Is Amazon's plan to licence Walk Out tech to retailers a game-changer?

This week Amazon announced it will licence it cashier-less Just Walk Out technology to other retailers. The retail and tech giant launched the system two years ago in its Go grocery chain in the US, which uses hundreds of cameras and depth sensors to detect if a shopper has picked up and left with a product. 

While Amazon Go shoppers are billed via their Amazon account, the system has been adopted so shoppers register their payment card on entry instead. 

Announcing the move, Amazon said: “We now offer retailers the ability to leverage this technology in their stores to help bring fast and convenient checkout experiences to more shoppers.” 

But analysts are unsure about how much of a game-changer it will be for retailers. 

Early days

Guy Elliott, senior industry lead of retail at Publicis Sapient, told Essential Retail the technology would be most useful for retailers with a high frequency of customers, primarily groceries.

“Other retailers have much larger problems that they should be worrying about before looking at this kind of solution," he said. “I can only see this appealing to desperate large retailers and possibly small/midsize retailers that don't really feel like they compete directly with Amazon.”

Eliott believes the product is analogous to retailers historically having used Amazon to build their early website or using AWS. “Eventually you realise that you are funding Amazon to continue to kill you in the market, you’re helping them fine tune their product so that they can better use it against you and you’re giving them all the data on your shoppers buying habits and ways of interacting with your stores. You’re then faced with a hefty bill to move off the Amazon platform.”  

So far Just Walk Out has only been rolled out in a relatively small number of stores, with just 26 store announcements in the US. Although Amazon is reported to be considering opening a store near Oxford Circus in London. 

But it isn’t currently trying to roll this tech out to its Whole Foods acquisition, which Eliott said might imply “the technology isn’t ready to work at that kind of scale". He said the cost may be prohibitive or the "completely hands off experience isn’t yet… something the customers are interested in in all cases".

Data ownership

Tamara Gaffney, vice president of decision insight at Quantum Metric, points out that shoppers are still not accustomed to the model that Amazon Go works on. People may be hesitant to shop “knowing that Amazon is surveilling their journey through the store and will have their facial information on file in addition to the data the tech giant already owns,” she explained. 

The Go stores have had most success in city centres like New York and Chicago, where the convenience of walking in and out makes the biggest difference, she added.

So where there is consumer appetite for this technology, there could be benefits to retailers. “Without having to wait in lines to checkout, the possibility for impulse buys become higher, and retailers avoid that last-minute second-thinking of purchases that comes at the register. Other retailers who struggle with shoplifting may also see benefits as in-store security systems are extremely outdated and unfriendly. 

“In apparel, we might see similar behavioral patterns where shoppers pick up more items to try them on at home and return the ones that they don’t like. This sort of impact could also create higher average cart values.” 

But the big issue for retailers is a lack of access to customer data especially “considering Amazon is in direct competition with almost every kind of retailer nowadays".

She said: “At a traditional retailer, cashiers can ask for customer emails at checkout to tailor marketing offers and build their customer base, sign customers up for loyalty and rewards programs, and up-sell their purchases by offering deals and discounts. How much will Amazon charge for access to the retailer’s own customer information?”

The big test for Amazon will be how good a partner they are to the retail ecosystem. “Sharing data, personalisation insights and adding intelligence to retailer’s in store experiences would give it a let up. Data is a concern for retailers. Amazon has stated they will only collect the data needed to provide shoppers with an accurate receipt – but customers who opt in will still be sharing their email with the company. It remains to be seen whether retailers will be given this data, or even if Amazon will keep it for their own loyalty use.”

Supplier or competitor?

When it comes to innovations “Amazon is the master of disrupting the status quo,” said Natalie Berg of NBK Retail. “So it’s not a surprise that as they moved into bricks and mortar, their first port of call was to stamp out any friction from the customer experience.”

She added: “Amazon has been quite clever here: create a lot of hype, panic rivals into testing their own inferior versions and then save the day by licensing their own tech.

“In some ways, I think Amazon is creating a solution to a problem that doesn’t exist. Sure, the ability to bypass the checkout will appeal on those time-sensitive shopping occasions – an office worker’s lunch break, at the airport, a football match, etc. But I don’t see checkout-free shopping as a game-changer for the rest of the industry.” 

However, Berg noted the company’s industry foothold should not be underestimated. “It’s time we stop thinking of Amazon as a retailer. They are fast becoming the infrastructure, the rails that the retail sector runs on.”

According to a report by Global Data last year, Amazon’s UK retail revenue is anticipated to increase from £9.9 billion in 2019 to £15.7 billion in 2024. While food and grocery is set to be the fastest growing sector, as it ramps up its focus on the UK food market via its Amazon Fresh division. 

So while Amazon undoubtedly has some compelling technology products on offer, retailers must also be aware the company remains an existential threat to the sector.