Photo: @RLTheis via Twenty20
Amazon Go doesn’t want to leave cash on the table
In the face of growing criticism that cashless retail technology will leave a big portion of the consumer population in the U.S. behind, Amazon.com has revealed that it plans to allow customers who shop at its Amazon Go stores to pay with cash.
Steve Kessel, senior vice president of physical stores at Amazon, announced to employees in an all-hands meeting last month that the company is planning additional payment options at Amazon Go stores, according to CNBC. The announcement came in response to concerns that there is an element of “discrimination and elitism” to be found in Just Walk Out technology. The technology as it is currently deployed requires shoppers to have a smartphone associated with a credit card or bank account that can be automatically billed upon leaving the store. This prevents those without access to such financial products — a population made up disproportionately of immigrants, minorities and lower-income people — from shopping there.
The move appears to mark a turnaround in Amazon’s stance on compulsory cashlessness.
Earlier in the year, the tech giant went as far as to threaten to not bring Amazon Go to Philadelphia if the city went through with its plan to ban cash-free stores. Philadelphia’s ban on cashless stores passed in March, making it the first city to do so. (In Massachusetts, it is state law that businesses must accept cash.)
It’s not clear exactly how Amazon will facilitate cash payment in the fully-automated stores, although it has taken steps to let cash-only customers use its services before. Last year, the e-tailer launched Amazon Cash. The app allows users to visit participating physical retailers like Speedway and CVS and deposit cash into an Amazon account so that the funds may be used to shop on Amazon.com.
Being able to spend cash might appeal to more than those with special economic situations. In October 2017, Shake Shack piloted a Lower Manhattan location that did not accept cash. Customers complained of the lack of the human element and limitations to the automated ordering. Shake Shack discontinued the pilot less than a year later.
- Amazon exec tells employees that Go stores will start accepting cash to address ‘discrimination’ concerns – CNBC
- Will other cities follow Philly in banning cashless stores? – RetailWire
- Can Amazon Cash open e-commerce up to millions of underbanked consumers? – RetailWire
- Shake Shack ends cashless experiment – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: Do you think that Amazon will be able to facilitate cash payments in a way that makes Amazon Go appealing to unbanked and underbanked consumers? What lessons do you think other retailers experimenting with cashless concepts will learn from Amazon’s experience?
Poll
BrainTrust
Ryan Mathews
Founder, CEO, Black Monk Consulting
Jeff Hall
President, Second To None
This completely changes the game for Amazon Go. The entire point of Go was to provide a cashier-less experience – to remove the need to stand in line to pay/check out. Given this recent announcement – and the public backlash, Amazon can find a way to take cash, but it defeats the point of the concept. The key learning for retailers is, be very mindful of the potential negative public reaction to ideas that may exclude some people. Even the mighty Amazon couldn’t get past this one.
This seems more an issue of principle than practical application. It’s hard to believe Amazon Go shoppers are “bankless” unless by choice. Adding the cost burden of accepting and handling cash — even though Amazon will no doubt do it in some unique automated fashion that improves the efficiency — still seems like a very expensive PR strategy.
Whether Amazon Go appeals to the unbanked and underbanked consumer will very much depend on how much Amazon Go advertises within that demographic and in what neighborhoods it operates its stores.
If they are wise they will accept cash at their “retail” locations, save the cash balance on account for the customer and then allow in-store and online shopping for those without digital payment accounts.
I wonder how much customer polling Amazon did before deciding to go cashless. I don’t see stores not accepting cash as just discrimination against those less fortunate people who don’t have credit cards; I also see it as a major inconvenience to everyone. If I want to only buy a pack of mints for $2.49, do I really want to use my credit card or debit card? Using cash for small items is still more convenient. Eventually, we will be cashless worldwide but only after a time when the technology is perfected, and we will merely use a thumbprint or a retina scan. We are not there yet, and all these other methods or payment: using the app, credit card, debit card and so on take time, and when you want to pay cash, you should be able to. I see more states banning cashless stores and all those stores that were going in that direction to rethink their strategy. Amazon Go will have to concede and put in a POS register; however, I would expect it to be a self-checkout register that will also require the user to have the Amazon Go app.
This is a blessing in disguise for Amazon; there’s just no disputing that the human element is important, and disenfranchising young people and our less affluent neighbors wasn’t a good look. This will wind up being a win for them.
Amazon’s change of heart and pivot to allow cash purchases is a lesson for all consumer-facing brands: If you wish to be relevant, you must do everything in your power to reduce friction, inconvenience and customer effort. Creating barriers around the purchase process will quickly result in consumers taking their spend to the competition.
Amazon does not make all of the rules. If Amazon wants to expand stores, it has to find an efficient way to deal with cash. Some of the issues are real and some are perceived. This is one case where Amazon could learn a great deal from Walmart and the many ways it has adapted to customer payments. Walmart is well on the way to becoming a national bank — and they have many ways of accepting customer payments … including cash.
Introducing cash payments makes the Amazon Go concept less efficient for the company. As well as staffing costs, there are the other expenses associated with cash handling that will need to be absorbed. But for consumers who don’t wish to pay with cash, the frictionless experience will remain unchanged.
In terms of the impact on trade, given the locations and targeting of the stores, I’d question how many consumers with only the means to pay in cash they’d attract. So I can’t see this move expanding the reach dramatically.
Neil, you nailed it!
Absolutely! Now if the food in the Go stores is extraordinary and everyone is clamoring for it, that is another thing. Then they may be discriminating, so to speak. But right now, the attraction to the store is the fast, easy process of grab and go. It is about a brand experience, and that experience depends on cashless. It is no longer that experience when cash is introduced and they become just another convenience store. For my 2 cents.
This really isn’t too tough. Going cashless is a PR misstep, especially for a company run by the world’s richest man. The fix? Oh, I don’t know … vending machines, parking lots and all kinds of other folks seem to have worked the bugs out of cash acceptance … why can’t retail? Going cashless today just isn’t the right hill for Amazon to die on this year. In five years, who knows? Eventually the society will move toward a “no cash” model, but until then the politics are a little dicey.
Amazon will figure it out. In addition, to the negative PR it received for its cashless concepts, economics will come into play. There are almost 40 million Americans using SNAP and WIC benefits (more than the entire population of Canada). Even with EBT options available to them this population may have felt neglected by a cashless enterprise. No longer.
This is a very tricky debate. The unintended discrimination argument is valid, but no one ever chastises e-commerce sites for not accepting cash…because that’s just the way that specific channel needs to work. Why not let a cashless retail channel exist as well? The market will adapt as there will always be companies who are more than willing to pick up the sales from customers who feel ostracized.
Even though the futurists have told us “cashless is the future,” we know they haven’t been accurate very often. So this really isn’t a surprise. And it gives us more evidence that Amazon is becoming serious about finally becoming profitable on their 50 percent of revenue that is retail.
I like that Amazon is addressing a part of the consumer population that doesn’t go “cashless.” I have different ideas of how this would work. Their focus has always been on making the experience convenient for their customers. Is it as simple as loading cash onto an Amazon app? That’s a good place to start. It will be interesting to see Amazon’s solution.
Before jumping to conclusions on how Amazon will handle this, let’s cover two factors. First, this is a PR issue for them and we all know Amazon is a PR master. Letting the world know about this turnaround is a net positive PR-wise for Amazon so that’s the real motivation here. They’ve noted the backlash cashless is creating and they don’t want to be perceived negatively over this as the entire “just walk out” cashierless experience has already generated a mix of positive and negative feelings for Amazon to date.
Second, Amazon still wants to be able to serve ANY customer. Although it isn’t clear how adding cash payments opens up a new target customer for Go stores – it remains to be seen where they will place them – we still don’t know HOW they will accept cash payments. No doubt Amazon is working on something new that will retain the convenience factor for Go stores while adding a cash payment mechanism. We shouldn’t assume this means a standard self-checkout or cashier-based POS terminal will simply be added to all Go stores as a result of this announcement. That’s not the Amazon way.
I think the question asked is wrong. It should read, “Does Amazon really care if it does not appeal to the unbanked or people who want to use cash?”
I think the answer is no. Yes, they will find a way to serve customers who want to pay with cash. They will not go out of the way to make it easy. They will comply with the law.
The change in Amazon Go’s stance allows the customers to choose how they want to pay. As has been pointed out, some may elect to use cash even though they have a debit or credit card. Allowing customers this choice may create a lesser “wow” factor for Amazon Go, but it opens their shopping experience to more customers.
In Jeff Bezos’s letter to shareholders that was published today, he specifically mentions Amazon Go as an example of “imagining the impossible” and accomplishing it by creating a cashierless store, thereby removing the pain point of waiting in lines. Whether or not they are accepting cash on principle or necessity, I believe Amazon will continue to find its own way to do the impossible and preserve the concept of a cashierless store and still accept cash.
For locations that require retailers to accept cash, Amazon can figure out a way to do it. However, it will be an option that is available only in the markets that dictate it.
It will be tricky for Amazon to do, as it is more than accepting cash, if you assume that the bank-less consumers also don’t have a smart phone. Entrance to Amazon Go today is dependent on an app on the consumer’s smart phone. If it gets too cumbersome to accommodate cashless customers, Amazon may choose not to open their Go stores in those markets.
When you imagine the Amazon Go store is just a giant vending machine it becomes easy to understand why accepting only digital payments is a non-starter, even without the regulations It’s just too easy to accept cash in a machine and save the cash balance on account for the customer. Kiosks are already doing this in micro markets all over the country. Kiosk and smartphone based micro markets are appearing in more locations replacing traditional vending machines. Most of these micro markets accept cash and manage the customer’s balance on account.
I use cash without a cashier at Costco all the time. What’s the big deal? It doesn’t take a “cashier” to take cash — the bank and ATMs work like this.