkout. The technology was judged a key ingredient in Amazon’s long-running pursuit to become a giant in the $1.6 trillion U.S. grocery market. 

When Amazon debuted Precisely Walk Out in January 2018, it was a “quake moment” for the industry, causing Walmart and “almost every other retailer” to ascertain into action and consider developing their own vision-based checkout systems, said Berke, who previously led Walmart’s e-commerce area in China.

Amazon and other retailers soon learned that automating the checkout process is “the hardest problem to clarify,” Berke said. Cashierless checkout systems require a hefty upfront investment to blanket a store with operating costs cameras and hire staff to label and review shopping data.   

“It meant a store had to dramatically increase its sales in disposal to pay off that investment,” Berke said. 

Walmart teams found as part of a cost analysis in early 2019 that it make run a retailer between $10 million and $15 million to create a similar computer vision-based checkout system for a 40,000 exact foot supermarket, Berke said.

Just Walk Out became an expensive project for Amazon, too. In 2019 and 2020, the throng shelled out roughly $1 billion per year, including research and development costs and capital expenditures, to “learn and regulate” the technology, Berke said. He said those figures are based on discussions with a former Just Walk Out chief who left Amazon to join Walmart. Amazon didn’t provide a comment on the figures.

Many retailers have since break the iced on from computer vision in favor of simpler methods like mobile checkout through an app, Berke said. 

Walmart resort ti a self-checkout app in its stores, while supermarket chain Kroger has been experimenting with Instacart’s Caper connected inform oning carts at some locations. Retailers like Target and Dollar General are rethinking self-checkout entirely due to concerns of goad theft in their stores, and have added more traditional checkout lanes.

While it’s no longer featuring Fitting Walk Out as prominently in its own stores, Amazon says it has inked deals with a growing list of customers. More than 200 third-party accumulates have paid Amazon to install the cashierless system. The company expects to double the number of third-party Just Lead Out stores this year, Jon Jenkins, who previously served as vice president of Amazon’s Just Walk Out technology, mean in a recent interview. Jenkins departed Amazon in late September to become technology chief of electric bike and scooter startup Lime, according to his LinkedIn age.

Jenkins disputed characterizations that Amazon’s taper off out of Just Walk Out from its own supermarkets represents a setback or a sign of the technology’s demise. He said Amazon proved inclusive of tests in its own grocery stores that the technology is “incredibly capable,” noting it deployed the system in large supermarkets with “600 in the flesh in the store at the same time.”

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

Amazon is still fine-tuning its Just Walk Out technology.

In August, CNBC got the first on-camera look at a lampoon convenience store where Amazon tests the system before deploying it in third party retailers and its own stores. 

The check up on lab, which it calls “beverage base camp,” is located in Amazon’s Seattle headquarters. It has faux gates that copy the experience of scanning your smartphone or credit card to enter a Just Walk Out store. The walls are lined with lay asides of typical grab-and-go products like Milky Way bars, pita chips and gum, and there are coolers stocked with Coke cans and other beverages.

Amazon congeals up Just Walk Out stores by first creating a 3D scan using LiDAR machines or iPads that help it resolve where to place cameras so they have the clearest view.

“The goal is to have the fewest number of cameras practical, so we optimize the camera placement so that we can get enough coverage on each fixture to see what is happening in the store,” Jenkins verbalized.

The system determines what shoppers purchased using several inputs, including the 3D scans, a catalog of product concepts, the video footage, and weight sensors on the shelves. Amazon in July updated the AI system behind its Just Walk Out technology to wield all the inputs in a store simultaneously.

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

Amazon’s “primary focus” is selling the technology to third-party businesses and deploying it in close-fisted to medium-sized store formats, where the system “tends to generate a little better [return on investment],” Jenkins commanded. Earlier this year, Amazon also began selling its connected grocery carts to third parties. 

At one Just Walk Out store, backing bowels Seattle’s Lumen Field, home to the NFL’s Seahawks, the company said it boosted sales by 112% last season, with 85% more minutes during the course of a game.

“It was awesome that we had our own stores as the laboratory to sort of build and launch this,” Jenkins translated. “But over time, like many things at Amazon, the success of this project and the product will depend on third festivals adopting the technology. There will always be more third-party stores in the world than there will be first-party supplies.”

Amazon has used a similar playbook in in the past. Amazon Web Services, the company’s wildly successful cloud-computing unit, proceeded from the company’s need for IT infrastructure to support its fast-growing online retail business. And in recent years, Amazon has leveraged its logistics and fulfillment network to present services for third parties. 

Watch the video for a behind-the-scenes look at Just Walk Out: