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Amazon offers cashierless checkout to retailers, challenging startups

Suman BhattacharyyabySuman Bhattacharyya
March 10, 2020
in Payments, Strategy
Reading Time: 3 mins read
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The rollout of Amazon’s cashierless checkout technology stack to other retailers could amount to a double-edged sword for payments startups offering similar tools, as it offers new opportunities to compete while adding pressure to their business models.

Amazon this week announced the launch of its “Just Walk Out” technology toolkit for retailers, to help eliminate checkout lines with a combination of computer vision, sensor fusion and deep learning, effectively allowing the Amazon Go experience to be deployed to any retail store. Amazon reportedly has signed several deals with retailers, but didn’t specify which.

“Since launching Amazon Go years ago, many retailers have expressed an interest in offering similar checkout-free shopping experiences,” Amazon wrote on its website. “We’re excited to now offer the ability for retailers to leverage Just Walk Out technology from Amazon in their stores.”

Amazon was not immediately available for comment. The e-commerce behemoth launched its first cashierless Amazon Go store in 2016, and has rolled out several locations across the U.S., including a 10,400-square-foot Amazon Go grocery store in Seattle last month. In recent years, the rise of Amazon Go has prompted the growth of startups focused on helping retailers deploy cashierless solutions, including Grabango, Zippin, FutureProof Retail, Standard Cognition and AVA Retail.

Amazon’s move puts it in direct competition with other cashierless payment startups, since it allows shoppers to walk into a store with any credit card, grab items for purchase and leave. The installation process, according to Amazon, can take as little as a week, and is suited to stores with high demand and long lines. Amazon did not provide any pricing information in its announcement.

See also: Wirecard’s cashier-free checkout to help retailers stand up to Amazon

David True, a partner at Paygility Advisors, said Amazon’s announcement is no surprise given its early role in forging a path in cashier-free physical retail payments. Whether or not retailers will be comfortable entrusting cashierless payments to Amazon, however, is open to question, given competitive concerns.

Retailers’ reticence to onboard the Amazon cashier-free toolkit could represent an opportunity for startups, True noted.

“Startups could benefit, because it’s growing awareness of the marketplace on Amazon’s dime, and then they can come in and say ‘yes, we can do better than Amazon, and we’re not Amazon,’” he said.

Others are not convinced Amazon’s entry into the space is a positive development for startups, since they may have assumed Amazon wouldn’t become a cashierless checkout vendor.

“Unfortunately, startups building automated retail solutions have [a] long bet that Amazon would keep cashierless checkout in-house,” said Gene Munster, managing partner at Minneapolis-based venture capital firm Loup Ventures. “Amazon will have a negative impact on those startups’ valuations, but many retailers will still look to buy tech from anyone but Amazon.”

There are also looming questions around retailer uptake for cashierless checkout tools, challenges that could affect startups as well as large brands offering such products. Despite the customer experience advantages, some retailers may still need to be convinced cashier-free checkout will generate enough of a return on investment.

“The technology has captured the imagination of lots of companies, but I’m not sure that many retailers have the budget or long-term interest to transform stores in this way,” said Sucharita Kodali, principal retail analyst at Forrester Research.

The Banking Automation Summit, which takes place from June 1-2 in Miami, is a unique opportunity to share insights, trends, strategies and best practices on back-office automation in financial services with the industry’s leading practitioners. Register here.

Tags: Amazoncashierless paymentsPremiumstartups
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