Online retail and logistics giant Amazon has signed ‘several’ deals with major international retailers to license its Just Walk Out automated check-out technology stack. Amazon itself made the announcement yesterday, which raises the question of whether the company has decided to pivot from aggressive expansion of its own checkoutless Amazon Go convenience stores.
The move could be a sign that a new strategy focused more on licensing its technology than running its own convenience supermarkets. Amazon has opened a total of 26 fully automated stores in the USA, and has reportedly looked into opening a location in London. However, earlier plans thought to target a huge investment in opening thousands of new Amazon Go locations in a land grab from traditional grocers hasn’t materialised.
While Amazon is sitting on a huge cash pile, around $43 billion as of late 2019, the cost of just the hardware for each new Amazon Go store is said to be around $1 million. That would put the overall cost of the 3000 new locations said to be planned by 2021 at over $3 billion – a huge upfront investment in an untried business model, even for Amazon.
The Just Walk Out combines arrays of cameras and sensors with computer vision and artificial intelligence to track what shoppers put in their bags or basket before automatically charging them through an app after they’ve walked out. Amazon didn’t yesterday name any of the partners deals to license the tech have been signed with and it’s unclear if any UK-based supermarket and convenience store chains are involved. The company has also not offered any details on how much the system will cost licensing partners.
Dilip Kuman, Amazon’s vice president of physical retail and technology sad that Amazon will be responsible for installing the technology in partner stores, including cameras and shelf weight sensors. It could even turn out that not all the licensees are grocers after Mr Kumar commented:
“This has pretty broad applicability across store sizes, across industries.”
Amazon CEO Jeff Bezos has a strong philosophy that human workers should not do jobs that software and robotics can handle. However, with 3.6 million individuals employed as cashiers in the USA alone, there are worries that an automated revolution in retail could raise unemployment figures before the economy adapts to provide new jobs.
Having established itself as the largest ecommerce operation in the world, as well as owning an increasingly lucrative cloud computing arm, Amazon Web Services, which is the market leader in public cloud facilities, Amazon has made increasing forays into traditional, physical retail in recent years. The 2017 acquisition of upmarket grocers Whole Foods for $13.7 billion, announced Amazon’s arrival as a major competitor in bricks-and-mortar retail as well as the digital space.
The first Amazon Go supermarket was opened in Seattle in 2018, near the company’s HQ in the city. When entering an Amazon Go store, customers scan a barcode generated by their app. They are then tracked by cameras and motion sensors while they shop, with shelf weight monitors and other sensors cross-referencing purchases picked up by computer vision. The system is sophisticated enough to not even be thrown off if a shopper picks something up but later returns it.
If Amazon takes the strategic decision to focus more on licensing its tech than opening its own brand convenience supermarkets, it would mirror the approach being taken by Ocado, the UK online groceries delivery company. While Ocado still runs its own online groceries business in the UK, the larger part of the business, and that which will ultimately dictate its future growth as a company, is now licensing its automated warehouse technology to international supermarket chains.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.